A recent decision from the Tax Court of Canada has resulted in a split outcome for Postalong Technology Inc. regarding its claims for federal pandemic relief benefits1. The case, heard in Vancouver before Justice Randall S. Bocock, centered on whether the company met the strict revenue reduction thresholds required to qualify for the Canada Emergency Wage Subsidy and the subsequent Hardest Hit Businesses Recovery Program. While the company successfully secured a portion of the contested funds through a mid-hearing concession by the government, it ultimately failed to convince the court that it was eligible for payments during the final stages of the subsidy programs in 2022.
The dispute began after the Minister of National Revenue conducted a redetermination of the company’s eligibility for subsidies it had already received. In March 2024, the Minister issued a notice denying all benefits previously paid to Postalong Technology Inc. for qualifying periods stretching from period 13 through period 28. These periods covered a significant span of the pandemic, during which the federal government provided financial assistance to businesses that could demonstrate a specific percentage decrease in their revenue compared to pre-pandemic levels.
When the matter reached the Tax Court in November 2025, the legal landscape shifted quickly. At the outset of the hearing, counsel for the King conceded that the company was indeed entitled to the benefits for periods 13 through 23. This concession effectively settled the eligibility for the Canada Emergency Wage Subsidy portions and the early stages of the Hardest Hit Businesses Recovery Program. However, the government maintained its opposition to the company’s claims for periods 24 through 28, which covered the timeframe from December 19, 2021, to May 7, 2022. The total amount at stake for these five contested periods was just over 45,000 dollars.
To qualify for the Hardest Hit Businesses Recovery Program during these later stages, the legislation required a much sharper decline in revenue than earlier periods. Specifically, an applicant had to show that its revenue during the pandemic claim period was 50 percent or less of its pre-pandemic revenue. While the mathematical formula was straightforward, the difficulty for Postalong Technology Inc. lay in proving exactly how much money was earned during specific months. The Canada Revenue Agency had used a mathematical average based on the company’s annual tax returns, but the company’s director, Edward Wu, argued that an average did not reflect the reality of his business.
Mr. Wu, representing the company, testified that the business was primarily cash-based and experienced significant monthly variations. He presented the court with specific monthly revenue figures, claiming that in early 2020, the company earned between 4,700 and 5,800 dollars per month. He then contrasted these with figures for early 2022, where he claimed monthly revenue had dropped to as low as 850 dollars. Mr. Wu argued that because his office manager only deposited cash into the bank once certain thresholds were reached, the bank statements and the government’s averages were misleading indicators of when the money was actually earned.
Justice Bocock scrutinized the evidence provided by the company, including lists prepared for the litigation and bank statements. The court found several inconsistencies in the testimony and the documentation. For instance, some amounts were characterized as revenue in certain contexts but as director investments or cash infusions in others. Furthermore, the company’s T-2 corporate tax returns revealed that 2022 was actually the company’s best year for total revenue, a fact that seemed at odds with the claim that the first five months of that year were financially disastrous.
The court noted that if it were to accept Mr. Wu’s monthly figures for the start of 2022, it would mean the company earned only about 6,740 dollars in the first five months of the year, followed by an astronomical jump to over 138,000 dollars in the final seven months. Mr. Wu offered no substantive explanation for such a dramatic and sudden recovery, especially since the business ceased operations shortly thereafter. Justice Bocock described the explanation of this incredible revenue variance as unconvincing.
Another hurdle for the company was the lack of reliable, contemporaneous financial records. Mr. Wu testified that certain records were unavailable and acknowledged that neither the office manager nor the accountant attended the hearing to provide evidence or explain the ledger entries. The court found that the documents produced by the company were constructed specifically for the litigation and were not referenced to historical financial data. Without a distinct journal of cash receipts or disbursements to verify the timing of the revenue, the court was left with only the annual tax returns and general bank statements.
Ultimately, the court determined that the government’s approach of averaging the annual revenue was reasonable in the absence of reliable source documents from the taxpayer. Justice Bocock concluded that the evidence did not support a finding that the company’s revenue had fallen by the required 50 percent for the final five periods. The court observed that while the averaging method allowed the company to qualify for earlier periods when the thresholds were lower, it could not overcome the higher evidentiary burden and stricter requirements of the final periods.
In the final judgment, the appeal was allowed only for the periods conceded by the government at the start of the trial. The claims for the 45,014 dollars associated with periods 24 through 28 were dismissed. Because the result was mixed, with both sides winning on different points, the court ordered that each party would be responsible for their own legal costs. The matter was referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the court’s findings.
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