In Canada v. Bowker (Fed CA, 2023) the Federal Court of Appeal considered a Crown appeal from a Tax Court cost award. In this quote the court considers the Minister's lack of discretion regarding the quantum in settling a tax matter with a taxpayer (ie. they can't compromise solely for the sake of settling the matter):
[42] The law as to settlements in the income tax context is relatively settled. The following passage from Galway v. M.N.R., 1974 CanLII 2465 (FCA), [1974] 1 FC 600 (Galway) at page 602 is the classic formulation of the principle:
[…] the Minister has a statutory duty to assess the amount of tax payable on the facts as he finds them in accordance with the law as he understands it. It follows that he cannot assess for some amount designed to implement a compromise settlement and that, when the Trial Division, or this Court on appeal, refers an assessment back to the Minister for re-assessment, it must be for re-assessment on the facts in accordance with the law and not to implement a compromise settlement.
See also CIBC World Markets Inc. v. Canada, 2012 FCA 3, [2012] F.C.J. No. 30 at paras. 22-24, Canada (Attorney General) v. Collins Family Trust, 2022 SCC 26 at para. 26.
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