Citation: 2013 TCC 260
Date: 20130820
Docket: 2012-4452(IT)I
BETWEEN:
TRACEY RIDOUT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1]
In 2010, Tracey Ridout claimed a
disability tax credit and a supplemental personal credit in respect of her son.
The claim was made for taxation years from 2000 to 2009 and was approved by the
Minister of National Revenue.
[2]
Ms. Ridout paid an amount of
$7,125.37 to DTS Disability Tax Services Ltd. (“DTS”) for consultation and
preparation of claims regarding this claim. The issue in this appeal is whether
these fees are deductible in computing income pursuant to paragraph 60(o) of
the Income Tax Act.
[3]
Paragraph 60(o) is reproduced
below.
60. Other deductions - There may be deducted in computing a taxpayer’s income
for a taxation year such of the following amounts as are applicable:
[…]
(o) legal [or other]
expenses [of objection or appeal] - amounts paid by the taxpayer in the
year in respect of fees or expenses incurred in preparing, instituting or
prosecuting an objection to, or an appeal in relation to,
(i) an assessment of
tax, interest or penalties under this Act or an Act of a province that imposes
a tax similar to the tax imposed under this Act,
(ii) a decision of the
Canada Employment and Immigration Commission, the Canada Employment and
Insurance Commission, a board of referees or an umpire under the Unemployment
Insurance Act or the Employment Insurance Act,
(iii) an assessment of
any income tax deductible by the taxpayer under section 126 or any interest or
penalty with respect thereto, or
(iv) an assessment or a decision
made under the Canada
Pension Plan or a provincial pension plan as defined
in section 3 of that Act;
[4]
Ms. Ridout was represented at the
hearing by Michael Campagne who is the president of DTS. He informed the Court
that the issue in this appeal is common to several of DTS’ clients and that this
is the first appeal to come before the Court.
[5]
Mr. Campagne was the only witness on
behalf of Ms. Ridout. The Crown called Lisa Lalonde from the Canada Revenue
Agency (CRA) who was involved in the decision to disallow the deduction of the
fees.
Positions of parties
[6]
The position of the Crown is that
the fees paid to DTS by Ms. Ridout do not qualify for deduction under paragraph
60(o) because they do not relate to an objection or appeal in relation to an
income tax assessment.
[7]
Ms. Ridout submits that the
unusual circumstances in her case justify the allowance of the deduction. Some
of the particular circumstances noted by Mr. Campagne are set out below.
(a)
The CRA had previously allowed a similar
deduction in respect of fees paid by other clients of DTS.
(b) The disability tax credit regime has a unique
pre-assessment system which requires a taxpayer to submit a doctor’s
certificate before making a claim. It is unusual to require documentation to be
submitted before claiming a deduction in an income tax return.
(c)
The legislative provisions
relating to the disability tax credit are complex, and therefore relief should
be given for the costs of expert advice that is required at a pre-assessment
stage.
(d) There is evidence to suggest that the CRA is dealing
unfairly with Mr. Campagne.
Discussion
[8]
Although Ms. Ridout’s
circumstances are sympathetic, the appeal
must be dismissed because paragraph 60(o) of the Act does not permit the
deduction that she seeks.
[9]
The fact that a legislative provision
may produce a harsh result in a particular case is not a sufficient ground to
allow an appeal. As often mentioned by judges of this Court in appeals
involving sympathetic circumstances, it is the prerogative of Parliament to
write the law as it sees fit and it is the duty of the Court to apply it.
[10]
Based on the language used in paragraph 60(o), in order for Ms.
Ridout to succeed in this appeal, the fees she paid must relate to the
preparation, institution or prosecution of an objection or appeal with respect
to a federal or provincial income tax assessment.
[11]
Central to this determination is
the meaning of the terms “objection” and “appeal” in relation to an income tax
assessment. I will first consider the federal assessment.
[12]
The Act has a specific
legislative scheme that applies to objections and appeals of assessments. The
scheme is governed by sections 165 and 169, which are reproduced in part below.
165. (1) Objections to
assessment - A taxpayer who objects to an assessment under this Part may
serve on the Minister a notice of objection, in writing, setting out the
reasons for the objection and all relevant facts,
(a) where the assessment is in respect
of the taxpayer for a taxation year and the taxpayer is an individual (other
than a trust) or a testamentary trust, on or before the later of
(i) the day that is one year after
the taxpayer’s filing-due date for the year, and
(ii) the day that is 90 days after
the day of mailing of the notice of assessment; and
(b) in any other case, on or before the
day that is 90 days after the day of mailing of the notice of assessment.
[…]
(2) Service - A notice of objection under
this section shall be served by being addressed to the Chief of Appeals in a
District Office or a Taxation Centre of the Canada Revenue Agency and delivered
or mailed to that Office or Centre.
[…]
169. (1) Appeal - Where
a taxpayer has served notice of objection to an assessment under section 165,
the taxpayer may appeal to the Tax Court of Canada to have the assessment
vacated or varied after either
(a) the Minister has confirmed the
assessment or reassessed, or
(b) 90 days have elapsed after service
of the notice of objection and the Minister has not notified the taxpayer that
the Minister has vacated or confirmed the assessment or reassessed,
but no appeal under this section
may be instituted after the expiration of 90 days from the day notice has been
mailed to the taxpayer under section 165 that the Minister has confirmed the
assessment or reassessed.
[13]
The problem that I have with Ms.
Ridout’s position is that she did not intend to file an objection or appeal
pursuant to these provisions. Indeed she likely was precluded from doing so for
some of the taxation years at issue because the limitation periods would have
expired.
[14]
Ms. Ridout’s claim for disability
tax relief was made by way of an application to adjust her income tax returns.
The form that was filed was a T1 Adjustment Request. This is a different procedure
from the objections process.
[15]
Accordingly, the fees paid by Ms.
Ridout did not relate to the preparation, institution or prosecution of an
objection or appeal of an assessment under sections 165 or 169. I conclude that
the fees do not relate to an objection or appeal in respect of a federal
assessment.
[16]
As for whether the fees relate to
an objection or appeal with respect to a provincial assessment, it is not clear
to me whether the fees relate to a provincial assessment at all and neither
party mentioned provincial tax at the hearing. In any event, the relevant
provincial legislation generally provides that a provincial reassessment is
automatically required to be made if a federal reassessment is made (British Columbia Income Tax Act, s. 30(1)). No separate objection and appeal process
is provided for in such cases. I would conclude that the fees also do not
relate to an objection or appeal in relation to a provincial assessment.
[17]
I now turn to the arguments made
by Mr. Campagne. All of the arguments have their basis in fairness and policy
and it is not possible to allow the appeal on these grounds.
[18]
In particular, the Court cannot grant relief simply because a
deduction was given to other taxpayers: Sinclair v The Queen, 2003 FCA
348.
[19]
In addition, the Court cannot
grant relief on grounds of fairness alone. The role of this Court is limited to
determining the correctness of the assessment based on the relevant provisions
of the Act and the facts giving rise to the statutory liability: Ereiser
v The Queen, 2013 FCA 20.
[20]
Mr. Campagne submits that there is
a different assessing procedure with respect to disability tax credit claims
because a doctor’s certificate must be filed with the claim.
[21]
The problem with this submission
is that the deduction provided for in paragraph 60(o) applies only to fees paid
in connection with objections and appeals. It is not possible for the Court to extend the deduction to other
types of fees, such as fees incurred with respect to a T1 Adjustment Request
even if the process is similar to an objection. The restriction in paragraph 60(o) is a matter of policy that is the
prerogative of Parliament and not the courts.
[22]
Finally, Mr. Campagne submits that
the CRA has acted unfairly towards him as a consultant who specializes in disability
tax credit claims. Mr. Campagne referred me to two documents.
[23]
The first is an internal CRA email
communication which states that the CRA decided to disallow fees paid to DTS
“in all cases” (Ex. A-1, Tab 6).
[24]
The second is a response from the
CRA to Mr. Campagne relating to a service-related complaint (Ex. A-1, Tab 8).
In the letter, Mr. Campagne is informed that it is the CRA’s policy to withhold
medical-type information from authorized representatives on disability tax
credit matters. I have reproduced an excerpt from the letter below.
Beginning in June
2009, the CRA introduced a new policy to limit communication with authorized
representatives on DTC-related matters. The CRA now only provides
representatives with information about the processing status of the application
and/or the eligibility determination. The CRA considers information contained
in clarification letters and responses from medical practitioners as medical in
nature, not tax information, and therefore, inappropriate for sharing with
authorized representatives.
[25]
The allegation of unfair treatment by the CRA is not a
proper basis to allow the deduction that Ms. Ridout seeks (Ereiser v The
Queen, 2013 FCA 20, at para 31). Accordingly, although the allegation
is a serious one, it would not be proper for me to comment on it.
[26]
I would conclude that the
deduction of the fees paid by Ms. Ridout is not permitted by paragraph 60(o) of
the Act and the appeal should be dismissed.
[27]
Each party shall bear their own
costs.
Signed at Toronto, Ontario this 20th day of August
2013.
“J. M. Woods”
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