Schnier – Ontario Court of Appeal indicates that an assessment under appeal is not an “amount payable” as defined in ITA s. 223

S. 172.1 of the Bankruptcy and Insolvency Act provided more onerous conditions for the discharge of an individual from bankruptcy where a substantial portion of the individual’s total unsecured proven claims is in the form of “amounts payable” within the meaning of ITA s. 223(1).

Brown JA has found that assessments under appeal are not amounts payable for these purposes. In response to the Attorney General’s argument that ITA s. 152(8) deems an assessment to be “valid and binding,” he stated:

Both ss. 152(8) and 248(2) indicate that until the objection or appeal process is concluded, the amount of tax the Minister can compel a taxpayer to pay cannot be known. The assessed amount can change from time to time by virtue of judicial decisions or new assessments: Terra Nova Properties… [1967] 2 Ex. C.R. 46… .

He also noted that “the existence of the outstanding appeal entitles the trustee to classify the claim based on the unpaid assessed amounts as a contingent, unprovable one.” Although it is unlikely that this case will reverse the accepted view (e.g., under s. 160) that tax liabilities can arise even before they are assessed, this latter point, that a tax appeal can render an assessment an unprovable claim, appears to be important.

Neal Armstrong. Summaries of Schnier v. Canada (Attorney General), 128 O.R. (3d) 537, 2016 ONCA 5 under Bankruptcy and Insolvency Act, s. 172.1(8), ITA s. 152(8), s. 223(1).