Date:
20121218
Docket:
T-1658-11
Citation:
2012 FC 1499
Toronto, Ontario,
December 18, 2012
PRESENT: The
Honourable Mr. Justice Manson
BETWEEN:
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HAROLD COOMBS AND JOAN COOMBS
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Applicants
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and
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CANADA REVENUE AGENCY
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Respondent
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REASONS FOR
JUDGMENT AND JUDGMENT
I. Overview
[1]
This
is an application for judicial review pursuant to section 18.1 of the Federal
Courts Act, RSC 1985, c F-7, of the discretionary decision by the Canada
Revenue Agency [CRA] to issue a Requirement to Pay [RTP] to the applicants.
[2]
The
applicants seek an order to quash or invalidate the RTP and a mandamus order to
restrict the CRA from instituting any further collection actions until such
time that a Notice of Confirmation or variation of assessments has been issued
to the applicants.
II. Background
[3]
The
applicants, Harold Coombs and Joan Coombs, are the directors and controlling
shareholders of Select Travel Inc [Select Travel].
[4]
Harold
Coombs is also the president of Select Travel, a company incorporated under the
laws of Ontario.
[5]
On
March 23, 2010, Select Travel was reassessed by the CRA for the 2004 and 2008
taxation years and was found to owe 6,651.84$ and 597.28$, respectively. On
March 24, 2010, the CRA sent a notice of reassessment for those two years and
advised Mr. Coombs of an outstanding balance of 8,094.61$ . On June 24, 2011,
Mr. Coombs filed a Notice of Objection to the reassessment with the Chief of
Appeal.
[6]
On
March 24, 2011, Select Travel was reassessed for the 2009 and 2010 taxation years
and was found to owe 1,612.45$ and 1,349.78$, respectively. On August 11, 2011,
CRA sent Select Travel a Statement of Account which indicated a tax debt of
12,692.84$. By September 2, 2011, that amount had increased to 12,729.40$.
[7]
It
is submitted by the respondent, and not contested by the applicants, that the
12,729.40$ amount consists only of Select Travel’s source deduction tax
liability.
[8]
On
September 2, 2011, CRA sent the RTP to TD Canada Trust, Select Travel’s
financial institution, for the amount owing: 12,729.70$. On September 8, 2011,
TD Canada Trust complied with the RTP and paid the full amount of 12,729.70$.
On September 28, 2011, Harold Coombs filed an application for judicial review
on behalf of Select Travel Direct Inc. (file T-1597-11).
[9]
On
October 7, 2011, Harold Coombs filed another application for judicial review,
this time on behalf of himself and his wife, Joan Coombs (file T-1658-11). On
November 24, 2011, the respondent sought a motion to strike one of the two
Notices of Application on the grounds that they were virtually identical and
sought the same relief.
[10]
On
December 19, 2011, Justice Roger Hughes issued an order stating that both
applications would be heard together. However, file T-1597-11 was discontinued
on December 7, 2011. The remaining file, T-1658-11 is the object of this
application for judicial review.
[10]
[11]
It
should be noted that the applicants are self-represented and submitted no
memorandum of argument. Respondent’s counsel made a preliminary objection that
the Coombs did not have status to appear on behalf of the corporate entity
Select Travel in respect of which the complaint concerning the issuance of the
RTP and collection has been raised. In the interest of justice, and given their
roles as sole directors and shareholders, I granted status to the Coombs to
make representations on behalf of Select Travel.
[12]
The
applicants seek the following:
A. An
order quashing the RTP;
B. A
declaration that the RTP is unlawful and in violation of paragraph 225.1(d) and
subsection 225.1(2) of the Income Tax Act, RSBC 1996, c 215 [ITA];
C. An
order restricting the CRA from making further collection actions until a notice
of confirmation or variation has been mailed to the applicants;
D. An
order stating that the CRA must comply with subsections 225.1(a) to (g) of the
ITA;
E. An
order compelling the CRA to fulfill its duties pursuant to sections 225.1 and
225.1(2) of the ITA.
III. Issues
[13]
The
issues, as reformulated, are as follows:
A. Does
the Federal Court have jurisdiction to determine the present application
regarding whether Select Travel’s tax assessments are valid?
B. Was
the CRA legally permitted under the ITA to issue the RTP on September 2, 2011
to collect the tax debt?
C. Was
the CRA obligated, through the Taxpayers Bill of Rights or for any other reason,
to provide reasons for its assessment and collections actions and if so, were
these obligations met?
IV. Standard of review
[14]
Neither
party submitted an evaluation of the applicable standard of review, however,
the applicable standard of review for discretionary decisions of the CRA is
reasonableness (Dingman v Canada (Minister of National Revenue - MNR),
2009 FC 395).
V. Analysis
[15]
Federal
Court does not have jurisdiction to hear challenges of tax assessments which
are solely within the jurisdiction of the Tax Court of Canada (Walker
v Canada, 2005 FCA 393 at para 13). Therefore, to the extent the applicants
wish to challenge the validity of the reassessments, the application must fail.
Moreover, collection actions taken in respect of a valid assessment are lawful
(Krahn v Canada (Customs and Revenue Agency), 2005 FC 471 at paras 9 and
10).
[16]
To
the extent the applicants challenge the CRA’s decision to issue the RTP on
September 2, 2011, the Court has jurisdiction.
[17]
The
applicants submit that CRA erred when it issued the RTP, in failing to consider
their Notice of Objection filed on June 2, 2010, and on proceeding with the
collection measures before the collection commencement-day, pursuant to
subsection 225.1(1) of the ITA.
[18]
However,
given that the applicants’ tax debt represents payroll source deductions, which
are required to be deducted or withheld and to be remitted or paid, subsections
225.1(1) to 225.1 (4) do not apply, and CRA was entitled to issue the RTP to
collect that debt. The notice of objection is not relevant here (Gagne v
Minister of Revenue, 2003 FCT 18 at paras 17, 28, and subsections 225.1(6)
(b), (d) and (e) of the ITA).
[19]
Where
there is no stay of such a collection action, the CRA can take immediate
collection action as long as the assessment is valid (Canada (Minister of National Revenue - MNR) v Vu, 2004 FC 1783 at para 3;
aff’d 2005 FC 788).
[20]
Lastly,
while CRA was not obligated to provide reasons for its assessment and
collections action, pursuant to section 152 of the ITA, nevertheless the
evidence shows through the affidavits of Lynn Watson sworn February 6, 2012 and
Nancy Arnold sworn November 23, 2011, that sufficient reasons were given to the
applicants to explain CRA’s reassessment and collections (Newfoundland and
Labrador Nurses’ Union v Newfoundland and Labrador (Treasury Board), 2011
SCC 62). In reviewing that evidence, I gave little or no weight to references
to third party conversations contained in the affidavit of Lynn Watson, but did
give weight to the Exhibits to her affidavit, and particularly Exhibits A, B
and C, relating to Automated Collections and Source Deduction System business
records, evidencing communications with Select Travel and Harold Coombs.
[21]
For
the reasons stated above, this application is dismissed.
JUDGMENT
THIS
COURT’S JUDGMENT is that the application for judicial review is
dismissed with costs.
"Michael D.
Manson"
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