Citation: 2011TCC39
Date: 20110121
Docket: 2010-2433(IT)APP
BETWEEN:
PATRICK NICHOLLS,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
V.A. Miller J.
[1]
On June 21, 2010, Mr.
Nicholls filed a Notice of Appeal for his 1990, 1991, 1992, 1993, 1994 and 1995
taxation years in which he wrote the following:
A.
Reasons for the appeal. These assessments are a
nullity as there is no proof of sending according to subsection 244(5) of the Income
Tax Act.
B.
Statement of relevant facts in support of the
appeal. An effectively extinguished tax debt revived without proof of issuance
or sending, a procedure necessary to authorize collection.
As a nullity has no value, I ELECT to have the informal procedure
under the Act apply to this appeal and for this purpose I elect, in accordance
with section 17, to limit the appeal to $12,000 as being the aggregate of all
amounts in issue in this appeal or, where the amount in issue is a loss, to
limit the amount of that loss to $24,000.
[2]
On the cover sheet for
the Notice of Appeal, Mr. Nicholls wrote that the “Date of Reassessment” was
November 10, 2005. The Notice of Appeal was changed by the court to an
application to extend the time to file an appeal under the Informal Procedure.
[3]
The Respondent has
opposed the application for extension of time on the basis that notices of
objection were not served for the years in issue and the application was not
made within one year after the expiration of the time otherwise limited by the Income
Tax Act (the “Act”) for instituting an appeal. In support, the
Respondent filed the affidavit of Bruce Costigan, Litigation Officer with the
Canada Revenue Agency (CRA). In his affidavit, Mr. Costigan summarized the
discussions between the Applicant and the officers in the Collections Division
of CRA with respect to the Applicant’s tax debt for the years in issue. These
discussions took place from July 11, 1994 to June 15, 1999. At no time in these
discussions did the Applicant say that he had not received the notices of
assessment for his 1990 to 1995 taxation years. The records of these
conversations disclose that the Applicant’s main concern was the amount of his
tax debt for the years in issue. On June 15, 1999, the Applicant informed the
CRA Collections Division that he intended to file his 1998 income tax return
which would reflect a loss he could carry-back to clear his outstanding tax
balance. Also included in the affidavit were letters which the CRA had sent to
the Applicant with respect to various requests he had made for the years in
question. These letters were dated from November 10, 2005 to June 19, 2008.
[4]
The Applicant filed a
motion on October 11, 2010 in which he requested that this court vacate the
assessments and reassessments for the 1990 to 1995 taxation years on the basis
that they were nullities as there was no proof they were sent. He relied on several
decisions to support his position that an assessment is not complete, and is
therefore not valid, unless a notice is sent to the taxpayer[1].
[5]
On December 3, 2010,
the Respondent filed a Reply to the Applicant’s Motion and a Cross-Motion in
which the Respondent again requested that the application for extension of time
be dismissed as the Applicant did not file notices of objection for the years
1990 to 1995, inclusive. The Respondent submitted a second affidavit of Mr.
Costigan in which he described the mailing practices and procedures of CRA as
they related to the Applicant. He stated:
iv) CRA mailing practices and procedures as they relate to the
Applicant
19. I am informed by Marie Josee-Gagne, A/Manager, Initial Returns
Processing Section, Processing Division, Individual Returns Directorate, and
believe it to be true that:
a.
income tax assessments are processed
electronically in our computer system and the information is released
electronically to the Media Services Print Shop of the Electronic and Print
Media Directorate in a Daily Assessing Schedule (DAS) for printing of the
Notices of Assessment and that the date of the notice is post dated to the date
of mailing;
b.
The Applicant’s assessments for the 1990 to 1995
taxation years were sent to the Print Shop as follows:
i.
The applicant’s Notice of Assessment for the
1990 taxation year was released in DAS 70 with the notice postdated to October
4, 1993
ii.
The applicant’s Notice of Assessment for the
1991 taxation year was released in DAS 33 with the notice postdated to June 7,
1993
iii.
The applicant’s Notice of Assessment for the
1992 taxation year was released in DAS 43 with the notice postdated to July 5, 1993
iv.
The applicant’s Notices of Assessment for the
1993, 1994 and 1995 taxation years were released in DAS 61 with the notices
postdated to December 16, 1996
c.
The system does not provide the DAS for the
Notices of Reassessment.
d.
Notices of Reassessment are processed in the
same manner as Notices of Assessment and were released in a DAS.
20. I am informed by Bruce Gilbert, Project Management and Client
Services Section, Business Integration Division, Electronic and Print Media
Directorate, and believe it to be true that:
a. the information released by the Initial Returns Processing
Section in DAS is downloaded for printing and the Notices of Assessment are
printed with the date of the notice post dated to the date of mailing;
b. the printed Notices of Assessment are inserted in individual
envelopes;
c. the inserters keep a tally sheet of the total number of printed
notices for mailing;
d.
all envelopes are placed in bins for pickup by
Canada Post for mailing on the date of the notice, and;
e.
before the Notices of Assessment are placed in
the bin for pickup by Canada Post, the computerized count on the inserters is
matched with the expected count stored in the DAS and if both counts are not
the same the print job is cancelled, the printed notices destroyed, and the
print job is redone;
f.
the counts were accurate for each of the DAS
associated the Applicant’s above-noted Notices of Assessment.
[6]
The Applicant filed a
further motion on December 8, 2010 reiterating the request that he made in his
motion dated October 11, 2010.
[7]
The Applicant’s 1990 to
1995 taxation years were assessed as follows:
|
Year
|
Assessment
|
Reassessment
|
|
1990
|
October 4, 1993
|
|
|
1991
|
June 7, 1993
|
|
|
1992
|
July 5, 1993
|
March 17, 1994
|
|
1993
|
December 16, 1996
|
September 29, 1997
|
|
1994
|
December 16, 1996
|
September 29, 1997
|
|
1995
|
December 16, 1996
|
|
[8]
The Applicant’s 1992
taxation year was reassessed to include unreported interest income. His 1993
and 1994 taxation years were reassessed, at his request, to allow a non-capital
loss carry back from his 1996 taxation year.
[9]
By November 10, 2005,
the Applicant’s total tax debt for the 1991, 1992, 1993, 1994 and 1995 tax
years was $265,068.56 and the Applicant questioned whether the CRA had the
right to collect the tax debt in light of the decision in Markevich v. Canada (2003)[2]. The Applicant was informed that the Income
Tax Act[3]
had been amended and as a result of this amendment he continued to be liable
for the full amount of the tax debt.
[10]
The Applicant later
requested that his 1995 taxation year be reassessed. On March 28, 2008, the CRA
informed him that it could not reassess his 1995 year as it was beyond the 10
calendar years allowed by subsection 152(4.2) of the Act. On April 28,
2008, the Applicant brought an application for judicial review of this
decision. The application for judicial review was dismissed by Barnes, J. of
the Federal Court and his decision was affirmed by the Federal Court of Appeal
on January 27, 2010.
[11]
Electronic copies of
the Applicant’s 1991 to 1995 assessments and reassessments were included as an
exhibit to Mr. Costigan’s second affidavit. These copies had been printed from
the CRA database on January 25, 2007, at the request of the Applicant[4], and attached to
the affidavit which he had filed with the Federal Court. The Applicant’s affidavit
was sworn by him on May 8, 2008.
[12]
After a review of all
the evidence and the submissions made by the parties, I have concluded that the
Applicant’s motions and application for extension of time must be dismissed. I
have concluded that the Respondent has submitted sufficient evidence to show
that the notices of assessment and reassessment were issued and sent to the
Applicant.
[13]
It is my opinion that
Mr. Costigan’s description of the mailing practices and procedures as they
relate to the Applicant has established on a balance of probability that the
notices of assessment for the 1990 to 1995 taxation years were issued by CRA
and were mailed on the dates listed in paragraph 7 above[5]. The CRA could
not provide the details for the Daily Assessing Schedule (DAS) for printing the
notices of reassessment for the 1992, 1993 and 1994 taxation years. However,
Mr. Costigan stated that the notices of reassessment were processed in the same
manner as the notices of assessment and were released in a DAS. I find that, in
the circumstances, this is sufficient evidence. The evidence has shown that the
Applicant requested the reassessment of his 1993 and 1994 taxation years. If
these reassessments were not issued and sent, surely the Applicant would have
questioned the Collections Officers with CRA at an earlier date. He has waited
thirteen years to ask the CRA to prove that it sent the notices. He has not
suggested in any of his correspondence with the CRA that he had not been
assessed for his 1990 to 1995 taxation years.
[14]
Although I do not have
to decide the point, when the whole of the evidence is taken into
consideration, I have concluded that it is implausible that the Applicant did
not receive the notices of assessment and reassessment for the years in
question. The Federal Court of Appeal has stated in Aztec Industries Inc. v.
R.[6]
that where a taxpayer alleges that he did not receive a notice of assessment
and that no such assessment was issued, the onus is on the Minister to prove
that the notice was sent. That situation does not exist in this application.
[15]
First, the Applicant
did not allege in his notice of appeal or his motions that he did not receive
the notices of assessment or reassessment. He has alleged that there is no
proof of sending the assessments and reassessments. It was only in response to
counsel for the Respondent’s argument, at the hearing of the application, that
the Applicant stated that he did not receive the assessments in issue. The
Minister only has the onus to prove that the assessments were sent if the
Applicant alleges that he has not received the assessments and that allegation
is credible. I find that it is not plausible that the Applicant did not receive
nine notices of assessment and reassessment. He discussed his tax debt with CRA
officials over a period of 14 years and he never suggested that he had not
received the notices of assessment and reassessment in question. The Applicant
wrote to the CRA to have his 1995 taxation year reassessed.
[16]
Neither the Applicant
nor counsel for the Respondent addressed the statements in the purported Notice
of Appeal filed by the Applicant. However, it appears from the statements made
by the Applicant, that it is his belief that the Minister must issue notices of
assessment to revive the tax debt for the 1990 to 1995 taxation years. That
belief is incorrect. The limitation period for collecting the tax debt for these
years has been extended by the amendment of section 222 of the Act.
[17]
For all of these
reasons, the Applicant’s motions are dismissed. The Applicant has admitted that
he never filed notices of objection for the 1990, 1991, 1992, 1993, 1994 and
1995 taxation years. This application was filed with the court beyond the one
year and 90 day limitation period that is allowed in section 167 of the Act.
The relevant portion of that section reads:
167. (1) Where an appeal to the Tax Court of Canada has not
been instituted by a taxpayer under section 169 within the time limited by that
section for doing so, the taxpayer may make an application to the Court for an
order extending the time within which the appeal may be instituted and the
Court may make an order extending the time for appealing and may impose such
terms as it deems just.
(5) No order shall be made under this section unless
(a) the application is made within one year after
the expiration of the time limited by section 169 for appealing;
[18]
Subsection 167(5) of
the Act is mandatory[7].
The application for extension of time to file a notice of appeal is dismissed.
Signed at Ottawa, Canada, this 21st day
of January 2011.
“V.A. Miller”
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