Date: 20040423
Docket: A-36-03
Citation: 2004 FCA 32
CORAM: LÉTOURNEAU J.A.
NADON J.A.
PELLETIER J.A.
BETWEEN:
HER MAJESTY THE QUEEN
Appellant
and
GEORGE AGAZARIAN
Respondent
"Heard at Vancouver, British Columbia, on December 18, 2003."
Judgment delivered at Ottawa, Ontario, on April 23, 2004.
REASONS FOR JUDGMENT BY: PELLETIER J.A.
CONCURRED IN BY: NADON J.A.
CONCURRING REASONS BY: LÉTOURNEAU J.A.
Date: 20040423
Docket: A-36-03
Citation: 2004 FCA 32
CORAM: LÉTOURNEAU J.A.
NADON J.A.
PELLETIER J.A.
BETWEEN:
HER MAJESTY THE QUEEN
Appellant
and
GEORGE AGAZARIAN
Respondent
REASONS FOR JUDGMENT
PELLETIER J.A.
[1] This is an appeal from the decision of Bell J. of the Tax Court of Canada with respect to the determination of a point of law under Rule 58 of the Tax Court of Canada Rules (General Procedure). The question which the parties put before the Court was the following:
Was the Minister of National Revenue entitled to make a reassessment of tax for the appellant's 1987 taxation year pursuant to subparagraph 152(4)(b)(i) of the Income Tax Act after October 5, 1991, the end of the appellant's normal reassessment period for the 1987 taxation year?
[2] The determination was made on the basis of an agreed statement of facts, the material parts of which are reproduced below:
1987 TAXATION YEAR
1. On or before April 30, 1988, the Appellant filed for his 1987 taxation year the return of income ("1987 Tax Return") required by section 150.
2. By Notice of Assessment dated October 5, 1988, the Minister of National Revenue ("Minister") assessed the Appellant's 1987 taxation year. A copy of this Notice of Assessment is attached as Exhibit "A".
3. In his return of income for his 1988 taxation year ("1988 Tax Return") the Appellant included a form entitled "Request for Loss Carry-Back" in which he requested that a noncapital loss of $1,747,617 ("1988 Partnership Loss") representing his share of a loss suffered by the Grand Bell Property, Ltd. partnership be applied as a deduction ("1988 Loss Carry Back") for his 1987 taxation year. A copy of the "Request for Loss Carry Back" form is attached as Exhibit "B".
4. By Notice of Reassessment dated July 11, 1989, the Minister reassessed the taxable income of the Appellant for the 1987 taxation year in response to an objection or request for adjustments which the Appellant had filed. The Minister applied to the Appellant's taxable income for the 1987 taxation year non-capital losses carried forward from the Appellant's 1984, 1985 and 1986 taxation years. A copy of this Notice of Reassessment is attached as Exhibit "C".
5. By letter dated September 8, 1989, an official of the Department of National Revenue (now the Canada Customs and Revenue Agency) ("CCRA") acknowledged receipt of the 1988 Tax Return and advised the Appellant that the 1988 Partnership Loss would be reviewed prior to the 1988 Tax Return being processed; accordingly, the 1988 Tax Return would be held in abeyance until completion of the CCRA's review. A copy of this letter is attached as Exhibit "D".
6. By letter dated February 6, 1990, an official of the CCRA notified the Appellant that the 1988 Tax Return would be processed as filed. The letter further stated that the review of the 1988 Partnership Loss was still in progress and that the Appellant would be notified of the CCRA's findings prior to completion of the audit. A copy of this letter is attached as Exhibit "E".
7. By Notice of Reassessment dated August 22, 1990 ("Second 1987 Reassessment"), the Minister reassessed the Appellant's 1987 taxation year to allow the deduction of the 1988 Loss Carry Back to the extent of the Appellant's taxable income for the 1987 taxation year. A copy of the Second 1987 Reassessment is attached as Exhibit "F".
8. The "normal reassessment period", within the meaning of subsection 152(3.1), in respect of the Appellant's 1987 taxation year ended on October 5, 1991.
9. The Appellant did not file any other prescribed forms amending the 1987 Tax Return to claim any further deductions from his income for his 1987 taxation year.
10. By Notice of Reassessment dated April 1, 1993 ("Third 1987 Reassessment"), the Minister purported to reassess the Appellant's tax liability for the 1987 taxation year by disallowing the deduction of the 1988 Loss Carry Back from the Appellant's taxable income for the 1987 taxation year. A copy of the Third 1987 Reassessment is attached as Exhibit "G".
11. On May 7, 1993, the Appellant objected to the Third 1987 Reassessment and duly served notices of objection in accordance with subsection 165(1). The reasons for the objection were, inter alia, that the Third 1987 Reassessment was made after the expiry of the normal reassessment period in respect of the year and, accordingly, was a nullity.
12. By Notice of Confirmation dated April 20, 1995, the Minister confirmed the Third 1987 Reassessment. The Appellant filed a Notice of Appeal to this Court on July 18, 1995 in respect of the Third 1987 Reassessment.
[. . .]
[Exhibits not attached]
[3] The parties have different views as to what the Motions Judge decided. According to the appellant, the judge decided that:
a) subparagraph 152(4)(b)(i) of the Income Tax Act, R.S.C. 1985 (5th Supp.) c. 1, as amended ... limits the Minister to issuing only one reassessment in respect of a loss carry-back request; and
b) a reassessment cannot be made under paragraph 152(6)(c) and, as a result, found that the Disputed Reassessment was the second reassessment made pursuant to subsection 152(4).
[4] The respondent says that this is an incorrect interpretation of the Motions Judge's decision:
(a) The Motions Judge did not determine that subparagraph 152(4)(b)(i) limited the Minister to issuing only one reassessment in respect of a loss carry-back request. Rather, the Motions Judge determined that subparagraph 152(4)(b)(i) limited the Minister to issuing one reassessment in response to a taxpayer's request under subsection 152(6) after the normal reassessment period for the year had ended.
(b) The Motions Judge did not determine that a reassessment cannot be made under paragraph 152(6)(c) and as a result the Third 1987 Reassessment [the Disputed Reassessment] was the second reassessment made pursuant to subsection 152(4). Rather, the Motions Judge determined that the Third 1987 Reassessment was not made under paragraph 152(6)(c) because the Minister had fulfilled his statutory duty when he made the Second 1987 Reassessment and the Minister was prevented by subsection 152(4) from making any further reassessment.
[5] I have come to the conclusion that whether one takes the appellant's view of the Motions Judge's decision, or the respondent's, the decision cannot stand for the reasons which follow.
Which legislation applies?
[6] In their memoranda and in argument before us, the appellant questioned whether the applicable legislation was the Income Tax Act as it stood in 1993, the time at which the Disputed Reassessment was made, or the legislation as it stood following the amendments introduced in 1998, which were made effective after April 27, 1989. The parties agreed that whichever disposition applied, the effect was the same.
[7] Subsection 152(4) (as it then read) was replaced by the current version of that disposition by subsection 181(4) of the Income Tax Amendment Act 1997, S.C. 1999, c. 19, which reads: "Subsection 152(4) of the Act is replaced by the following: ...". There followed the current version of subsection 152(4). The date of application of the amendment was set out in subsection 181(8) in the following terms "Subsections (3) to (5) apply after April 27, 1989" and is followed by a list of qualifications which are not relevant to the present discussion.
[8] What effect is to be given to this direction as to the temporal application of the amendment? I note, first of all, that the date of application is a specific date and not a reference to a taxation year. If the amendment effects a change in the law, the use of a specific date of application raises the possibility of differential treatment of taxpayers within a single taxation year. For example, the Minister's power to assess or reassess a taxpayer's return for the 1987 taxation year would depend upon the date on which the Minister assessed or reassessed the taxpayer's tax. Since the tax system is based upon horizontal and vertical equity, this type of unequal treatment is inherently unlikely. See Krishna, The Fundamentals of Canadian Income Tax (7th Ed.) Carswell, Toronto, 2002, at p. 12-13.
[9] The other possibility is that the amendment does not effect a change in the law so that the date of application is a matter of administrative interest only. There is no presumption that an amendment is intended to change the law. In fact, the Interpretation Act, R.S.C. 1985, c. I-21, is to the opposite effect. Paragraph 44(f) provides as follows:
44. Where an enactment, in this section called the 44. En cas d'abrogation et de remplacement, les règles :
"former enactment", is repealed and another suivantes s'appliquent :
enactment, in this section called the "new enactment",
is substituted therefor,
[. . .] . . .
(f) except to the extent that the provisions of the new f) sauf dans la mesure où les deux deux textes
enactment are not in substance the same as those of diffèrent au fond, le nouveau texte n'est pas réputé
the former enactment, the new enactment shall not be de droit nouveau, sa teneur étant censée constituer
held to operate as new law, but shall be construed and une refonte et une clarification des règles de droit
have effect as a consolidation and as declaratory of du texte antérieur;
the law as contained in the former enactment;
[10] Before us, the parties agreed that both the present and former versions of subsection 152(4) had the same effect. Notwithstanding that agreement, the appellant took the position that the present version applied, in reliance upon the date of application provided in the amending legislation. While we are not bound by the parties' agreement as a matter of law, the conclusion that both versions of the legislation say the same thing is consistent with the use of a specific date of application (as opposed to a reference to a particular taxation year). I therefore propose to examine both dispositions to see if they do, in fact, say the same thing. If they do, the issue of the version of the legislation to be applied becomes an administrative issue only.
Analysis
[11] I begin by examining the text of the former enactment. I believe that it is useful, prior to setting out the legislative text, to say a few words about its structure. We are dealing with two concepts, the Minister's power to assess and reassess the taxpayer's income, and the time limits within which the Minister may exercise that power. Subsection 152(1) confers upon the Minister the power to assess the taxpayer's income following receipt of the taxpayer's return, and subsection 152(6) confers upon the Minister the power to reassess that taxpayer's income in certain circumstances, one of which is a request by a taxpayer for a reassessment to claim a loss carry-back to a prior taxation year.
| 152.(1) Assessment.- The Minister shall, with all due dispatch, examine a taxpayer's return of income for a taxation year, assess the tax for the year, the interest and penalties, if any, payable and determine
(a) the amount of refund, if any, to which the taxpayer may be entitled by virtue of section 129, 131, 132 or 133 for the year, or
(b) the amount of tax, if any, deemed by subsection 119(2), 120(2), 120.1(4), 122.2(1), 127.1(1), 127.2(2), 144(9), 210.2(3) or (4) to have been paid on account of his tax under this Part for the year.
[. . .]
152.(6) Reassessment.- Where a taxpayer has filed for a particular taxation year the return of income required by section 150 and an amount is subsequently claimed by him or on his behalf for the year as
(a) a deduction under paragraph 3(e), by virtue of his death in a subsequent taxation year and the consequent application of section 71 in respect of an allowable capital loss for the year,
(b) a deduction under section 41 in respect of his listed-personal-property loss for a subsequent taxation year,
(b.1) a deduction under paragraph 60(i) in respect of a premium (within the meaning assigned by subsection 146(1)) paid in a subsequent taxation year under a registered retirement savings plan where the premium is deductible by reason of subsection 146(6.1),
(c) a deduction under section 118.1 in respect of a gift made in a subsequent taxation year or under section 111 in respect of a loss for a subsequent taxation year,
(c.1) a deduction under subsection 126(2) in respect of an unused foreign tax credit (within the meaning assigned by paragraph 126(7)(e)) for a subsequent taxation year,
(d) a deduction under subsection 127(5) in respect of property acquired or an expenditure made in a subsequent taxation year,
(e) a deduction under subsection 125.2 in respect of an unused Part VI tax credit (within the meaning assigned by subsection 125.2(3)) for a subsequent taxation year,
(f) a deduction under section 125.3 in respect of an unused Part I.3 tax credit (within the meaning assigned by subsection 125.3(3) for a subsequent taxation year, or
(g) [Repealed.]
(h) a deduction by virtue of an election for a subsequent taxation year under paragraph 164(6)(c) or (d) by his legal representative,
by filing with the Minister, on or before the day on or before which the taxpayer is, or would be if a tax under this Part were payable by him for that subsequent taxation year, required by section 150 to file a return of income for that subsequent taxation year, a prescribed form amending the return, the Minister shall reassess the taxpayer's tax for any relevant taxation year (other than a taxation year preceding the particular taxation year) in order to take into account the deduction claimed.
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152.(1) Cotisation.- Le Ministre doit, avec toute la diligence possible, examiner la déclaration de revenu d'un contribuable pour une année d'imposition, fixer l'impôt pour l'année, l'intérêt et les pénalités payables, s'il en est, et déterminer
a) le montant du remboursement, s'il en est, auquel il a droit en vertu des articles 129, 131, 132 ou 133, pour l'anée, ou
b) le montant d'impôt réputé en application des paragraphes 120(2), 120.1(4), 122.5(3), 127.1(1), 144(9) ou 210.(3) ou (4) avoir été versé au titre de l'impôt du contribuable en vertu de la présente partie pour l'année ou réputé par le paragraphe 119(2) être un paiement en trop.
. . .
152.(6) Nouvelle cotisation.- Lorsqu'un contribuable a produit la déclaration de revenu prescrite par l'article 150 pour une année d'imposition et que, par la suite, une somme est réclamée pour l'année par lui ou pour son compte à titre de
a) déduction, en application de l'alinéa (3)e), résultant de son décès au cours d'une année d'imposition subséquente ayant entraîné l'application de l'article 71 relativement à une perte en capital déductible pour l'année,
b) déduction d'un montant en vertu de l'article 41 relativement à sa perte relative à des biens personnels désignés pour une année d'imposition subséquente,
b.1) déduction, en application de l'alinéa 60i), relativement à une prime, au sens du paragraphe 146(1), versée au cours d'une année d'imposition subséquente dans le cadre d'un régime enregistré d'épargne-retraite et déductible en application du paragraphe 146(6.1),
c) déduction, en application de l'article 118.1, relativement à un don fait au cours d'une année d'imposition subséquente ou, en application de l'article 111, relativement à une perte subie pour une année d'imposition subséquente,
c.1) déduction, en application du paragraphe 126(2), relativement à la fraction inutilisée du crédit pour impôt étranger (au sens donné par l'alinéa 126(7)e)) pour une année d'imposition subséquente,
d) déduction, en application du paragraphe 127(5), relativement à des biens acquis ou des dépenses faites dans une année d'imposition subséquente,
e) déduction, en application de l'article 125.2, au titre d'un crédit d'impôt de la partie VI inutilisé - au sens du paragraphe 125.2(3) - pour une année d'imposition ultérieure,
f) déduction, en application de l'article 125.3, au titre d'un crédit d'impôt de la partie I.3 inutilisé, au sens du paragraphe 125.3(3), pour une année d'imposition ultérieure, ou
g) [Abrogé par 1988, chap. 55, art. 136(6).]
h) déduction à cause d'un choix pour une année d'imposition subséquente effectué par son représentant légal en vertu de l'alinéa 164(6)c) ou d),
en produisant auprès du Ministre, au plus tard le jour où le contribuable est tenu, ou le serait s'il était tenu de payer de l'impôt en vertu de la présente Partie pour cette année d'imposition subséquente, de produire en vertu de l'article 150 une déclaration de revenu pour cette année d'imposition subséquente, une formule prescrite modifiant la déclaration, le Ministre doit fixer de nouveau l'impôt du contribuable pour toute année d'imposition pertinente (autre qu'une année d'imposition antérieure à l'année donnée) afin de tenir compte de la déduction réclamée.
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[12] The power to assess and reassess is not entirely open-ended. There are time limits within which that power must be exercised, and limits as to the subject matter which may be the subject matter of reassessment. Both kinds of limits are found in subsection 152(4) as it existed at the time the reassessments in question were made.
| 152.(4) Assessment.- Subject to subsection (5), the Minister may at any time assess tax for a taxation year, interest or penalties, if any, payable under this Part by a taxpayer or notify in writing any person by whom a return of income for a taxation year has been filed that no tax is payable for the taxation year, and may
(a) at any time, if the taxpayer or person filing the return
(i) has made any misrepresentation that is attributable to neglect, carelessness or wilful default or has committed any fraud in filing the return or in supplying any information under this Act, or
(ii) has filed with the Minister a waiver in prescribed form within the normal reassessment period for the taxpayer in respect of the year,
(b) before the day that is 3 years after the expiration of the normal reassessment period for the taxpayer in respect of the year, if
(i) an assessment or reassessment of the tax of the taxpayer was required pursuant to subsection (6) or would have been required if the taxpayer had claimed an amount by filing the prescribed form referred to in that subsection on or before the day referred to therein,
(ii) there is reason, as a consequence of the assessment or reassessment of another taxpayer's tax pursuant to this paragraph or subsection (6), to assess or reassess the taxpayer's tax for any relevant taxation year,
(iii) there is reason, as a consequence of a transaction involving the taxpayer and a non-resident person with whom the taxpayer was not dealing at arm's length, to assess or reassess the taxpayer's tax for any relevant taxation year, or
(iv) there is reason, as a consequence of an additional payment or reimbursement of any income or profits tax to or by the government of a country other than Canada, to assess or reassess the taxpayer's tax for any relevant taxation year, and
(c) within the normal reassessment period for the taxpayer in respect of the year, in any other case,
reassess or make additional assessments, or assess tax, interest or penalties under this Part, as the circumstances require, except that a reassessment, an additional assessment or an assessment may be made under paragraph (b) after the normal reassessment period for the taxpayer in respect of the year only to the extent that it may reasonably be regarded as relating to
(d) the assessment or reassessment referred to in subparagraph (b)(i) or (ii),
(e) the transaction referred to in subparagraph (b)(iii), or
(f) the additional payment or reimbursement referred to in subparagraph (b)(iv).
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152.(4) Cotisation.- Sous réserve du paragraphe (5), le ministre peut, à un moment donné, fixer l'impôt pour une année d'imposition, ainsi que les intérêts ou pénalités payables en vertu de la présente partie par un contribuable, ou donner avis par écrit, à toute personne qui a produit une déclaration de revenu pour une année d'imposition, qu'aucun impôt n'est payable pour l'année, et peut, selon les circonstances, établir des nouvelles cotisations, des cotisations supplémentaires ou des cotisations d'impôt, d'intérêts ou de pénalités en vertu de la présente partie:
a) à un moment donné, si le contribuable ou la personne produisant la déclaration:
(i) soit a fait une présentation erronée des faits, par négligence, inattention ou omission volontaire, ou a commis quelque fraude en produisant la déclaration ou en fournissant quelque renseignement sous le régime de la présente loi,
(ii) soit a adressé au ministre une renonciation, selon le formulaire prescrit, au cours de la période normale de nouvelle cotisation applicable au contribuable pour l'année;
b) avant le jour qui est trois ans après la fin de la période normale de nouvelle cotisation applicable au contribuable pour l'année, lorsque, selon le cas:
(i) une cotisation ou une nouvelle cotisation de l'impôt du contribuable a été exigée conformément au paragraphe (6), ou l'aurait été si le contribuable avait déduit un montant en produisant le formulaire prescrit visé à ce paragraphe au plus tard le jour qui y est mentionné,
(ii) il y a lieu, par suite de l'établissement de la cotisation ou de la nouvelle cotisation de l'impôt d'un autre contribuable conformément au présent alinéa ou au paragraphe (6), d'établir une cotisation ou une nouvelle cotisation de l'impôt du contribuable pour toute année d'imposition pertinente,
(iii) il y a lieu, par suite d'une opération à laquelle le contribuable et une personne non résidante avec laquelle il a un lien de dépendance sont parties, d'établir une cotisation ou une nouvelle cotisation de l'impôt du contribuable pour toute année d'imposition pertinente,
(iv) il y a lieu, par suite d'un paiement supplémentaire ou d'un remboursement d'impôt sur le revenu ou sur les bénéfices au gouvernement d'un autre pays que le Canada ou par suite d'un tel paiement ou d'un tel remboursement par ce gouvernement, d'établir une cotisation ou une nouvelle cotisation de l'impôt du contribuable pour toute année d'imposition pertinente;
c) au cours de la période normale de nouvelle cotisation applicable au contribuable pour l'année, dans les autres cas; toutefois, une nouvelle cotisation, une cotisation supplémentaire ou une cotisation peut être établie en application de l'alinéa b) après la période normale de nouvelle cotisation applicable au contribuable pour l'année seulement s'il est raisonnable de la considérer comme se rapportant à la cotisation ou nouvelle cotisation visée au sous-alinéa b)(i) ou (ii), à l'opération visée au sous-alinéa b)(iii) ou au paiement supplémentaire ou remboursement visé au sous-alinéa b)(iv).
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[13] One notes that while subsection 152(1) confers upon the Minister the power (and the obligation) to assess the taxpayer's income, and to do so with due dispatch, it does not prescribe a time within which the Minister must exercise that power. Similarly, while subsection 152(6) confers upon the Minister the obligation to reassess a taxpayer's income to take into account the taxpayer's claim of a loss carry-back, it does not impose a period within which such reassessment must occur. To determine what those limitation periods are, one must turn to subsection 152(4).
[14] Subsection 152(4) speaks, in its opening words, of the absence of a limitation period with respect to the Minister's power to assess a taxpayer's liability for tax in the first instance. The Minister may "at any time" assess tax for a taxation year. Since the initial assessment is usually triggered by the filing of the taxpayer's income tax return, and since the time of filing is a matter entirely within the taxpayer's control, the Minister must be free to assess at any time, without regard to the year in which the income was earned (and the liability for tax arose).
[15] Subsection 152(4) also speaks of the Minister's power to reassess. The words "and may" which appear immediately before paragraph (a) refer to the words "reassess or make additional assessments..." which appear immediately following paragraph (c). Paragraphs (a), (b) and (c) set out the times within which certain types of reassessments may occur. Paragraph (a) stipulates that reassessments may occur at any time if the taxpayer has waived benefit of the normal reassessment period or where fraud is an issue. Paragraph (b) provides that reassessments relating to various specific powers to reassess are to occur within the three years following the normal reassessment period (the "extended assessment period"), and paragraph (c) provides that in any other case, the power to reassess must be exercised in the normal reassessment period.
[16] The power to reassess within the extended assessment period found in paragraph 152(4)(b) is then curtailed in the last words of subsection 152(4). Where such a reassessment occurs, it is limited to the subject matter of the specific power which authorizes its exercise. In this case, the power to reassess following a request for a reassessment to claim a loss carry-back, is limited to the loss carry-back itself. It does not open up the taxation year for reassessment on any other ground.
[17] The French version of the text is to the same effect though its structure is less obvious than the English version. The opening words of the subsection deal first with the power of initial assessment:
Sous réserve du paragraphe (5), le Ministre peut, à un moment donné, fixer l'impôt pour une année d'imposition, ainsi que les intérêts ou pénalités payables en vertu de la présente partie par un contribuable, ou donner avis par écrit, à toute personne qui a produit une déclaration de revenu pour une année d'imposition, qu'aucun impôt n'est payable pour l'année...
[18] These words mirror the opening words of the English version. The expression "à un moment donné" corresponds to the phrase " at any time " in the English text. The French text then goes on to deal with the powers of the Minister following the initial assessment, before dealing with the time limits within which those powers may be exercised. In the English version, the limits are set out first, followed by the powers subject to those limits. The French version reads as follows:
...et peut, selon les circonstances, établir des nouvelles cotisations, des cotisations supplémentaires ou des cotisations d'impôts, d'intérêts ou de pénalités en vertu de la présente partie...
[19] The corresponding language in the English text appears immediately after paragraph (c).
[20] In both versions of the text, the last portion contains the subject matter limitations on the exercise of the power conferred in the earlier parts of the disposition.
[21] I disagree with the Motion Judge's conclusion that subparagraph 152(4)(b)(i) authorizes a single reassessment because it refers to the reassessment "required" by subsection 152(6). Subparagraph 152(4)(b)(i) simply identifies the circumstances in which the extended reassessment period in paragraph 152(4)(b) applies; it does not define what can occur within that extended reassessment period. The definition of what may occur in the extended limitation period occurs in the words following paragraph 152(4)(c): "reassess or make additional assessments, or assess tax, interest or penalties under this Part as the circumstances may require." The power to reassess more than once in relation to each of the reassessment periods defined in paragraphs 152(4)(a), (b) and (c) is found in the italicized words "as the circumstances may require". See Abrahams v. Canada (M.N.R.) (No. 1), [1967] 1 Ex. C.R. 314 and Loukras v. M.N.R. [1990] 2 C.T.C. 2044 (T.C.C.). Those words apply equally to each of those limitation periods. There is no reason in principle to treat them differently in relation to the extended reassessment period in paragraph 152(4)(b) than there is in relation to the normal reassessment period in paragraph 152(4)(c).
[22] The phrase "selon les circonstances" corresponds to the English phrase "as the circumstances may require". In both versions, this phrase qualifies the preceding actions, namely "reassess or make additional assessments" ("établir des nouvelles cotisations, des cotisations supplémentaires"), or "assess tax, interest or penalties under this Part" ("ou des cotisations d'impôt, d'intérêts ou de pénalités en vertu de la présente partie"). Logically the grant of the power to do certain things "as the circumstances may require" can be read as conferring:
1) the power to do any of those things; or
2) the power to do any of those things more than once.
[23] The intention of the legislator may, in my view, be found in the French version of the text. The English version simply speaks of "may ... reassess" which gives no indication of number, while the French version refers to "établir des nouvelles cotisations", which is undoubtedly plural. Consequently, even if "as the circumstances may require" ("selon les circonstances") applies to a choice between the enumerated categories, the category of reassessment is defined as more than one reassessment.
[24] As a result, my view is that the French text not only supports but strengthens the argument that the old version of the legislation permits multiple reassessments within the extended reassessment period with respect to a request for reassessment made pursuant to subsection 152(6).
[25] I now turn to the text of the disposition as it presently stands, an example of legislative drafting which, to use the words of the Motions Judge, lacks "the elusive characteristic of clarity". But, difficult as it is, it is intelligible.
| (4) The Minister may at any time make an assessment, reassessment or additional assessment of tax for a taxation year, interest or penalties, if any, payable under this Part by a taxpayer or notify in writing any person by whom a return of income for a taxation year has been filed that no tax is payable for the year, except that an assessment, reassessment or additional assessment may be made after the taxpayer's normal reassessment period in respect of the year only if
(a) the taxpayer or person filing the return
(i) has made any misrepresentation that is attributable to neglect, carelessness or wilful default or has committed any fraud in filing the return or in supplying any information under this Act, or
(ii) has filed with the Minister a waiver in prescribed form within the normal reassessment period for the taxpayer in respect of the year; or
(b) the assessment, reassessment or additional assessment is made before the day that is 3 years after the end of the normal reassessment period for the taxpayer in respect of the year and
(i) is required pursuant to subsection 152(6) or would be so required if the taxpayer had claimed an amount by filing the prescribed form referred to in that subsection on or before the day referred to therein,
(ii) is made as a consequence of the assessment or reassessment pursuant to this paragraph or subsection 152(6) of tax payable by another taxpayer,
(iii) is made as a consequence of a transaction involving the taxpayer and a non-resident person with whom the taxpayer was not dealing at arm's length,
(iii.1) is made, if the taxpayer is non-resident and carries on a business in Canada, as a consequence of
(A) an allocation by the taxpayer of revenues or expenses as amounts in respect of the Canadian business (other than revenues and expenses that relate solely to the Canadian business, that are recorded in the books of account of the Canadian business, and the documentation in support of which is kept in Canada), or
(B) a notional transaction between the taxpayer and its Canadian business, where the transaction is recognized for the purposes of the computation of an amount under this Act or an applicable tax treaty.
(iv) is made as a consequence of a payment or reimbursement of any income or profits tax to or by the government of a country other than Canada or a government of a state, province or other political subdivision of any such country,
(v) is made as a consequence of a reduction under subsection 66(12.73) of an amount purported to be renounced under section 66, or
(vi) is made in order to give effect to the application of subsection 118.1(15) or 118.1(16).
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(4) Le ministre peut établir une cotisation, une nouvelle cotisation ou une cotisation supplémentaire concernant l'impôt pour une année d'imposition, ainsi que les intérêts ou les pénalités, qui sont payables par un contribuable en vertu de la présente partie ou donner avis par écrit qu'aucun impôt n'est payable pour l'année à toute personne qui a produit une déclaration de revenu pour une année d'imposition. Pareille cotisation ne peut être établie après l'expiration de la période normale de nouvelle cotisation applicable au contribuable pour l'année que dans les cas suivants:
a) le contribuable ou la personne produisant la déclaration:
(i) soit a fait une présentation erronée des faits, par négligence, inattention ou omission volontaire, ou a commis quelque fraude en produisant la déclaration ou en fournissant quelque renseignement sous le régime de la présente loi,
(ii) soit a présenté au ministre une renonciation, selon le formulaire prescrit, au cours de la période normale de nouvelle cotisation applicable au contribuable pour l'année;
b) la cotisation est établie avant le jour qui suit de trois ans la fin de la période normale de nouvelle cotisation applicable au contribuable pour l'année et, selon le cas:
(i) est à établir en conformité au paragraphe (6) ou le serait si le contribuable avait déduit un montant en présentant le formulaire prescrit visé à ce paragraphe au plus tard le jour qui y est mentionné,
(ii) est établie par suite de l'établissement, en application du présent paragraphe ou du paragraphe (6), d'une cotisation ou d'une nouvelle cotisation concernant l'impôt payable par un autre contribuable,
(iii) est établie par suite de la conclusion d'une opération entre le contribuable et une personne non résidente avec laquelle il avait un lien de dépendance,
(iii.1) si le contribuable est un non-résident exploitant une entreprise au Canada, est établie par suite:
(A) soit d'une attribution, par le contribuable, de recettes ou de dépenses au titre de montants relatifs à l'entreprise canadienne (sauf des recettes et des dépenses se rapportant uniquement à l'entreprise canadienne qui sont inscrits dans les documents comptables de celle-ci et étayés de documents conservés au Canada),
(B) soit d'une opération théorique entre le contribuable et son entreprise canadienne, qui est reconnue aux fins du calcul d'un montant en vertu de la présente loi ou d'un traité fiscal applicable,
(iv) est établie par suite d'un paiement supplémentaire ou d'un remboursement d'impôt sur le revenu ou sur les bénéfices effectué au gouvernement d'un pays étranger, ou d'un état, d'une province ou autre subdivision politique d'un tel pays, ou par ce gouvernement,
(v) est établie par suite d'une réduction, opérée en application du paragraphe 66(12.73), d'un montant auquel il a été censément renoncé en vertu de l'article 66,
(vi) est établie en vue de l'application des paragraphes 118.1(15) ou (16).
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[26] I have reproduced the whole of subsection 152(4) so its structure can be seen, but I have put the parts of it which are in issue in this appeal in bold characters so as to simplify the reading of the text.
[27] The opening words of the English text of the current legislation provide that the Minister may assess and reassess at any time. This power, it will be noted, applies to the initial assessment and to any reassessment. However, the subsection goes on to provide that an assessment, reassessment or additional assessment can only be made outside the normal reassessment period in certain circumstances. Since the normal reassessment period begins to run from the date of mailing of the initial assessment, this limitation does not apply to the initial assessment, but only to subsequent reassessments and additional assessments. This establishes the general rule, the Minister may assess and reassess at any time, and the limitation, the assessment or reassessment must occur within the normal reassessment period except in certain circumstances.
[28] Those circumstances are set out in paragraphs (a) and (b). Paragraph 152(4)(a) deals with waivers and fraud. Since it operates as an exception to the normal reassessment period and no other limitation is provided, the power to assess and reassess under paragraph 152(4)(a) may therefore be exercised at any time. This is the same result as is achieved by paragraph 152(4)(a) of the former legislation.
[29] Paragraph 152(4)(b) provides for another exception to the normal reassessment period in respect of those circumstances which are set out in subparagraphs 152(4)(b)(i) to (vi). Of particular interest in these proceedings is subparagraph 152(4)(b)(i) dealing with reassessments to give effect to a loss carry-back claimed under subsection 152(6). Unlike the case of paragraph 152(4)(a), this exception to the rule that the power to assess and reassess must be exercised within the normal reassessment period is subject to its own limitation: it must be exercised within three years of the end of the normal reassessment period. This is the same extended reassessment period which one finds at paragraph 152(4)(b) of the former legislation. Any other case, e.g., reassessment following a closer examination of a taxpayer's affairs by the Minister, falls within the broad limitation that the power to assess and reassess must be exercised within the normal limitation period.
[30] One can see that insofar as time limits are concerned, the present and former versions of subsection 152(4) are to the same effect. But, whereas the former version also contained subject matter limitations on the power to reassess within the extended reassessment period, the present version does not. However, the same result is achieved by providing for the subject matter limitations which appeared in the former subsection 152(4) which are found in subsection 152(4.01) of the current legislation which I need not reproduce in full. The portion which concerns us is subparagraph 152(4.01)(b)(i) which provides as follows:
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(4.01) Notwithstanding subsections 152(4) and 152(5), an assessment, reassessment or additional assessment to which paragraph 152(4)(a) or 152(4)(b) applies in respect of a taxpayer for a taxation year may be made after the taxpayer's normal reassessment period in respect of the year to the extent that, but only to the extent that, it can reasonably be regarded as relating to,
[. . .]
(b) where paragraph 152(4)(b) applies to the assessment, reassessment or additional assessment,
(i) the assessment, reassessment or additional assessment to which subparagraph 152(4)(b)(i) applies,
[. . .]
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(4.01) Malgré les paragraphes (4) et (5), la cotisation, la nouvelle cotisation ou la cotisation supplémentaire à laquelle s'appliquent les alinéas (4)a) ou b) relativement à un contribuable pour une année d'imposition ne peut être établie après l'expiration de la période normale de nouvelle cotisation applicable au contribuable pour l'année que dans la mesure où il est raisonnable de considérer qu'elle se rapporte à l'un des éléments suivants:
. . .
b) en cas d'application de l'alinéa (4)b):
(i) la cotisation, la nouvelle cotisation ou la cotisation supplémentaire à laquelle s'applique le sous-alinéa(4)b)(i),
. . .
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[31] Subsection 152(4.01) restricts the right of reassessment within the extended reassessment period to the subject matter which gave rise to the right to reassess outside the normal reassessment period. It is therefore to the same effect as the final paragraphs of the former subsection 152(4).
[32] One last point of comparison is the power to reassess more than once. In the former enactment, this power was found in the words "as the circumstances may require". In the present disposition, the Minister is given the power to assess or reassess "at any time". Stroud's Judicial Dictionary (5th Ed.) (London, Sweet and Maxwell Limited, 1986) gives as the primary definition of "at any time" the following:
(1) A power to do a thing e.g. to revoke uses "at any time" is not confined to one execution; the words are equivalent to "from time to time, as often as the donee of the power shall think good" (Digges Case 1 Rep. 173) . . .
[33] On the basis of the plain meaning of the words "at any time", I have little difficulty in concluding that the power to assess and reassess more than once applies not only to those reassessments which come within the normal reassessment period but also to those which fall outside that period. There is nothing in the language of the subsection which would support the opposite conclusion.
[34] In the case of the present disposition, the French version of the text introduces an ambiguity which is not present in the English version. In this text, the structure of the French version parallels the structure of the English version but it omits some words:
Le ministre peut établir une cotisation, une nouvelle cotisation ou une cotisation supplémentaire concernant l'impôt pour une année d'imposition, ainsi que les intérêts ou les pénalités, qui sont payables par un contribuable en vertu de la présente partie...
Words equivalent to "at any time" are conspicuously absent from the French text which suggests that only a single exercise of the power to reassess is authorized.
[35] It could be argued that there must be implied in the opening words of the present subsection 152(4) the phrase "à un moment donné". These words would be required to give effect to the power to reassess in the case of fraud or waiver which appear in paragraph (a) which is an exception to the normal reassessment period. If the Minister's power to reassess in such a case is not limited by the normal reassessment period (to which it is an exception) and the normal reassessment period (which does not apply to it), then the power must be exercisable at any time. Since the power is conferred by the opening words of the subsection, it must apply to all elements which are referred to in that part of the subsection.
[36] When one is faced with the possibility of a difference between the English and French versions of text, as in this case, it is necessary to reconcile the two versions to give effect to the meaning that is compatible with the spirit and intent of the statute to ensure the attainment of its objects. See [1979] 1 S.C.R. 865">Canada v. Compagnie Immobilière BCN, [1979] 1 S.C.R. 865, at p. 871-872. This case further established that there is no general rule that the more restrictive version is the intended meaning. See also Beothuk Data Systems Ltd., Seawatch Division v. Dean, [1998] 1 F.C. 433 (C.A.), where this Court held that "this is not a case where one language version is ambiguous and the other is clear, such that the latter can be used to construe the former. Rather, it is a case where one language version is capable of a broader meaning than the other, and the issue to be decided is which meaning best accords with Parliament's intention in enacting the provision" (at para. 32).
[37] In order to ascertain Parliament's intent in enacting the provision, one may look to the former versions of the text. See Sarvanis v. Canada, [2002] 1 S.C.R. 921, at p. 929. The former version, by its use of "as the circumstances require" and "selon les circonstances", supports the proposition that Parliament intended that the Minister have the power to reassess more than once. This proposition is further supported when one looks at the difference between the former and the present versions of the text. Given a legislative direction that the new provision applies as of April 27, 1989, differing versions of the text means that taxpayers will be treated differently with respect to the same taxation year depending upon the time at which the Minister chose to reassess. This is clearly inequitable and is to be avoided if it is at all possible to do so.
[38] This possibility leads me to conclude that the words "à un moment donné" are implied in the opening phrase of the French version of subsection 152(4). Such an implication is justified from the inner logic of the text itself, but the validity of such an approach is confirmed by mischief which would follow any other interpretation.
[39] I am therefore confirmed in my opinion that the present and former versions of subsection 152(4) are to the same effect. As a result, the date of application of the current subsection is of administrative significance only.
[40] My conclusion as to the effect of the legislation is consistent with certain dicta of Rothstein J. (as he then was) in Greene v. Canada (Minister of National Revenue - M.N.R.), (1995), 95 D.T.C. 5078, where the issue was whether the Minister was bound, following a request for a loss carry-back under subsection 152(6), to reassess the taxpayer so as to give effect to the loss carry-back. Rothstein J.A. decided that the Minister was only bound to consider the request for loss carry-back, and was not bound to grant the relief sought by the taxpayer. In the course of coming to that conclusion, Rothstein J. pointed out that even if the Minister was bound to do as the taxpayer requested, he could always correct an inappropriate reassessment under subsection 152(6) by a subsequent reassessment under subparagraph 152(4)(b)(i). It was argued before us that this supported the contention that the Minister can reassess to correct an initial reassessment made pursuant to subsection 152(6). I agree with that conclusion though I do not agree that the power to do so arises under subparagraph 152(4)(b)(i).
[41] My conclusion is also consistent with that arrived at by Cullen J. in Flexi-Coil Ltd. v. Canada (Minister of National Revenue - M.N.R.) (F.C.T.D.) (1991), 92 D.T.C. 6047.
[42] Counsel for the respondent brought to our attention the anomaly inherent in the interpretation of subsection 152(4) which I have adopted. That anomaly, simply stated, is that the Minister could reassess a loss carry back in circumstances where the Minister could not reassess the claim for the loss in the taxation year in which it occurred.
[43] A line graph can be used to make this clearer:
1 2 3 4 5 6 7
Loss incurred
Loss carry back
| Year 2 normal reassessment period |
| Year 1 extended reassesment period |
[44] A taxpayer who incurs a loss in year 2 can claim a loss carry back to year 1. The normal reassessment period applicable to year 2 (and hence to the reassessment of the deductibility of the loss) ends in year 5. But the extended reassessment period for year 1, applicable to the reassessment of the loss carry back expires at the end of year 7. Consequently, the Minister could reassess the loss carry back in years 6 and 7, even if he was precluded from reassessing the deductibility of the loss in the year in which it was incurred.
[45] But the opposite interpretation, that is, that the Minister may only reassess a loss carry back once also leads to an anomalous result. For example, a claim for a three year loss carry back in respect of a loss incurred in year 4 would result in a loss carry back to year 1 which would be statute-barred at the end of year 4. But, the Minister could reassess the loss itself in years 5, 6 and 7 to disallow it, even though he was unable to disallow the loss carry back.
1 2 3 4 5 6 7
Loss incurred
Loss carry back
| Year 1 normal reassessment period |
| Year 4 normal reassessment period |
[46] Both cases lead to an anomalous result which arises from the fact that no common reassessment period is provided for the event giving rise to the claim for reassessment and the carry back to a prior year.
CONCLUSION
[47] As regards the question which the parties put before the Motions Judge, it is my conclusion that the Minister had the power to reassess the respondent more than once beyond the normal assessment period, providing that the reassessments took place within the extended reassessment period. The power to reassess to give effect to a loss carry-back is found in subsection 152(6) while the power to reassess more than once is found in the words "as the circumstances may require" or "at any time", depending upon which version of the legislation is under consideration.
DISPOSITION
[48] I would therefore allow the appeal and making the order which the Motions Judge ought to have made, I would answer the question which was put to the Motions Judge in the affirmative. The appellant is entitled to her costs.
"J.D. Denis Pelletier"
J.A.
"I agree,
M. Nadon"
LÉTOURNEAU J.A. (Concurring)
[49] I agree with the conclusion reached by my colleague. I refrain from expressing any view as to which provision (the old or the new subsection 152(4)) applies since the parties have agreed that the effect would be the same whether one provision or the other is applied.
[50] I hasten to add that I am not at all convinced that the power to reassess more than once after the taxpayer's normal reassessment period originates, in former subsection 152(4), from the words "as the circumstances require". I believe these words refer more to the nature of the power conferred and the subject matter of that power than to the frequency of its use.
[51] As a matter of fact, pursuant to the provision, either a reassessment or additional assessments, as the circumstances require, may be made and such reassessment or additional assessments may either be, as the circumstances require, for tax, interests or penalties. Both the English and the French texts, the latter being clearer in this respect, bear this conclusion of mine. The power to reassess more than once, I believe, is more appropriately found in the words "at any time" ( « à un moment donné » in French) appearing in the first sentence of former subsection 152(4) as well as in the consistent use of the plural in French (des nouvelles cotisations, des cotisations supplémentaires ou des cotisations d'impôt, d'intérêts ou de pénalités) and the partial use of said plural in English (make additional assessments).
[52] I note in passing that, in the new version of subsection 152(4), both the French and the English texts now use the singular to describe the power given to the minister, that the words "as the circumstances require" have been replaced by "if any", that these replacing words have been omitted in French and, as my colleague pointed out, that the words "at any time" do not appear in the French text. All of this certainly does not assist in the search for the elusive clarity.
[53] The reassessment requested by a taxpayer for a loss carry-back is, as my colleague stresses, limited to the loss carry-back itself. It is no license to reassess the taxpayer on any other ground. That said, I do not think, however, that the reassessment is limited to a single one as contended by the respondent.
[54] The legislative provisions under scrutiny are a mess. With all respect to the contrary opinion, I do not think that they lend themselves to a literal interpretation. They are in such a state of disarray that the literal interpretation leads to incongruous results whether one adopts the appellant's or the respondent's position.
[55] There is, however, one incongruity resulting from the respondent's contention that leads me to believe that Parliament did not intend that the reassessment be limited to a single instance after the normal assessment period. Let us assume that a loss is first reported by a taxpayer in the 1990 taxation year and that a request is made to carry it back to the 1987 taxation year. Let us also assume, as this is generally what happens, that the loss reported in the 1990 taxation year is accepted after an initial mechanical assessment and, consequently the deduction, as requested, is allowed in the 1987 taxation year. If, upon reassessment of the taxpayer for the 1990 taxation year within the normal period of assessment, the Minister comes to the conclusion that the reported loss is not one that is legally admissible for deduction, he would be prohibited from correcting the 1987 tax assessment so as to disallow the loss. It means that a taxpayer would in fact deduct a loss legally inadmissible. I do not think that Parliament intended such an absurd result when it enacted these cumbersome provisions.
[56] The provisions relating to a carry-back loss have been enacted for the benefit of the taxpayer. However, it was not intended that they, or their interpretation, "lead to a very one-sided result", to borrow the expression of Rothstein J. in Green v. Her Majesty the Queen, [1995] 1 C.T.C. 135, affirmed by our Court 95 DTC 5684, and be detrimental to the public interest when a fair and equitable construction of these provisions for both parties is available and does no violence to a text which, as some writers have said in relation to the whole Income Tax Act, appears to be written in neither of Canada's official languages: Rand, Clifford and Stitt, Understanding the Income Tax Act, 2nd ed., Toronto, Carswell, 1991, page v.
[57] I would dispose of the appeal as my colleague proposes.
"Gilles Létourneau"
J.A.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-36-03
APPEAL FROM AN ORDER OF THE TAX COURT OF CANADA DATED
JANUARY 6, 2003
STYLE OF CAUSE: Her Majesty the Queen and George Agazarian
PLACE OF HEARING: Vancouver, British Columbia
DATE OF HEARING: December 18, 2003
REASONS FOR JUDGMENT: PELLETIER J.A.
CONCURRED IN BY: NADON J.A.
CONCURRING REASONS BY: LÉTOURNEAU J.A.
DATED: April 23, 2004
APPEARANCES:
SOLICITORS OF RECORD:
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Morris Rosenberg
Deputy Attorney General Of Canada
Vancouver, British Columbia
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FOR THE APPELLANT/
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McCarthy Tetrault
Vancouver, British Columbia
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FOR THE RESPONDENT
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