Merswolke v. The Queen, 95 DTC 821, [1995] 1 CTC 2524 (TCC)

Mogan J.T.C.C.:—The main issue in this appeal is the validity of a reassessment of income tax for the 1987 taxation year when the reassessment was made after the "normal reassessment period" as that phrase is defined in section 152 of the Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1 (the "Act"). There are other issues which relate to the 1987 and 1988 taxation years. This appeal was argued upon an agreed statement of facts which, because it was drafted in technical language, I shall summarize below:

1. Sometime in 1987, the appellant and her husband ("Paul") disposed of a rental property located on 16th Street South in the City of Owen Sound in the province of Ontario (referred to herein as the "property”). In their 1987 income tax returns, the appellant and Paul each reported rental income of $19,298 from the property. In the same returns for 1987, they each reported a capital gain of $291,438 arising from the disposition of the property. And finally, each claimed a capital gains reserve of $191,438 pursuant to subparagraph 40(1 )(a)(ii) of the Income Tax Act.

2. In their income tax returns for 1988, the appellant and Paul each reported a capital gain of $191,438 pursuant to subparagraph 40(l)(a)(ii) of the Act.

3. By notices of assessment dated July 4, 1988, the Minister of National Revenue (the "Minister") assessed the appellant and Paul for 1987 in accordance with the amounts reported by them. The normal reassessment period defined in section 152 of the Act with respect to the appellant’s 1987 taxation year ended on July 4, 1991. No notices of objection were filed by either the appellant or Paul in respect of those notices of assessment.

4. By notice of assessment dated October 19, 1989, the Minister assessed the appellant for 1988 in accordance with the amounts reported by her. Similarly, by notice of assessment dated October 30, 1989, the Minister assessed Paul for 1988 in accordance with the amounts reported by him. No notices of objection were filed by either the appellant or Paul in respect of those notices of assessment.

5. On May 30, 1991, the appellant filed with the Minister a limited waiver for her 1987 taxation year. The waiver was limited to rental income and expenses with respect to the property. Capital gains realized on disposition of the property are not reasonably regarded as relating to a matter specified in the waiver within the meaning of paragraph 152(5)(c) of the Act.

6. By notice of reassessment dated July 12, 1991, (after the normal reassessment period defined in section 152 of the Act had expired for the appellant’s 1987 taxation year), the Minister reassessed the appellant for 1987 so as to delete the rental income in the amount of $19,298 and the capital gain in the amount of $291,438. The appellant did not object to this reassessment. By notice of reassessment dated July 12, 1991, the Minister reassessed Paul for 1987 so as to include in his income the rental income and capital gain which were deleted from the appellant’s income for 1987 by the other notice of reassessment for 1987 dated July 12, 1991. Paul objected to this reassessment.

7. By notice of reassessment dated July 12, 1991, the Minister reassessed the appellant for 1988 so as to delete from her income the capital gain in the amount of $191,436 which had been reported by her. The appellant did not object to this reassessment. By notice of reassessment dated July 12, 1991, the Minister reassessed Paul for 1988 so as to include in his income the capital gain in the amount of $191,438 which was deleted from the appellant’s income for 1988 by the other notice of reassessment for 1988 dated July 12, 1991. Paul objected to this reassessment.

8. In a letter to Revenue Canada dated January 17, 1992, from Collins Barrow, chartered accountants acting as the duly authorized representative of the appellant and Paul in respect of the reassessments of their 1987 and 1988 taxation years, Collins Barrow stated that the notices of reassessment dated July 12, 1991 for the 1987 taxation years of the appellant and Paul should be reversed because the 1987 taxation year was statute-barred and no waivers in respect of the capital gains had been filed. Collins Barrow also stated that the amount of $3,000, representing unreported mortgage interest, should be included in the appellant’s income for 1988. The letter was sent to Revenue Canada with the appellant’s consent and authority.

9. By notices of reassessment dated March 9, 1992, the Minister reassessed the appellant and Paul for the 1987 and 1988 taxation years in the manner agreed to in the letter of January 17, 1992 from Collins Barrow. In particular, the appellant’s 1987 taxation year was reassessed so as to include in her income rental income in the amount of $19,298 and a capital gain in the amount of $291,438. The appellant’s 1988 taxation year was reassessed so as to include in her income a capital gain in the amount of $191,438 and interest income in the amount of $3,000. On the same date, March 9, 1992, Paul’s 1987 taxation year was reassessed so as to delete from his income the rental income and capital gain (subject to the capital gains reserve) which had been previously included in his 1987 income under the notice of reassessment dated July 12, 1991. Also, Paul’s 1988 taxation year was reassessed so as to delete from his income for that year the capital gain which had been previously added to his income under the notice of reassessment dated July 12, 1991 in respect of 1988. A refund to Paul resulted from the March 9, 1992 reassessment of his 1987 taxation year, and a refund to him resulted from the March 9, 1992 reassessment of his 1988 taxation year.

10. By notices of objection dated June 5, 1992, the appellant objected to the March 9, 1992 reassessments of her 1987 and 1988 taxation years. Paul did not object to the notices of reassessment dated March 9,1992 in respect of his 1987 and 1988 taxation years. The Minister confirmed the March 9, 1992 reassessments of the appellant’s 1987 and 1988 taxation years.

Counsel for the appellant and respondent also signed and filed with the Court a document entitled agreed statement of issues in dispute which set out the following three questions:

1. Is the appellant estopped from denying the validity of the notices of reassessment dated March 9, 1992 in respect of her 1987 and 1988 taxation years?

2. If the answer to the question posed in issue no. 1 above is no, is the notice of reassessment dated March 9, 1992 in respect of the appellant’s 1987 taxation year valid, even though it was made after the expiry of the normal reassessment period for the appellant in respect of her 1987 taxation year?

3. If the answer to the question posed in issue no. 2 is no, is a capital gains reserve in the amount of $127,625 properly included in the computation of the appellant’s income for the 1988 taxation year?

Although a ”yes" answer to the question posed in issue no. 1 would result in the appeals for 1987 and 1988 being dismissed or quashed, all three issues were argued in depth. Having regard to the arguments submitted by counsel, I shall begin by assuming (without deciding) that the appellant is not estopped in issue no. 1 so that I may first consider and decide issue no. 2.

The basic question in issue no. 2 is the validity of the most recent reassessment for the appellant’s 1987 taxation year. Because the agreed statement of facts described three different notices of assessment issued by the Minister of National Revenue with respect to the 1987 taxation year, I shall for convenience refer to them as follows: the notice of assessment dated July 4, 1988 will be "the original assessment"; the notice of reassessment dated July 12, 1991 will be "the first reassessment"; and the notice of reassessment dated March 9, 1992 will be "the second reassessment". When asking if the second reassessment is valid, there are a number of significant facts to remember: (i) that reassessment was issued after the "normal reassessment period" (three years) as those words are defined in subsection 152(3.1) of the Act; (ii) there is no evidence or even a suggestion that the appellant made any misrepresentation or committed any fraud with respect to her 1987 taxation year within the meaning of subsection 152(4) of the Act; and (iii) the second reassessment was made by the Minister of National Revenue at the request of and with the consent of the appellant as expressed in the letter of January 17, 1992 from Collins Barrow, her duly authorized agents.

The Minister’s power to assess and reassess tax is set out in section 152 of the Act. The Minister may not ordinarily reassess after the "normal reassessment period" (1.e., three years) unless the taxpayer has made a misrepresentation, committed a fraud or filed a waiver. In the circumstances of this appeal, there was no misrepresentation or fraud; and the waiver (Exhibit B) was restricted to rental income and expenses of the property. The waiver did not include or extend to any capital gain or loss resulting from the disposition of the property.

The question of whether the Minister could issue a valid reassessment with the consent of the taxpayer after the normal reassessment period (now three years but formerly four years) was considered by the Federal Court in an appeal by Canadian Marconi Co.: Canadian Marconi Co. v. Canada, [1989] 2 C.T.C. 128, 89 D.T.C. 5370 (F.C.T.D.) and [1991] 2 C.T.C. 352, 91 D.T.C. 5626 (F.C.A.). For the taxation years 1973 to 1976, Marconi had regarded interest from short-term securities as income from business and had included that interest in the computation of Canadian manufacturing and processing profits. The Minister regarded the interest as income from property. The Supreme Court of Canada ultimately decided (November 6, 1986) in Marconi’s favour holding that the interest was income from business ([1986] 2 S.C.R. 522, [1986] 2 C.T.C. 465, 86 D.T.C. 6526). While the appeals for 1973-76 were going through the courts, however, the Minister issued reassessments in July 1983 for Marconi’s taxation years 1977 to 1981 and the Minister again assumed that the interest was income from property. Marconi did not serve notices of objection for the years 1977-81 believing that the Minister would reassess if necessary to be con- sistent with the ultimate decision of the Supreme Court for the earlier years. In 1987, the Minister informed Marconi that there would be no fresh reassessments for the years 1977-81 because Marconi had not filed waivers for those years within the prescribed time. Marconi applied to the Federal Court for a declaration that the Minister was not precluded from making fresh reassessments for 1977-81. In the Trial Division, Joyal J. relied on subsection 152(8) to hold that any assessment would be voidable but would not be void ab initio.

152(8) An assessment shall, subject to being varied or vacated on an objection or appeal under this Part and subject to a reassessment, be deemed to be valid and binding notwithstanding any error, defect or omission therein or in any proceeding under this Act relating thereto.

Joyal J. held in favour of Marconi and stated at page 141 (C.T.C. 5379):

Subsection 152(8) of the Act bears a close analysis. That subsection states that an assessment, which is always subject to a reassessment, is deemed to be valid and binding notwithstanding any error, defect or omission therein or in any proceeding under this Act relating thereto. This particular provision in my view, expresses the intention of Parliament to confer a prima facie validity on any assessment action taken by the Minister, subject only to its enforceability vis à vis the taxpayer. This presumption of validity may only be defeated by a successful objection or appeal or by the taxpayer raising the shield of protection given him by subsection 152(4). This leads me to conclude that any assessment of the Minister is voidable, but would not be void ab initio.

The Federal Court of Appeal reversed the Trial Division and held in favour of the Minister. Mahoney J.A. delivering the reasons for the Court stated at page 356 (D.T.C. 5629):

The learned trial judge found, in subsection 152(8), a Parliamentary intention that an out of time reassessment be voidable rather than void.

It is true that subsection 248(1) of the Act provides:

248(1) ’’assessment" includes a reassessment.

That definitional section cannot, in my view, prevail to render the terms assessment and reassessment entirely interchangeable in a provision that clearly distinguishes between them and expressly provides differently in respect of them, in my opinion, subsection 152(4) is such a provision. The Minister may assess at any time but, having assessed, the Minister can only reassess within the prescribed times of having notified the taxpayer of the assessment.

This is a hard case from the respondent’s [i.e., Marconi’s] point of view but, in my respectful opinion, this appeal is concerned with a rather straightforward question of statutory interpretation.

In my opinion, there is no ambiguity in subsection 152(4) as it bears on the question here. It seems to me that subsection 152(4) is clear and I have been pointed to nothing in its immediate context or in other provisions of the Act that would suggest it should be interpreted otherwise than in its plain meaning.

I would allow the appeal with costs and, pursuant to subparagraph 52(b)(iii) of the Federal Court Act, declare that on the facts as agreed the Minister of National Revenue had no power to reassess the respondent’s income tax returns for its taxation year 1977 to 1981, inclusive, on or after November 6, 1989 [sic].

On the question of whether a reassessment is voidable or void ab initio, I think the Federal Court of Appeal decided that a reassessment after the “normal reassessment period" is void ab initio unless it is justified within the terms of section 152. At first blush, I am inclined to find that the second reassessment is void ab initio. In the extraordinary circumstances of this case, however, such a finding may be too simplistic because (i) the appellant did file a restricted waiver for 1987 within the prescribed time; (ii) the first reassessment was a nil assessment; and (iii) the second reassessment appears to be a replica of the original assessment with respect to determining the amount of tax. Firstly, did the waiver give any authenticity to the second reassessment?

Although the waiver (Exhibit B) was in respect of "rental income and expenses", the main thrust of the first reassessment was to exclude the capital gain from the computation of the appellant’s income on the Minister’s assumption that the appellant’s husband was the sole owner of the property. The exclusion of the appellant’s rental income was a consequence of that assumption. Similarly, the main thrust of the second reassessment was to include one-half of the capital gain in the computation of the appellant’s income after the Minister received the letter from Collins Barrow acting on behalf of the appellant and her husband. Again, the inclusion of the appellant’s rental income was a consequence of the Minister reallocating the capital gain. The Minister’s attempts to change the allocation of the capital gain as between the appellant and her husband were not within the scope of the waiver. It is clear from the agreed statement of facts that the amount of rental income ($19,298) reported by the appellant in her 1987 income tax return and accepted as part of her 1987 income in the original assessment was the same amount excluded from her income in the first reassessment and later included in her income in the second reassessment. Because the exclusion and later inclusion of the rental income in the respective reassessments was a consequence of the Minister’s attempts to change the allocation of the capital gain as between the appellant and her husband, I find that the Minister was not relying on the waiver when issuing either the first reassessment or the second reassessment. Indeed, the Minister never did adjust the revenue and expenses which resulted in the rental income of $19,298. That same amount of rental income simply followed the Minister’s changing view as to whether the property was owned equally by the appellant and her husband or only by the husband. If the second reassessment is otherwise void, it is not "saved" by the waiver.

With respect to the question posed in issue no. 2,1 shall summarize the appellant’s principal arguments and indicate their source by reference to the paragraph in the appellant’s memorandum of argument.

1. The Minister may reassess tax only within the normal reassessment period except under the conditions described in subsections 152(4), (4.2) and (4.3). None of the conditions described in subsection 152(4), (4.2) or (4.3) are satisfied in this appeal. (para. 17)

2. The Minister does not have the power to reassess tax after the expiry of the normal reassessment period unless authorized by the Act; and the Minister cannot obtain that power by receiving the consent of the taxpayer, (para. 18)

3. The appellant has not appealed from the first reassessment. As a result, this Court does not have jurisdiction to make a finding that the first reassessment is invalid. (para. 42)

4, The jurisdiction of the Court in this appeal is limited to determining the validity of the second reassessment and the reassessment of March 9, 1992 for 1988. If such reassessments are held to be valid, it will not be necessary to consider the validity of the first reassessment. Should the second reassessment be held to be invalid, however, the appropriate order to be made by this Court would be to refer the matter back to the Minister to be reassessed on the basis that rental income from the property in the amount of $19,298 be included in the appellant’s income for the 1987 taxation year. (para. 43)

5. In the alternative, if the Court should conclude that it has jurisdiction to consider the validity of the first reassessment and the reassessment of July 12, 1991 for 1988, it is the appellant’s submission that these reassessments are valid and should not be vacated or treated as a nullity by this Court. (para. 44)

I agree with the first argument. I agree with the second argument which is supported by the decision of the Federal Court of Appeal in Marconi as I understand that decision. I do not agree with the third, fourth or fifth argument. If I should find that the second reassessment is not valid (i.e., the result which the appellant wants), I must either vacate the assessment or refer it back to the Minister for reconsideration and reassessment pursuant to section 171 of the Income Tax Act. If I vacate the second reassessment, I am obliged to express an opinion as to which of the two prior assessments has lawfully determined the appellant’s income tax liability for 1987. If I refer the second reassessment back to the Minister for reconsideration and reassessment, I am obliged to set out the terms of the proposed reassessment. Given these alternatives, it is not reasonable for the appellant to argue that I do not have jurisdiction to make a finding with respect to the validity of the first reassessment.

If the second reassessment viewed in isolation is void on the basis of the Marconi decision, then the first reassessment is also void for the same reason because it was issued eight days after the end of the normal reassessment period. In my view, the validity or invalidity of the first reassessment is not affected by the fact that it was a nil assessment because "an assessment is only the ascertainment and fixation of liability”. See Pure Spring v. M.N.R., [1946] C.T.C. 171, 2 D.T.C. 844, at page 198 (D.T.C. 857). If the Minister makes a determination that a taxpayer owes tax in the amount of nil or some greater amount with respect to a particular taxation year, it is still an ascertainment and fixation of liability. If the first reassessment is otherwise void, it also is not "saved" by the waiver.

The second reassessment (Exhibit F) described in paragraph 9 of the above summary of facts appears to be a replica of the original assessment (Exhibit A) described in paragraphs 1 and 3 of the above summary of facts with respect to the determination of net federal tax and net provincial tax for 1987. The only difference is the amount of interest assessed in the second reassessment as a consequence of the refund paid to the appellant resulting from the first reassessment. Relying on paragraphs 1, 5 and 11 of the agreed statement of facts and Exhibits A and F, I am satisfied that the Minister included in the computation of the appellant’s 1987 income for purposes of the second reassessment the same amounts (rental income of $19,298 plus a capital gain of $291,438 less a capital gains reserve of $191,438) which the appellant had reported in her 1987 income tax return, and which the Minister had included in the original assessment. Do those facts justify the second reassessment under subsection 152(5)?

152(5) There shall not be included in computing the income of a taxpayer for a taxation year, for the purposes of any reassessment, additional assessment or assessment of tax, interest or penalties under this Part that is made after the normal reassessment period for the taxpayer in respect of the year, any amount

(a) that was not included in computing the taxpayer’s income for the purposes of an assessment of tax under this Part made before the end of the normal reassessment period for the taxpayer,

(b) in respect of which the taxpayer establishes that the failure so to include it did not result from any misrepresentation that is attributable to negligence, carelessness or wilful default or from any fraud in filing a return of his income or supplying any information under this Act, and

(c) where any waiver has been filed by the taxpayer with the Minister, in the form and within the time referred to in subsection (4), with respect to a taxation year to which the reassessment, additional assessment or assessment of tax, interest or penalties, as the case may be, relates, that the taxpayer establishes cannot reasonably be regarded as relating to a matter specified in the waiver.

In my view, subsection 152(5) does not by itself authorize the Minister to make a reassessment with respect to a particular taxation year. If the Minister wants to reassess, he must find his authority under subsection 152(4), (4.2) or (4.3). When the Minister has established his authority to reassess with respect to a particular taxation year, subsection 152(5) places certain limitations on what may be included in the computation of income for the purposes of such reassessment. In this appeal, the Minister has not established his authority to reassess. Therefore, subsection 152(5) cannot be used to support or justify either the second reassessment or the first reassessment. I return to my first inclination and find that the second reassessment is void because it is not saved by the waiver and the Minister has not established any other authority for reassessing after July 4, 1991. The first reassessment is also void for the same reasons.

As a general rule, when the Minister of National Revenue has made a reassessment, the Court cannot grant any relief with respect to an earlier assessment because the reassessment will have rendered the earlier assessment null. In Abrahams v. M.N.R., [1966] C.T.C. 690, 66 D.T.C. 5451 (Ex. Ct.), Jackett P. stated at page 692 (D.T.C. 5452):

Assuming that the second reassessment is valid, it follows, in my view, that the first reassessment is displaced and becomes a nullity. The taxpayer cannot be liable on an original assessment as well as on a reassessment. It would be different if one assessment for a year were followed by an "additional” assessment for that year. Where, however, the "reassessment" purports to fix the taxpayer’s total tax for the year, and not merely an amount of tax in addition to that which has already been assessed, the previous assessment must automatically become null.

An earlier assessment will therefore be displaced and become a nullity only if a subsequent assessment is valid. Conversely, an earlier assessment should not be a nullity if the subsequent assessment is invalid. In this appeal, it seems to me that the original assessment should still be valid if both the first reassessment and the second reassessment are void.

In Lornport Investments Ltd. v. The Queen, 140 N.R. 393, 92 D.T.C. 6231, the Federal Court of Appeal considered the validity of a particular assessment when the Minister issued a subsequent assessment which was vacated by court order. In March 1984, the Minister issued an original notice of assessment for the 1983 taxation year. Early in 1987, the Minister issued his first notice of reassessment to Lornport for 1983 well within the normal reassessment period. Lornport objected to the first reassessment and commenced an appeal. In July 1988, the Minister issued his second notice of reassessment to Lornport for 1983 after the normal reassessment period had expired. The second reassessment increased the total amount of tax assessed for 1983. Lornport objected and, upon motion to the Federal Court, the second reassessment was vacated. There was a question as to whether the order vacating the second notice of reassessment had any effect on the validity of the first notice of reassessment. Lornport and the Minister agreed to submit the following questions of law to be determined by the Federal Court:

1. Was the reassessment made by way of the first notice of reassessment superseded and displaced by the reassessment made by way of the second notice of reassessment and ceased to exist from the time of issuance of the second notice of reassessment forward (as the plaintiffs contend)? or

2. Was the reassessment made by way of the first notice of reassessment currently subsisting notwithstanding the issuance thereafter of the second notice of reassessment (as the defendants contend)?

The Federal Court of Appeal referred to the decision of Jackett P. in Abrahams (above) and held that the issuance of a subsequent reassessment does not have the automatic effect of wholly destroying the legal vitality of a prior reassessment for all purposes. Stone J.A. delivering the judgment for the Court stated at page 6233 (N.R. 396):

I have come to the conclusion, in the particular circumstances of this case, that the second reassessment, which was vacated by the court order of April 20, 1989, did not supersede and nullify the first reassessment. It seems to me that the Court order amounted to judicial recognition that the second reassessment, issued as it was beyond the statutory time limit, was not legally issued. It did not, for that reason, displace and render the first reassessment a nullity. That reassessment continues to subsist, in my opinion.

Having concluded that the second reassessment and the first reassessment are void, I would vacate both reassessments and rely on the decision in Lornport to order that the original assessment (notice of which is dated July 4, 1988) continues to subsist.

I have one last observation with respect to the 1987 taxation year. I have held above that, if the first reassessment and the second reassessment are otherwise void, they are not saved by the waiver because the Minister did not rely on the waiver when making either of those reassessments. If I should be wrong on that issue, and if the first reassessment and second reassessment are protected by the waiver because the Minister respectively excluded and then included the rental income of $19,298 (without adjustment) when computing the appellant’s income for 1987, then I would hold that all parts of the second reassessment are valid within the terms of paragraph 152(5)(a) because no amount was included in computing the appellant’s income for 1987 for the purposes of the second reassessment that was not included in computing the appellant’s income for 1987 for the purposes of the original assessment made on July 4, 1988. The net federal tax and the net provincial tax are the same in the second reassessment (Exhibit F) as in the original assessment (Exhibit A).

The disposition of the 1988 appeal is dependent upon what happened in 1987. In the appellant’s 1987 income tax return, she claimed a capital gains reserve in the amount of $191,438 pursuant to subparagraph 40( l)(a)(iii) of the Income Tax Act. This reserve was allowed in the original assessment. (See paragraphs 1 and 5 of agreed statement of facts.) This reserve was also allowed in the second reassessment of March 9, 1992. (See Exhibit F.) Under subparagraph 40(l)(a)(ii) of the Act, there must be included in computing a taxpayer’s gain for a particular taxation year from the disposition of a property any amount claimed by the taxpayer under subparagraph

(iii) in computing his gain for the immediately preceding year from the disposition of the property. In my preferred decision (finding both reassessments void), the reserve was claimed and allowed in the original assessment for 1987 which is valid and subsisting. And in my alternative decision (i.e., if the reassessments are saved by the waiver, the second reassessment is valid under paragraph 152(5)(a)), the reserve was claimed and allowed in the second reassessment for 1987. Therefore, in either event, the reserve must be carried forward and included in 1988.

The appeals for 1987 and 1988 were not argued as a stated case or on the basis of certain questions of law. The pleadings raised certain issues. On September 7, 1994, the parties filed with the Court an agreed statement of facts. On September 9, 1994, the parties filed an agreed statement of issues in dispute, and those three issues are set out above. In my opinion, the agreed statement of issues in dispute does not include all of the questions which I am required to answer for the disposition of these appeals. I will therefore expand upon my response to those three issues:

1. It is not necessary for me to decide the estoppel argument, but I have assumed (without deciding) that the appellant is not estopped.

2. The notice of reassessment dated March 9, 1992 with respect to the appellant’s 1987 taxation year is void. So is the earlier reassessment of July 12, 1991. The original assessment of July 4, 1988 for the 1987 taxation year is valid and subsisting. Alternatively, if the reassessments of July 12, 1991 and March 9, 1992 are saved by the waiver, then all parts of the reassessment of March 9, 1992 with respect to the 1987 taxation year are valid within the terms of subsection 152(5), and the reassessment of July 12,1991 becomes a nullity.

3. Having regard to the facts disclosed in paragraphs 1, 3, 5 and 6 of the agreed statement of facts, and having regard to my conclusion that the original assessment of July 4, 1988 with respect to the 1987 taxation is valid and subsisting (or alternatively, that the reassessment of March 9, 1992 is valid if saved by the waiver), the taxable capital gain in the amount of $127,625 is properly included in the computation of the appellant’s income for the 1988 taxation year.

The formal judgment will record that (i) the appeal for 1987 is allowed and the reassessment of March 9, 1992 is vacated; (ii) the reassessment of July 12, 1991 for 1987 is also vacated; (iii) the original assessment of July 4, 1988 for 1987 is valid and subsisting; and (iv) the appeal for 1988 is dismissed. Considering the results of these appeals in terms of their financial substance, the appellant has lost in her attempt to stand under the shelter of the nil assessments issued on July 12, 1991 with respect to her 1987 and 1988 taxation years. The respondent is entitled to costs.

Appeal for 1987 allowed; appeal for 1988 dismissed.