Bakorp – Federal Court of Appeal finds that s. 169(2.1) did not permit a large corporation to change arguments on appeal

The taxpayer's Notice of Objection indicated that the Minister had erred in reducing the amount of a deemed dividend from $53 million to $28 million for its 1995 taxation year, but its Notice of Appeal indicated that the deemed dividend for 1995 should have been nil instead. On appeal it emerged that taxpayer’s counsel in fact wanted to argue that the deemed dividend arose in 1993 (when all the shares in question were redeemed) rather than in 1995 (when the balance of the redemption proceeds were received).

The taxpayer, as a large corporation, could only appeal on an issue raised (and properly quantified) in its Notice of Objection. The taxpayer argued that, at both the Notice of Objection and Appeal stages, it was raising the same issue, namely, the quantum of the deemed dividend for 1995. Webb JA found that the Objection did not satisfy "the purpose of allowing the Minister to know the nature and quantum of tax litigation at the earliest possible date." Furthermore, it did not assist the taxpayer to try to obscure the change in its argument by drafting a Notice of Appeal which did not describe the (new) timing issue.

Neal Armstrong. Summary of Bakorp Management Ltd. v. The Queen, 2014 FCA 104 under s. 169(2.1).