Citation: 2010 TCC 651
Date: 20101221
Dockets: 2008-3353(IT)APP
2008-3349(IT)APP
2009-506(IT)APP
2008-1537(IT)APP
BETWEEN:
ROBERT KESHANE,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent;
AND BETWEEN:
E. DIANE MARTIN,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent;
AND BETWEEN:
DENISE TOULOUSE,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent;
AND BETWEEN:
STEFAN J. ELLIOTT,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Woods J.
[1]
These reasons relate to four
separate applications to extend time to institute appeals to this Court from
assessments under the Income Tax Act. The applicants were represented by
the same counsel and the applications were heard at the same time.
[2]
The applicants and the assessments
are listed below.
-
Robert Keshane – 1999, 2000, 2001,
2002 and 2006 taxation years
-
E. Diane Martin – 2006 taxation
year
-
Denise Toulouse – 2000, 2001,
2002, 2003, 2004 and 2005 taxation years
-
Stefan J. Elliott – 2006 taxation
year
[3]
The appeals which the applicants
seek to institute all relate to the same issue. Is employment income that they received
from Native Leasing Services (NLS) exempt from tax by virtue of paragraph 87(1)(b)
of the Indian Act? The applicants submit that the income is exempt, on
the basis that the income is personal property of an Indian situated on a
reserve. I understand that there are over 1,000 similar appeals pending in this
Court that have been instituted by employees of NLS.
[4]
Subsection 87(1), as it read
during most of the relevant periods, is reproduced below. An amendment
effective in 2006 is not relevant.
87(1) Notwithstanding any other Act of
Parliament or any Act of the legislature of a province, but subject to section
83, the following property is exempt from taxation, namely,
(a) the interest of an Indian or a
band in reserve lands or surrendered lands; and
(b) the personal property of an
Indian or a band situated on a reserve.
(Emphasis
added.)
[5]
Where an appeal has not been
instituted within the time provided by subsection 169(1) of the Income Tax
Act (ITA), this Court may allow an extension of time provided that the
requirements set out in subsection 167(5) have been satisfied. The subsection
reads:
167(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; and
(b) the taxpayer demonstrates that
(i) within the time otherwise limited by section 169 for appealing the
taxpayer
(A) was unable to act or to instruct another to act in the taxpayer’s name, or
(B) had a bona fide intention to appeal,
(ii) given the reasons set out in the application and the circumstances
of the case, it would be just and equitable to grant the application,
(iii) the application was made as soon as circumstances permitted, and
(iv) there are reasonable grounds for the appeal.
Time limit for application
[6]
Paragraph 167(5)(a)
provides that an extension of time cannot be granted unless the application has
been made within a specified deadline. The general rule is that the application
must be made within one year and 90 days from the date of the notice of
confirmation.
[7]
The applications before me were all
filed in time except for the applications filed by Robert Keshane in reference
to assessments for the 1999, 2000, 2001 and 2002 taxation years. The notices of
confirmation for these assessments were all dated April 20, 2006. The
applications for extension of time were not filed until October 9, 2008, which
is beyond the one year and 90 day time limit in para. 167(5)(a). These
facts are not in dispute.
[8]
The applications in respect of
these assessments will be dismissed for this reason.
[9]
Counsel for Mr. Keshane submits
that this should not be a bar because there would be no prejudice to the
respondent if these applications were allowed. The problem with this submission
is that the legislation does not provide the Court with discretion to overlook
the application deadline.
[10]
The only application that remains
to be decided for Robert Keshane is the application for the 2006 taxation year which
was filed in time.
Reasonable grounds for the
appeal
[11]
The remaining applications should
be allowed if the requirements set out in s. 167(5)(b) have been
satisfied. A reasonably liberal interpretation of these requirements is
appropriate but the requirements cannot be ignored.
[12]
In all of these applications, the
applicants have failed to demonstrate that there are reasonable grounds for
their appeals, as required by s. 167(5)(b)(iv). The applications should
be dismissed for this reason.
[13]
Counsel for the applicants submits
that since the tax issue is very fact specific, it is not feasible to make a
determination as to whether there are reasonable grounds for the appeals without
hearing all the evidence.
[14]
I disagree with this submission.
[15]
Although applying para. 87(1)(b)
of the Indian Act in a particular case requires a fact specific inquiry,
the approach taken in respect of NLS employees in previous judicial decisions provides
considerable guidance as to whether there are reasonable grounds for appeal.
Most notable are the decisions in The Queen v. Shilling, 2001 DTC 5420
and Horn et. al. v. MNR, 2008 FCA 352, 2008 DTC 6743. Leave to appeal to
the Supreme Court of Canada was denied in both cases.
[16]
In light of this background, I would
agree with counsel for the respondent that in order to satisfy the Court that
there are reasonable grounds for an appeal in these applications, the applicant
must present a reasonable argument that the conclusions in Shilling and Horn
decisions are not applicable based on their particular facts. None of the applicants
have attempted to do this.
[17]
Counsel for the applicants also
submits that some latitude should be given because counsel are handling a great
many appeals by NLS employees and they have not been provided with much time to
prepare.
[18]
I cannot agree with this
submission. The requirement to have reasonable grounds for an appeal recognizes
that to grant extensions of time where there are no reasonable grounds would be
a waste of scarce judicial resources. If counsel did not have time to properly
prepare for these applications, other counsel could have been retained. I would
also note that Webb J. had previously denied an application to extend time to
an NLS employee for similar reasons: Johnston v. The Queen,
2009 TCC 327, 2009 DTC 1198. The position that the respondent takes in these
applications is not a surprise.
[19]
The applicants also submit that
the Shilling and Horn decisions have misinterpreted decisions of
the Supreme Court of Canada in applying the connecting factors analysis to
determine the location of employment income. Counsel submits that the “location
of the debtor” test set out in Nowegijick v. The Queen, 83 DTC 5041
(SCC) is the appropriate test to be applied.
[20]
I also do not agree with this
submission. Counsel did not make full arguments in respect of this issue in
these applications and instead referred me to arguments that she proposed to
make a few days later in appeals by Joseph Hester and Mildred Bondy. The
argument was rejected in those appeals (Hester et. al. v. The Queen,
2010 TCC 647), and it is not necessary for me to repeat the reasons here.
[21]
Although the requirement in s.
167(5)(b)(iv) should be interpreted broadly so as not to foreclose
reasonable arguments, none of the applicants have demonstrated that their
appeals have any reasonable prospects of success.
Stacia Loft
[22]
Finally, in order to avoid
confusion, I would briefly mention that an application to extend time by Stacia
Loft was heard together with these applications. This application was withdrawn
after the hearing and it is no longer necessary for me to deal with it.
Conclusion
[23]
In the result, the applications by
Robert Keshane, E. Diane Martin, Denise Toulouse and Stefan J. Elliott will be
dismissed.
Signed at Toronto, Ontario this 21st day of December 2010.
“J. M. Woods”
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