Citation: 2010TCC220
Date: 20100422
Docket: 2009-3163(IT)APP
BETWEEN:
VIOLA MAE WOODWORTH,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
V.A. Miller, J.
[1]
The Applicant seeks an
application for extension of time to file a Notice of Appeal in respect of her
2005 taxation year.
[2]
The Applicant’s 2005
taxation year was assessed by notice dated April 2, 2007 which was issued
pursuant to subsection 152(7) of the Income Tax Act (the “Act”). She
objected to this assessment on July 6, 2007 and was granted an extension of
time to file the Notice of Objection. The evidence at the hearing of this
application was that the Minister of National Revenue (the “Minister”)
confirmed the assessment on December 6, 2007.
[3]
In the original Notice
of Application, counsel for the Applicant argued that the Notice of Confirmation
was invalid as it was not personally received. The evidence showed that the
Notice of Confirmation was sent by registered mail to the Applicant on December
6, 2007.
[4]
It was the Applicant’s
evidence that she was away from her home in December 2007 and she asked her
friend, Elvin Calahaisen, to pick up her mail. She stated that she told him not
to sign for any mail on her behalf.
[5]
On December 28, 2007,
Mr. Calahaisen accepted delivery of the Notice of Confirmation on behalf of the
Applicant. He placed all of the mail on a table but the Applicant failed to
review all of her mail when she returned.
[6]
At the hearing of the
application, counsel sought to file an Amended Notice of Application which
contained additional issues in support of the application. As counsel for the Respondent
was taken by surprise, he was given the opportunity to file written submissions
and counsel for the Applicant was given a time to respond in writing.
[7]
I allow the Amended
Notice of Application to be filed.
[8]
The facts which gave
rise to the assessment which is the subject of this application are as follows:
a)
In 1992, Dr. Woodworth,
the Applicant’s spouse, opened a Registered Retirement Savings Plan (RRSP) with
the CIBC Trust Corporation (the Trustee). The Applicant was the named
beneficiary of the RRSP.
b)
Dr. Woodworth died on
September 24, 2004. At the time of his death, Dr. Woodworth was a tax debtor.
c)
In February 2005, the
Trustee transferred the proceeds of the RRSP into the Applicant’s RRSP.
d)
The Applicant did not
file her income tax return for the 2005 taxation year within the time specified
by the Act and the Minister issued an arbitrary assessment pursuant to
subsection 152(7) of the Act on April 2, 2007 (the “Assessment”).
e)
The Assessment issued
on April 2, 2007 included the value of the RRSP.
f) On January 11,
2007, the Minister issued an assessment pursuant to section 160 of the Act
in respect of the RRSP transfer (the “160 Assessment”).
[9]
The Amended Notice of
Application contained the following submissions:
a)
The Assessment is null
and void;
b)
If the Assessment is
not void, this appeal should be consolidated with the appeal of the 160
Assessment which has been filed with this Court;
c)
The Minister has not
vacated, confirmed or varied the Assessment, or reassessed the Applicant;
d) The Applicant’s circumstances warrant
the Court granting the application for extension of time.
Assessment is void
[10]
It is the Applicant’s
position that after the Minister issued the 160 Assessment he was functus
officio with respect to the Applicant’s tax liability relating to the
proceeds of the RRSP. Counsel for the Applicant argued that the Assessment was
void ab initio as the Minister had no jurisdiction to make a second
assessment relative to the RRSP transfer.
[11]
The Minister has
assessed the Applicant pursuant to Act. Section 160 of the Act is
a collection tool that is used by the Minister to facilitate the collection of
a tax debtor’s tax liability from another person[1].
It is a harsh tool but the Minister has the discretion whether or not to use
this method of collection.
[12]
Having assessed the Applicant
pursuant to section 160, the Minister is not functus officio with
respect to assessing the Applicant for her personal tax liability in a
particular taxation year.
[13]
The Applicant was
required to file a return of income for her 2005 taxation year[2].
[14]
The Minister was
authorized by subsection 152(7) of the Act to assess the Applicant for
her 2005 taxation year. As a result, the Assessment is not void ab initio.
Consolidation of Appeals
[15]
Section 26 of the Tax
Court of Canada Rules (General Procedure) (the “Rules”) reads:
26. Where two or more
proceedings are pending in the Court and
(a) they have in common a question of law or fact or mixed
law and fact arising out of one and the same transaction or occurrence or
series of transactions or occurrences, or
(b) for any other reason, a direction ought to be made
under this section,
the Court may direct that,
(c) the proceedings be consolidated or heard at the same
time or one immediately after the other, or
(d) any of the proceedings be stayed until the determination
of any other of them.
[16]
The term “proceedings”
is defined in section 2 of the Rules to mean an appeal or reference.
[17]
The Assessment has not
been validly appealed to this Court and it cannot be consolidated with the
appeal of the 160 Assessment. This is most unfortunate as the appeal of the two
assessments should have proceeded at the same time.
Confirmation of the Assessment
[18]
It is the Applicant’s
position that the Notice of Confirmation was never issued.
[19]
The Applicant has
relied on the decision in Aztec Industries v. Canada[3] as
authority for its position that the Court must perform a two step analysis to
decide (1) whether the Minister has proven that a notice had been issued and
mailed as required by law; and, (2) assuming such proof, did the taxpayer rebut
the presumption that such notice was received. If the taxpayer proves that she
did not receive the notice, it rebuts the presumption that the notice was
“sent”. As a result, the time limitation under section 169 is not triggered.
[20]
In Schafer v. R.[4], the Federal
Court of Appeal disagreed with the approach proposed by the Applicant. Isaac,
C.J., as he then was, stated:
9 I
am aware that the Tax Court has interpreted almost identical sections of the Income
Tax Act2 to mean that the limitation period does not start to
run unless the taxpayer receives the notice of assessment within the statutory
time limit.3 However, this Court has criticized that approach in the
past. In Bowen v. Minister of National Revenue, Stone J.A. cited a
passage from the Tax Court's decision in Antoniou requiring receipt to
start the limitation period, and then stated:
With respect, we are unable to
agree with that conclusion. In our view, it disregards the plain meaning of
subsection 165(3) and section 169 of the [Income Tax] Act...
In our opinion, the duty resting
upon the Minister under subsection 165(3) was to do precisely what he did,
viz., notify the respondent of the confirmation by registered mail. Nothing in
that subsection or in section 169 required the notification to be
"served" personally or to be received by the taxpayer.4
[21]
In the present application, the Respondent
has proved that the Notice of Confirmation was sent by registered mail and was
received by Mr. Calahaisen at
the Applicant’s address. Subsection 248(7) deems the Applicant to have received
the Notice of Confirmation on the date that it is mailed.
[22]
In Schafer, Isaac, C.J.
wrote:
16 In
my respectful view, subsection 334(1) does not create a rebuttable presumption.
I have come to this conclusion for two reasons. The first is the conclusion of
Stone J.A. in Bowen that:
a
requirement for the receipt of the notification would be difficult, if not
totally unworkable, from an administrative standpoint.8
I agree that
it would be extremely difficult to administer a scheme in which a notice is
sent by ordinary first class mail that would require the Minister to contact
every person who has been sent a notice of assessment to ensure that they have,
in fact, received it.
[23]
The wording in subsection 334(1)
of the Excise Tax Act is almost identical to that in subsection 248(7)
of the Act. I conclude that the deeming provision in subsection 248(7)
is not a rebuttable presumption.
[24]
The Minister confirmed the Assessment
on December 6, 2007. The time period for filing the Notice of Appeal was ninety
days from that date; that is, the Notice of Appeal had to be filed by March 6,
2008[5].
[25]
This application for extension of
time was brought pursuant to section 167 of the Act. Subsection 167(5)
of the Act reads as follows:
(5) When order to be made -- 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;
[26]
The time limitation for filing
this application was March 6, 2009. This application was filed with the court
on October 8, 2009 which is beyond the time period allowed by the Act.
Applicant’s
Circumstances
[27]
Counsel for the Applicant argued
that it is just and equitable to make an order extending the time to appeal the
Assessment. He stated that the Applicant believed that her objections to the Assessment
and the 160 Assessment were ongoing; she had retained tax counsel in November
2008 to commence appeals in this Court from both assessments. The Applicant’s
former tax counsel failed to commence either appeal and did not advise the Applicant
until late August 2009.
[28]
Counsel submitted that at all
times the Applicant had a bone fide intention to appeal the Assessment.
[29]
I do not have the jurisdiction to
waive the time limit in the Act. As was stated by Nadon, J. in Carlson
v. R.[6]
at paragraph 13, if a postal failure cannot save a taxpayer, then the Applicant’s
failure to read her mail will not help her.
13 …
As this Court has held on numerous occasions, when a taxpayer is unable to meet
the deadline prescribed by the Act, even by reason of a failure of the postal
system, neither the Minister nor the TCC can come to his help. (See Schafer
v. R., [2000] F.C.J. No. 1480 (Fed. C.A.); Bowen v. Minister of National
Revenue (1991), [1992] 1 F.C. 311 (Fed. C.A.)). Hence, if a postal failure
cannot save a taxpayer, he will not be saved by his failure to grasp the
significance of a notice of assessment served on him.
[30]
The application for extension of
time is dismissed.
Signed at Ottawa, Canada, this 22nd day
of April 2010.
“V.A. Miller”
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