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Citation: 2007TCC690
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Date: 20071113
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Docket: 2007-3118(IT)APP
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BETWEEN:
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NICOLA VESCIO,
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Applicant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR ORDER
Little J.
A. Facts:
[1] The Applicant is a resident of the
City of Etobicoke, Province
of Ontario.
[2] The
Applicant moved to Canada from Italy in 1959.
[3] The
Applicant owns certain real estate assets and he has received rental income and
incurred rental expenses in connection with the real estate assets.
[4] On
July 13, 1992, the Applicant appointed his son, Domenico Vescio (“Domenico”),
as his Power of Attorney pursuant to the Powers of Attorney Act of Ontario.
[5] The
Applicant retained the services of Joseph Perconti of Perconti Bookkeeping
Services Ltd. (“Perconti”) to prepare his T1 tax returns and to deal with any
correspondence.
[6] On
December 17, 2003, a letter was sent by the Canada Revenue Agency (the “CRA”) to
Perconti requesting a substantiation of the rental expenses incurred by the
Applicant.
[7] Perconti
did not respond to the CRA letter, nor did Perconti inform the Applicant of the
letter from the CRA.
[8] On
July 4, 2004, a proposal letter was sent by the CRA to Perconti.
[9] Perconti
did not respond to the proposal letter received from the CRA and Perconti did
not inform the Applicant of the proposal letter.
[10] On October 4, 2004, the CRA issued Notices of Reassessment (the “Reassessment”)
for the Applicant’s 1999, 2000, 2001 and 2002 taxation years. The said
Reassessment denied rental expenses that had been claimed by the Applicant.
[11] Perconti did not file Notices of Objection to the Reassessments.
[12] On July 14, 2005, Perconti attempted to file Amended Rental Income and
Expense Statements plus T1 Adjustments with the CRA.
[13] Domenico testified that in May 2006 he personally “hand delivered” T1 Adjustments
for his father to the Toronto Centre Office of the CRA.
[14] Domenico also testified that he had four meetings with
Ms. Theresa Cortese, an official of the CRA, to discuss the T1
Adjustments and the Amended Rental Income and Expense Statements for his father.
[15] Domenico also testified that during these four meetings with
Ms. Cortese she never at any time indicated to him that a Notice of
Objection should be filed in order to resolve the Applicant’s tax issues.
[16] The deadline date on which Notices of Objection should have been filed
by the Applicant was January 2, 2006.
[17] On March 8, 2007, Mr. James McNamara, C.A., of the CRA sent a registered letter to the Applicant to the attention of
Domenico. In his letter Mr. McNamara said that he was returning all of the
T1 Adjustment Requests along with the supporting documents by registered mail without
a review under the Fairness Legislation (emphasis added).
[18] Domenico further testified that sometime during his four meetings with
officials of the CRA he was told that the CRA had lost the Applicant’s file.
B. Issue
[19] The issue is whether the Applicant should be granted an extension of
time within which to file Notices of Objection for the 1999, 2000, 2001 and 2002
taxation years.
C. Analysis and Decision
[20] Subsection 165(1)
of the Income Tax Act (the “Act”) provides that a taxpayer who
objects to an assessment may serve on the Minister of National Revenue (the
“Minister”) a Notice of Objection within 90 days of the day that is after the
day the Notices of Reassessment were mailed. In this situation all of the
Notices of Reassessment were mailed on October 4, 2004.
[21] Subsection 166.1(1)
of the Act provides that a taxpayer may apply to the Minister to extend
the time within which to serve a Notice of Objection. Paragraph 166.1(7)(a)
provides that an application to extend the time must be made within one year
after the expiration of the time in which to serve a Notice of Objection.
[22] In this situation
the Notices of Objection should have been served by the Applicant within 90
days of October 4, 2005, i.e. sometime before January 2, 2006. Domenico stated
that Notices of Objection were not filed for his father because of the
negligence of Perconti.
[23] If the Applicant had
made an application to extend the time under subsection 166.1(1) the
application should have been made within one year of January 2, 2006, i.e.
sometime before January 2, 2007. Counsel for the Applicant admitted that an
application to extend the time for filing Notices of Objection was not made until
April 23, 2007.
[24] Since the Applicant
did not serve Notices of Objection to the Reassessments within the 90-day
period provided by section 165 of the Act and since the Applicant did
not make an application to extend the time for objecting within the one year
provided by paragraph 166.1(7)(a) of the Act, the Tax Court does not
have the jurisdiction or authority to grant an extension of time to the
Applicant.
[25] In reaching this
conclusion I have referred to a number of Court decisions. The Queen v.
Carlson is a decision of the Federal Court of Appeal
2002 DTC 6893. In the Carlson case Mr. Justice Nadon said at
paragraph 10:
However, both the Minister and the TCC are
precluded under paragraphs 166.1(7)(a) and 166.2(5)(a) of the Act from
extending the time in which to file a notice of objection unless the
application is made within one year after the expiry of the time in which a
notice of objection could have been made.
[26] I have reached this
conclusion reluctantly because of various comments that were made by Domenico
in his sworn and uncontradicted testimony. Domenico said:
1. The Applicant is not
fluent in English. He can neither read nor write nor speak English fluently.
2. The Applicant has
serious health problems. He was diagnosed with leukemia in 1985. He is a
diabetic. He suffered a stroke in 2003. His memory is failing.
3. Domenico said that
he met with Ms. Cortese of the CRA on four occasions over 2 ½ years and he
understood that he was providing her with the information that she required to
resolve his father’s tax issue. Domenico said that during this period no one
from the CRA mentioned that Notices of Objection should be filed.
4. Domenico also said
that he thought he was cooperating with the CRA to resolve the issue. However,
he received a letter from Mr. McNamara dated March 8, 2007 in which Mr. McNamara stated
the documents were being returned without a review under the Fairness
Legislation.
Note: Counsel for the
Respondent did not produce Ms. Cortese or Mr. McNamara as witnesses to
refute, clarify or deny any of the statements made by Domenico.
[27] From an examination
of the evidence, it appears that officials of the CRA were acting in an
unusual, uncooperative and misleading way in their dealings with Domenico.
[28] The Federal Cabinet
has the authority under subsection 23(2) of the Financial
Administration Act to remit or waive tax. Subsection 23(2) of the Financial
Administration Act reads as follows:
23. (2) The Governor in
Council may, on the recommendation of the Treasury Board and when he considers
it in the public interest, remit any tax, fees or penalty.
[29] The Minister also
has the power under the Fairness Legislation in the Act to waive
interest or penalties. Information Circular No. 92-2 refers to the Fairness Legislation
and provides as follows:
1. … The legislation
[i.e. the fairness legislation] gives discretion to cancel or waive all or a
portion of any interest or penalties payable, and it applies to taxation years
back to 1985.
[30] I also refer to
Paragraphs 11 and 12 of the Taxpayer Bill of Rights which reads as follows:
11. You have the right to expect us to
be accountable.
You have the right to
expect us to be accountable for what we do. When we make a decision about your
tax or benefit affairs, we will explain that decision and inform you about your
rights and obligations in respect of that decision. We are also accountable to
Parliament, and through Parliament to Canadians, for what we do. We report to
Parliament on our performance with respect to tax services and benefit programs
and the results we achieve against our published service standards.
12. You have the
right to relief from penalties and interest under tax legislation because of
extraordinary circumstances.
You can expect us to
consider your request to waive or cancel in whole or in part any penalty and
interest charges if you were prevented from complying with your tax obligations
because of circumstances beyond your control, e.g. a disaster such as a flood
or fire, or if penalty or interest arose primarily because of erroneous actions
of the CRA, e.g. material available to the public contained errors which led
you to file incorrect returns or make incorrect payments based on incorrect
information.
[31] This may be a
situation where the Minister should consider exercising his power either under
the Financial Administration Act or the Fairness Legislation contained
in the Income Tax Act.
[32] The Motion filed by
the Applicant is dismissed.
Signed at Ottawa, Ontario, this 13th day of November
2007.
Little
J.
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