Citation: 2008TCC318
Date: 20080526
Docket: 2007-1093(IT)APP
BETWEEN:
LOUIS MILLS,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Jorré J.
[1]
This is an application
under section 167 of the Income Tax Act ("ITA") for an
order extending the time in which to institute an appeal from the reassessments
made for the 2003 and 2004 taxation years.
[2]
Subsection 167(3) of
the ITA states that the application must be accompanied by three copies of the
notice of appeal. Based on the notice of appeal, this dispute pertains to (i) a
capital cost allowance of $50,000 in 2003 and $50,000 in 2004 in respect of a
software licence, and (ii) a 50% penalty imposed under subsection 162(2)
of the ITA.
[3]
The Applicant, Dr.
Louis Mills, did not testify.
[4]
No evidence was
submitted with respect to some of the facts alleged in the application.
Facts
[5]
There was one witness,
namely Fannie Roy Huard, an assistant financial planner with Pascale Cauchi. The
Respondent tendered six exhibits.
[6]
Ms. Huard testified
that the Respondent had been a client for 10 years and was a veterinarian in
the Drummondville area.
[7]
Under the procedure in
place, clients were notified that if they were assessed, they should
immediately fax the documents to the office of Pascale Cauchi so that it could
forward them [TRANSLATION] ". . . to the Prospector office,
which mandated Jacques Matte to file any objection regarding the matter."
[8]
Prospector Master owned
the franchises that had been reassessed.
[9]
The Applicant asked
that an objection against the reassessments be lodged.
[10]
Pascale Cauchi had more
than 100 clients with this type of problem, but the Applicant's case was
different because he was the only person to have been assessed by the federal
authorities; the others were assessed by the provincial authorities.
[11]
The objections to the
provincial assessments were made, and applications were filed with the Court of
Québec.
[12]
The firm of Pascale
Cauchi got a phone call from the Applicant, who told them that his bank account
had been seized. This is when Ms. Huard learned [TRANSLATION]
". . . that the objection had not been filed as requested
by the client."
[13]
On cross-examination,
Ms. Huard confirmed that she had sent the fax in order for the objection to be filed
by Prospector Master, not by attorney Jacques Matte.
[14]
On May 19, 2005, the
Canada Revenue Agency wrote the Applicant to notify him that it would be examining
his 2003 income tax return, and to request additional information (Exhibit I-1).
[15]
On July 11, 2005, the
Canada Revenue Agency wrote to the Applicant again in order to notify him
that it had not received anything further to its letter of May 19, 2005,
and to request information again (Exhibit I-2).
[16]
On August 19, 2005, the
Canada Revenue Agency wrote to the Applicant once again, stating:
[TRANSLATION]
Further to your telephone message of July 15 asking that we contact
your attorney Mr. Matte, we left him messages on July 18 and August 16,
2005, but he never returned our calls.
The letter explained to the Applicant that since he
did not provide the information requested in the letters dated May 19 and July
11, 2005, the Canada Revenue Agency was contemplating a reassessment along with
penalties totalling 50%. The letter stated that the Applicant had until
September 6, 2005 to provide any information or explanations that he deemed helpful.
It said that if the Agency did not receive the information by that date, it
would issue a reassessment (Exhibit I-3).
[17]
The Minister assessed
the Applicant on October 31, 2005, and the Applicant filed notices of
objection dated November 8, 2005.
[18]
On January 25, 2006, the
Canada Revenue Agency wrote Dr. Mills about the objection, asking him to
contact the appeals officer as soon as possible (Exhibit I‑4).
[19]
On March 15, 2006, the
Canada Revenue Agency wrote to Mr. Matte and sent a copy of the letter to
the Applicant (Exhibit I-6). The first two paragraphs state:
[TRANSLATION]
We wrote and telephoned you about the above-mentioned objections,
but, as of this date, we have received no answer.
If you do not contact us by March 24, 2006, we will
process the objections using the information that is in our possession.
[20]
The Minister confirmed
the assessments on March 30, 2006.
[21]
The notice of account
dated October 25, 2006 (Exhibit I-5, page 2) was received by Ms. Huard, who
faxed it to Luc Bouchard. It is a final notice. Ms. Huard also received
notices of account pertaining to the Applicant prior to that date.
[22]
The final notice states
that the Agency may initiate collection measures if the amount is not paid or
the Applicant does not notify the Agency that he intends to file a notice of
objection.
[23]
Luc Bouchard is an
employee of Prospector and is responsible for regulatory and tax issues.
[24]
He sent documents to
the Canada Revenue Agency by fax on November 21, 2006 (Exhibit I-5).
[25]
The cover page says,
among other things: [TRANSLATION] "[H]ere is the notice of objection for
Louis Mills for the years 2003 and 2004". The notices of objection dated
November 8, 2005, and the notice of account dated October 25, 2006, are
attached to the cover page.
[26]
Ms. Huard said that she
learned, around February or March 2007, that the Applicant's bank account had
been seized.
[27]
The application for an
extension of time, dated February 27, 2007, was filed in this Court
the following day.
Analysis
[28]
The period prescribed
by subsection 169(1) of the ITA for instituting an appeal from the confirmation
of the reassessments ended in late June 2006. The instant application
was filed in late February 2007, which is eight months later, and falls
within the one-year period in which such an application may be made (this is
the first condition that must be met by such an application.)
[29]
Paragraph 167(5)(b)
of the ITA sets out four more conditions:
(b) the taxpayer demonstrates
(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.
[30]
The Applicant did not
argue that he was unable to act or instruct someone else to act in his name, and
he did not argue subparagraph 167(5)(b)(iv) of the ITA. Thus, I must
determine whether the evidence shows that the following three conditions have
been met:
(a) the taxpayer had a bona
fide intention to appeal,
(b) given the reasons set
out in the application and the circumstances of the case, it would be just and
equitable to grant the application, and
(c) the application was
made as soon as circumstances permitted.
[31]
We have no testimony
from the Applicant concerning his intention. We have no testimony from
Mr. Matte concerning the mandate that he was given and when it was given.
We have no documents concerning that mandate.
[32]
All we have is the
testimony of Ms. Huard, who acted as a liaison between the Applicant and
Prospector, and who, in turn, "mandated" Mr. Matte. She described
the practice that was followed when clients were having problems with Revenu Québec
or the Canada Revenue Agency, but her testimony did not establish that the
Applicant specifically asked for an appeal to be lodged from the reassessments.
[33]
Her testimony was
always about an objection, not a notice of appeal, even in response to a
question that contained a reference to a notice of appeal.
[34]
On November 21, 2006, Prospector sent the notices of objection to the
Canada Revenue Agency even though the confirmation had been issued on
March 30, 2006.
This would be surprising, assuming the Applicant sent the confirmation to
Ms. Huard and asked that a notice of appeal be filed — a request that Ms.
Huard would have forwarded to Prospector and that Prospector would have
forwarded to Mr. Matte if the process that she described had been followed.
[35]
The evidence as a
whole, and notably the elements that I have just described, lead me to the
conclusion that the Applicant has not shown that he had a bona fide intention
to institute an appeal within the time otherwise allotted.
[36]
Although it is not necessary
to consider the other two conditions, I would add that even if a bona fide
intention existed, the Applicant has not shown that the application for the
extension was made as soon as circumstances permitted. Ms. Huard testified
about when she became aware [TRANSLATION] "that the objection had not
been filed as requested by the client."
However, without the Applicant's testimony, we do not know when he became aware
that no appeal was under way, and thus, without knowing the starting point, there
is no way of knowing whether the application was made as soon as circumstances
permitted.
[37]
The result might have
been different if the Applicant had testified and there had been evidence concerning
certain allegations made in the application for an extension. Following the
initial hearing, I decided to reopen the hearing by telephone conference, and, given
the special circumstances, I decided, exceptionally, to give the Applicant the
opportunity to present additional evidence.
The Applicant chose not to present additional evidence.
Conclusion
[38]
The Applicant has not
shown that he meets all the conditions set out in subsection 167(5) of the ITA.
Consequently, the application is dismissed.
Signed at Ottawa,
Canada, this 26th day of May 2008.
"Gaston Jorré"
Translation
certified true
on this 9th day of
July 2008.
Brian McCordick,
Translator
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