Citation: 2008TCC55
Date: 20080130
Docket: 2007-3055(IT)I
BETWEEN:
741290 ONTARIO INC.,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Rossiter, J.
A. Introduction/Background
[1] The Appellant was assessed
by Canada Revenue Agency (“CRA”) for failure to pay source deductions from 1991
to 1999. The Appellant asserts it has never received Notices of Assessment for the
1991 to 1999 taxation years. The Respondent asserts that the Notices were mailed
to the Appellant at its registered business address and that it also provided
to the Appellant reconstructed Notices of Assessment in 2006. The Appellant, in
the meantime had; (1) made five applications under the so called Fairness
Provisions of the Income Tax Act (or other acts as the case may be); (2)
made numerous payments on the account as well as received ongoing statements of
accounts; and (3) had discussions with representatives of CRA. The Respondent
brought a Motion to Quash the Appeal.
B. Issue
[2] The application brings
forth a single issue.
Did the Appellant bring its appeal
to the Tax Court of Canada within the appropriate limitation periods with
respect to unremitted source deductions under the Unemployment Insurance Act
(“UIA”), Employment Insurance Act (“EIA”), Canada Pension Plan (“CPP”) and the Income
Tax Act (“ITA”)?
C. Facts
[3] The Appellant was a
corporation operating a nursing home in Toronto, Ontario in the 1990's with the
business ceasing operations in 1998. From 1991 through to 1999 the Appellant
was assessed for failure to pay source deductions with respect to income tax, unemployment
insurance and CPP premiums. CRA asserts that it mailed Notices of Assessment
between April 13, 1992 and July 14, 1999, to the Appellant at its registered
business address which remained the same throughout the 10 year operation of the
nursing home in Toronto. Throughout this period of time, the Appellant made numerous payments on
both its current and arrears accounts to CRA. The Appellant also applied on five
occasions for relief pursuant to the Fairness Provisions of the applicable act:
1. On
July 13, 1993, CRA granted relief from a penalty assessed in the amount of
$24,658.51 and further interest in the amount of $15,452.39 in relation to the
Appellant's 1991 and 1992 debts.
2. On
November 21, 1994, the CRA denied a second Fairness application made by the
Appellant.
3. On
January 17, 1997, CRA denied a third Fairness application made by the
Appellant.
4. On
March 15, 2001, CRA denied a fourth Fairness application made by the Appellant.
5. On
February 15, 2004, the Appellant’s principal, Stella Pinnock, inquired about
other requests she had made to CRA in seeking an appeal before the Fairness
Review Committee.
6. On
March 3, 2004, the Appellant was advised that no further reviews would take
place until Mr. and Mrs. Pinnock’s director’s liability appeals relating to the
Appellant were resolved.
7. On
November 15, 2005, a fifth Fairness application made by the Appellant was
denied.
[4] CRA also obtained
three Certificates and Writs of Seizure from the Federal Court of Canada with
respect to the amounts payable due to the Appellant's unremitted source deductions,
penalties and interest (December 8, 1994, September 29, 1998 and January 17,
2005).
[5] On November 25,
2005 the Appellant applied to the Federal Court of Canada for a stay of the collection
action initiated against the Appellant by CRA and it was during these
proceedings that CRA reconstructed the Notices of Assessment issued on 2006.
[6] On January 23,
2007, the Appellant attempted to file 87 Notices of Objection with CRA relating
to the Notices of Assessment.
[7] On March 22, 2007,
CRA advised the Appellant by correspondence that the time for objecting to the
assessments had expired and that CRA would not accept the objections.
[8] On April 2, 2007
the Appellant was again advised by CRA that the objections would not be accepted
as they were filed several years after the deadline to object had expired.
[9] On June 21,
2007 the Appellant appealed to the Tax Court of Canada.
D. Position of the
Parties
1. Position of the Appellant
[10] The Appellant has
taken the position that:
(1) they have never
received the Notices of Assessment and assert the only evidence on the motion
on this point is the affidavit of the principal of the Appellant, Stella
Pinnock, to the effect that the Appellant never received the Notices of
Assessment;
(2) the time for appeal
does not run until the Appellant was actually notified of the Assessments, which
did not occur until the reconstructed Notices of Assessment were received by
the Appellants and therefore their Notices of Objection were on time;
(3) the Appellant must
know the actual content of the assessments, not just be aware that the
assessments exist;
(4) the Respondent has
not proven to the Court that the Notices of Assessment were in fact mailed to
the Appellant as required by the ITA, CPP and the EIA.
2. Position of the
Respondent
[11] The Respondent takes
the position that: (1) the Notices of Assessment were mailed to the Appellant;
(2) there is substantial evidence that the Appellant knew of the assessments by
their five Fairness applications, the payments on account, receiving the CRA
statements of account, and the Appellant's continuing discussions with CRA.
E. Analysis
1. Limitation Periods
[12] In considering the issue
of whether the Appellant is timely in filing its 87 Notices of Objection on
January 23, 2007 relating to the Notices of Assessment issued by CRA, one must
examine the applicable limitation periods. The limitation periods vary depending
on the time each Notice of Assessment was issued because of legislative changes
between 1991 through to 1999.
(A) Income Tax Act
Subsection 165(1) of the ITA states
in part as follows:
A taxpayer who objects to an
assessment under this Part may serve on the Minister a notice of objection, in
writing, setting out the reasons for the objection and all relevant facts,
...
(b) in any other case, on
or before the day that is 90 days after the day of mailing of the notice of assessment.
[Emphasis added.].
(B) Canada Pension Plan
The limitation period
for objections under the CPP changed in 1997. Appeals for
reconsideration occurring before December 18, 1997 are governed by subsection
27(2) of the former CPP which states as follows:
Where the Minister has assessed an
employer for an amount payable by him under this Act, the employer or his
representative may appeal to the Minister for a reconsideration of the
assessment, either as to whether any amount should be payable or as to the
amount assessed, within ninety days of the day of mailing of of the notice
of assessment. [Emphasis
Added]
The current limitation period for
appeals under the CPP arising on or after December 18, 1997 is contained
in section 27.1 of the Plan:
An employer who has been assessed under
section 22 may appeal to the Minister for a reconsideration of the assessment,
either as to whether an amount should be assessed as payable or as to the
amount assessed, within 90 days after being notified of the assessment.
[Emphasis Added]
(C) Employment Insurance
Act/Unemployment Insurance Act
Similarly any appeals for
reconsideration, which arose before June 30, 1996 are governed by subsection
61(2) of the UIA which states as follows:
Where the Minister has assessed an
employer for an amount payable by him under this Act, the employer may appeal
to the Minister for a reconsideration of the assessment, either as to whether
any amount should be assessed as payable or as to the amount so assessed, within
ninety days of the day of mailing of the notice of assessment. [Emphasis
Added]
If the appeals to assessment arose
with respect to assessments on or after June 30, 1996 then the current
limitation period is applicable under the EIA, section 92 of the Act,
which states as follows:
An employer who has been assessed under
section 85 may appeal to the Minister for reconsideration of the assessment,
either as to whether an amount should be assessed as payable or as to the
amount assessed, within ninety days after being notified of the assessment.
[Emphasis Added]
[13] In summary, the limitation
periods are as follows:
1. Under
the ITA the Notice of Objection must be served on or before 90 days after
the day of mailing of the Notice of Assessment.
2.
The
limitation period in subparagraph 1 is also applicable for CPP and UIA
matters where the appeal for reconsideration, under the CPP relates to
an assessment occurring before December 18, 1997 and under the UIA,
where the assessment relates to a matter that arose before June 30, 1996.
3.
In
assessments under the CPP which arose on or after December 18, 1997
and in assessments under the EIA which relate to matters which arose on
or after June 30, 1996 the appeals for reconsideration must be served on the
Minister within 90 days after being notified of the assessment.
It should be noted that notification
is considerably different than the mailing of the Notice of Assessment and as
such that there are different limitation periods.
2. Assessments that Require Mailing
[14] With respect to
mailing, there are several statutory provisions that ease the evidentiary
burden on the Respondent to establish that limitation periods have been
triggered.
(A) Income
Tax Act
[15] Subsection 244(14)
of the ITA states that where a Notice of Assessment has been mailed it
is presumed to be mailed on the date on the Notice of Assessment:
For the purposes of this Act,
where ... any notice of assessment or determination is mailed, it shall be presumed
to be mailed on the date of that notice or notification.
[16] Also, if the
assessment was sent by first class mail the ITA deems it to be received
by the taxpayer on the date it was sent pursuant to subsection 248(7):
For the purposes of this Act,
(a) anything (other than a remittance or
payment described in paragraph (b)) sent by first class mail or its equivalent
shall be deemed to have been received by the person to whom it was sent on the
day it was mailed; …
[17] The presumption that
something was received on the date that it was mailed is not rebutable. See Schafer
v. R, [2000] G.S.T.C. 82 (F.C.A.). See also McClelland v. R., [2007]
5 C.T.C. 109 (F.C.A).
[18] These provisions
created a presumption that if the Minister can establish that a Notice of
Assessment was mailed, the limitation period begins to run on the date listed
on the Notice of Assessment.
[19] The Minister enjoys
a further presumption, that under the appropriate circumstances a copy of a
document is proof of the original document. This presumption is found in subsection
244(9) of the ITA:
An affidavit of an officer of the Department
of National Revenue, sworn before a commissioner or other person authorized to
take affidavits, setting out that he has charge of the appropriate records and
that a document annexed thereto is a document or true copy of a document made
by or on behalf of the Minister or a person exercising the powers of the
Minister or by or on behalf of a taxpayer, shall, be received as prima facie
evidence of the nature and contents of the document and shall be admissible in
evidence and have the same probative force as the original document would have
if it had been proven in the ordinary way.
[20] This presumption
could be useful to the Respondent as there are no existing copies of the
original assessment, according to the evidence of this Motion. With sufficient
affidavit evidence supporting the reconstructed Notices of Assessment, they can
be accepted as true copies of the original Notices of Assessment.
[21] Also, under appropriate
circumstances, the Respondent can avail himself of a presumption that certain
documents, including notices have been mailed. subsection 244(5) of the ITA states:
Where, by this Act or a regulation,
provision is made for sending by mail a request for information, notice or
demand, an affidavit of an officer of the Canada Revenue Agency, sworn before a
commissioner or other person authorized to take affidavits, setting out that
the officer has knowledge of the facts in the particular case, that such a
request, notice or demand was sent by registered letter on a named day to the
person whom it was addressed (indicating the address) and that the officer identifies
as exhibits attached to the affidavit the post office certificate of
registration of the letter or a true copy of the relevant portion thereof and a
true copy of the request, notice or demand, shall, in the absence of proof to
the contrary, be received as evidence of the sending and of the request, notice
or demand.
B. Canada
Pension Plan
[22] The CPP incorporates
section 244 of the ITA by reference by subsection 23(2) of the CPP.
The pre-1997 version of the CPP contained a similar provision.
C. Employment
Insurance Act
[23] With respect to
mailing, the EIA uses a deeming provision instead of an evidentiary
presumption. Subsection 85(4) of the EIA states:
The day of mailing of a
notice of assessment described in subsection (2) is, in the absence of any
evidence to the contrary deemed to be the day appearing from the notice to be the
date of the notice unless called into the question by the Minister or by a
person acting for the Minister or for Her Majesty.
[24] Before I make reference
to what is required of the Respondent on this Motion to Quash, the Appellant in
its defence in the Motion to Quash emphasized the September 20, 2007 affidavit
of Stella Pinnock, the principal of the Appellant who administered the affairs
of the Appellant wherein she stated in paragraph 2 in part as follows:
... I say unequivocally that at no time
was the corporation in receipt of any Notice of Assessment concerning the
continuous assessments of payroll source deduction discrepancies.
[25] The essence of the
Appellant's position is that the Appellant never received the Notices of
Assessment alleged to have been mailed to the Appellant by the Respondent not
that the Respondent never mailed the Notices of Assessment to the Appellant. There
is a significant difference between presenting an argument that the Respondent
never mailed the Notices of Assessment as compared to the assertion that the
Appellant never received the Notices of Assessment. In Schafer, supra, it
was determined that the receipt by a taxpayer of a Notice of Assessment is
irrelevant in determining the limitation period for filing a Notice of
Objection. The taxpayer was only opposing the Motion on the basis that it had
not received the Notice of Assessment. Here, the Appellant has cited a variety
of cases which relate to whether or not a Notice of Assessment was mailed by
CRA. Aztec Industries Inc. v. Canada, [1995] 1 C.T.C. 327
(F.C.A.), Katepwa Park Golf Partnership v. Canada, [2000] 3 C.T.C. 2043 (T.C.C.) and
Central Springs Ltd. v. Canada, 2006 D.T.C. 3597 (T.C.C.). Though there is a
reference to mailing in the Appellant’s motion, the Appellant argued the assessments
were not received and repeatedly referred to the fact that there was the
uncontroverted and unchallenged evidence before the court from the affidavit of
Stella Pinnock referred to earlier. This affidavit is not evidence that the
Notices of Assessment were not mailed; it was simply evidence that the
Appellant did not receive the Notices of Assessment and as a result, based upon
Schafer, supra, this argument is unsuccessful.
[26] In looking at what is
required of the Respondent on this Motion to Quash, I refer to Aztec
Industries Inc., supra, where the taxpayer brought an application to the Tax
Court of Canada for an extension of time to file a Notice of Objection. The
Court denied the application holding that it was out of time. The Federal Court
of Appeal heard an application for Judicial Review of the Tax Court of Canada
decision and concluded that there were no facts tendered by the Minister to
establish that a Notice of Assessment was ever mailed to the taxpayer. The
Minister was only able to establish that final requests for payment had been
issued to the taxpayer. The Federal Court of Appeal allowed the application
directing the Tax Court of Canada to deny the application for extension of time
on different grounds. Although it was not explained, the Appeal Court seemed to be of the
opinion that given that the mailing of the Notice of Assessment had not been
proven, the taxpayer does not require an extension of time in order to file a
Notice of Objection. At paragraph 12 of the decision, Hugessen, J. stated as follows:
Where as in
the present case, a taxpayer alleges not only that he has not received the
notice of assessment but that no such notice was ever issued, the burden of
proving the existence of the notice and the date of its mailing must
necessarily fall on the Minister; the facts are peculiarly within his knowledge
and he alone controls the means of adducing evidence of them. A number of
statutory provisions recognize the Minister's burden in this respect and are
clearly designed to alleviate it.
[27] Also, in that case the
evidence tendered by CRA, only amounted to bald assertions that the assessments
had been mailed. In cross-examination it was revealed that the affiant only
became active on the file some nine years after the purported Notices of
Assessment were sent, and did not work in the Tax Services Office where the
Notices would have been prepared and sent.
[28] In the case at bar,
there was no complaint, nor argument that the Notices of Assessment were not
mailed - it was argued that they were not received. Maybe the Appellant assumed
that if the assessments were not received, they were not mailed. The burden is still
upon the Minister to prove that they were indeed mailed. The Aztec case
sets the standard which the Respondent must meet in order to show that an
assessment has been mailed.
[29] In Central
Springs Ltd. v. Canada, supra, the taxpayer was seeking an Order to
extend the time to file a Notice of Objection. The Minister tendered an affidavit
from a CRA official stating that she had control over the relevant documents
and that Notices of Assessment had been sent. The Court in considering the
affidavit and in cross-examination of the CRA official found that she did not
have control over the computer where all pertinent records were stored nor did
she have any knowledge of the process for mailing the Notices of Assessment.
The Court went on to prefer the uncontested evidence given by the representatives
of the Appellant. The reason for not being aware of the Notices of Assessment
according to the representatives of the Appellant was that they had an
agreement with two CRA officials that no Notices of Assessment would be issued
pending the conclusion of a lengthy trial that was occupying the Appellant.
This case seems to support the view that a bald assertion by a CRA official
must outweigh the evidence tendered by the Appellant for CRA to establish that
Notices of Assessment were sent. The question arises whether or not a bald
assertion by a CRA official is enough evidence to prove that the Notices of
Assessment were mailed.
[30] The principles in Aztec
Industries Inc., supra, were followed in several cases including Kovacevic
v. Canada, [2002] 4 C.T.C. 2325 (T.C.C.), Massarotto v. R., [2000]
G.S.T.C. 19 (Eng.) (T.C.C.), Rick
Pearson Auto Transport Inc. v. Canada,
[1996] G.S.T.C. 44 (T.C.C.), amongst others.
[31] The common thread
amongst all of these cases is that the Minister must tender evidence to
establish that the Notices of Assessment were mailed. Seldom will testimony be
available that someone within CRA recalls having sent the particular Notice of
Assessment and normally CRA would discharge this burden by providing affidavits
or calling witnesses to testify as to the procedure for preparing a Notice of
Assessment and the ordinary mailing procedures followed by CRA (see for example
the sort of evidence tendered in Abraham v. R., [2004] 5 C.T.C. 2149 (T.C.C.).
CRA evidence will be given greater weight when more details of procedures are
provided and where cross-examination does not shake the evidence given.
[32] Reference should
also be made to Tomaszewski v. R., [2004] 2 C.T.C. 2341 (T.C.C.) wherein
Madam Justice Woods dealt with the weak evidence supporting CRA's contention
that a Notice of Assessment had been sent. Justice Woods found that the Appellant’s
previous knowledge of the tax liability provides no support for the contention
that the Notice of Assessment was mailed in the first place.
[33] What evidence has
been adduced to establish that the Notices of Assessment were mailed in order
for the Respondent to have the benefit of sections 244 and subsection 248(7) of
the ITA, subsection 23(2) of the CPP and subsection 85(4) of the
EIA and to trigger the limitation periods contained in subsection 165(1) of
the ITA, former subsection 27(2) of the CPP and subsection 61(2)
of the UIA?
[34] There is very
little evidence to support the Respondent’s position that the Notices of
Assessment were mailed during the period of 1991 and 1999. Firstly, there is a
statement in paragraph 26 of the Respondent’s Memorandum of Fact and Law which
states the affidavit of Ms. Ebanks establishes that the impugned assessments
were “mailed or otherwise communicated” to the Appellant. The statutory requirement
is mailing. The assessment being “otherwise communicated” does not begin the
limitation period for the filing of a Notice of Objection or appeal. The only
reference in Ms. Ebanks’ affidavit of August 28, 2007 that the original Notices
of Assessment were mailed was the following statement in paragraph 4 of the
affidavit:
As mentioned
at paragraphs 87 and 88 of the aforementioned affidavit, I caused to have
prepared 93 reconstructed Notices of Assessment, which were originally mailed
to the Appellant during the period from April 13, 1992 to July 14, 1999.
Secondly, in paragraph 8 of Ms. Ebanks’ affidavit of
October 25, 2006, she states that:
The CRA raised numerous assessments against 741290 for unremitted
employee taxes, employee contributions to CPP and EI, and employer
contributions to CPP and EI for the 1988 to 1998 taxation years inclusive.
Thirdly,
in paragraphs 73 and 74 of Ms. Ebanks’ affidavit of October 25, 2006 she states
that:
73 Lastly, at
paragraph 21 of her affidavit, Ms. Pinnock seems to be denying that the
corporation has ever received any tax assessment for corporate tax or payroll in
the almost 20 years the corporation has existed. This seems incredible. Some of
the assessments raised were as a consequence of payroll audits. As I understand
the process, a representative of the taxpayer (corporation) is normally
required to sign a payroll audit.
74 Also, at
paragraph 21 of her affidavit she suggests that the CRA advised that no Notices
of Assessment are ‘available’. She does not specify who at CRA she asked for
copies of the assessments, or when a request was made. She does not elaborate
on what is or is not available. I see no indication on the CRA collection docket
of any request by Ms. Pinnock or the company for copies of the various Notices
of Assessment. Notices of Assessment are issued to the taxpayer. I attach
hereto Exhibit ‘HH’ a true copy of an excerpt from the CRA online payroll
manual that explains when and how payroll assessments are issued. Copies are
not retained by the CRA, although the information contained on the assessment
is. A Notice of Assessment can be reconstructed by the CRA based on information
in the CRA computer system, but it takes a time to create these. I attach
hereto as Exhibit ‘II’ the portions of the CRA payroll manual that explains how
this can be done.
These
statements, referred to aforesaid paragraphs 8 and 73 and 74 of Ms. Ebanks’ affidavit
of October 25, 2006, only suggest that CRA raised the assessments – it does not
address whether or not the assessments were ever mailed.
Fourthly,
in paragraph 87 of Ms. Ebanks’ affidavit of October 25, 2006 she states that:
As a result of
the Applicant questioning the arrears, I caused to have prepared re-constructed
Notices of Assessment for the period of the relevant arrears. … The information
on each of these reconstructed notices of assessment is as stored in the CRA
computer mainframe.
This
information may be useful insofar that it establishes the likely contents of an
original Notice of Assessment, however it does not address the issue as to
whether or not any such original Notice of Assessment was ever issued or mailed
to the taxpayer.
The
affiant swore to materially the same thing on paragraph 4 in her affidavit of
August 28, 2007.
Fifthly,
in paragraph 14 of Ms. Ebanks’ affidavit of August 27, 2007 she makes an
assertion that the Notices of Assessment were issued during the nine year
period from 1991 to 1999. This is merely a bald assertion by Ms. Ebanks and does
not address the issue of mailing, as to who mailed them, when they were mailed,
from what office they were mailed and other information to confirm the mailing.
Finally,
there are two exhibit letters. The first from Karyn Thuss, Team Leader, CPP/EI
Appeals, dated March 22, 2007 and the second from Mark Okonski, CGA Team
Leader, Appeals, dated April 2, 2007. The Thuss correspondence makes no
reference to the mailing of the assessments and only makes references to 90
days after being notified of the assessments. This was referring to assessments
from 1991 to 1998. The Okonski correspondence relates to an objection under the
Income Tax Act and again refers to the assessments that have been issued
between 1991 and 1999 and again no reference to mailing. Both correspondences
expressed the opinion that the Notices of Objection were filed too late,
however, neither letter states the basis of this belief, on searches of the CRA
computer or the actual particularization of when the assessments were mailed.
[35] There is a lack
of evidence, to establish the basis of when, where, how and by whom the
original Notices of Assessment were mailed to the Appellant. Given the lack of
evidence to establish that the particulars of mailing of the Notices of
Assessment to the Appellant, the Respondent’s Motion to Quash the Notice of
Appeal as it relates to the Notices of Assessment under the ITA, and the
Notices of Assessment under the CPP, for the period before December 18,
1997 and the Notices of Assessment under the UIA, for the period before
June 30, 1996 should be dismissed on this basis alone but more will be said on
this point later herein.
3. Assessments that
Require Notification
[36] There are still outstanding assessments under the CPP for the
period on or after December 18, 1997 and assessments under the EIA for
the period on or after June 30, 1996.
[37] Under the CPP,
the current limitation period for appeals of assessments arising on or after
December 18, 1997, is 90 days after the employer is notified of the assessment
(section 27.1).
[38] The current limitation
period for appeals of assessments under the EIA which arose on or after
June 30, 1996 is 90 days after the employer is notified of the assessment
(section 92).
[39] In Sajim v.
M.N.R., [1989] F.C.J. No. 821 (T.D.) aff’d [1990] F.C.J. No. 232 (C.A.),
the issue was whether a solicitor had been properly served with the Minister’s
decision under the Customs Act. The Customs Act required
service by registered mail however the 90 day limitation period began to run
only when the person was notified. The Court held that notified meant when the
Notice was received by the solicitor, not when it was sent.
[40] The Court held that
it was open to the Plaintiff to dispute when a Notice had been received even
though the Crown could establish the date of mailing. In Brière v. Canada
(Employment and Immigration Commission)
(1988) 93 N.R. 115 (Fed. C.A.) at paragraph 57 (QL), Lacombe, J.A. held that to
notify in law means “to make known, to give notice to inform”. In Hornby
(Re), [1993] F.C.J. No. 431 (T.D.) the Court quoted from the The Concise
Oxford Dictionary, seventh edition, to find that “notify” means to “make
known, announce, report; inform, give notice to, …”. The Court also held that
this involved the taking of some sort of concrete action on the part of the
notifying party.
[41] These cases would
leave one to believe that the taxpayer must actually receive some form of the Notices
of Assessment against it. This does not necessarily mean the taxpayer must actually
receive the assessment. The statute does not say “90 days after receiving the
Notice of Assessment” but “90 days after being notified of the assessment”. If
the contents and effect of a communication with the employer is sufficient to
allow the employer to be informed of the contents of the assessment, then this
can be sufficient notice. The employer would be in a position to object and protect
its legal rights.
[42] The question then
becomes, has the Respondent established that the Appellant was indeed notified
of the assessments? I believe based on the evidence before the Court that the
Appellant was notified of the assessments liability.
Firstly,
the Appellant paid current and arrears amounts pursuant to the Notices of
Assessment. This demonstrates that the Appellant at least knew there were
assessment liabilities.
Secondly,
the Appellant made five so called Fairness applications one of which was successful.
It seems somewhat odd that the Appellant would be sufficiently aware of assessment
liabilities, to challenge interest and penalties based on the assessment
liabilities, yet be sufficiently unaware of their nature, that they were not
notified of the assessments. This is totally a contradiction.
Thirdly,
the Respondent sent out “several statements of account” to the Appellant
regarding the assessment liabilities. These statements were issued pursuant to requests
made by the Appellant. These statements were intended to satisfy the Appellant
about the particulars of the assessment. Keeping in mind, what I believe “notify”
to mean, these statements taken with other information in the knowledge of the
Appellant could serve as notification of the Notices of Assessment.
Fourthly,
three Certificates and Writs of Seizure were obtained by CRA against the
Appellant – December 8, 1994, September 29, 1998 and January 17, 2005. Such
certificates and writs could put the Appellant on notice that something was
amiss if nothing else.
Fifthly,
three liens were registered against the property of the Appellant – November
10, 2004, October 28, 2004 and February 21, 2005, respectively.
[43] With the evidence
before me, it is almost impossible to state that the Appellant was not notified
of the assessments liability - quite to the contrary - the Appellant obviously was
notified of the assessments liability if for no other reason than the Appellant
made numerous applications under the Fairness Provisions. How could the
applications be made under the Fairness Provisions of the ITA (and EIA
and CPP as the case may be) if the Appellant had not been
notified of the Assessments?
[44] As part of the
defence, on the Motion, Stella Pinnock stated in her affidavit that she was
preoccupied with securing funds to satisfy CRA and dealing with unionized employees
and financial issues – this argument is absolutely no defence to the motion.
[45] Quite clearly,
the Appellant had to be notified or had to have had notice of the assessments
under the CPP and EIA in order for the Appellant to pursue the
Fairness application. (The EIA by section 99 and CPP by
subsection 23(2) each incorporate by reference subsection 220(3.1) of the ITA,
the Fairness interest relief provision of the ITA) Assuming that the
very last Fairness application was applied for and the denial was
received on the same date, November 15, 2005, the limitation period would
commence to run from that particular point in time. I only make reference to
the Fairness applications because those were applications, taken by the
Appellant. There is the other evidence referred to, to show, that the Appellant
had to have been notified. Given that the Notices of Objection were filed on
January 23, 2007, the Appellant was well out of time so it would appear the
Respondent should be successful on its motion as it relates to the assessments
under the CPP which arose on or after December 18, 1997 and the assessments
under the EIA which arose on or after June 30, 1996 but that does
not end the matter.
4. No Decision by the
Minister
[46] The Respondent raised an alternative argument that no decision has been
made by the Minister and therefore there is nothing to appeal and the Tax Court
of Canada has no jurisdiction to entertain the appeal.
Canada
Pension Plan
[47] The relevance of a decision
being made by the Minister for the CPP portion of the appeal is based on
the statutory appeal provisions in the CPP. Former subsection 28(1) of
the Canada Pension Plan, as amended by R.S.C. 1985, c. 51 (4th Supp.),
in force from January 1, 1991 until December 18th, 1997, read as follows:
28.(1)
An employee or employer affected by a determination by or a decision on an
appeal to the Minister under section 27, or the representative of either of
them, may within ninety days after the determination or decision is
communicated to that employee or employer, or within such longer time as
the Tax Court of Canada on application made to it within those ninety days may
allow, appeal from the determination or decision to that Court by sending a
notice of appeal in prescribed form by registered mail to the Registry of that
Court. [Emphasis added]
Effective
on and after December 18, 1997 subsection 28(1) was amended by S.C. 1997, c.
40, s. 65 to read as follows:
28.(1)
A person affected by a decision on an appeal to the Minister under section 27
or 27.1, or the person’s representative, may, within 90 days after the
decision is communicated to the person, or within any longer time that the
Tax Court of Canada may allow on application made to it within those 90 days,
appeal from the decision to that Court by sending a notice of appeal in the
prescribed form by registered mail to the Registry of that
Court. [Emphasis added]
Effective on and after June 18, 1998, subsection 28(1)
was amended by S.C. 1998, c. 19, s. 255 to read as follows:
28.(1) A
person affected by a decision on an appeal to the Minister under section 27 or
27.1, or the person’s representative, may, within 90 days after the decision
is communicated to the person, or within any longer time that the Tax Court
of Canada on application made to it within 90 days after the expiration of
those 90 days allows, appeal from the decision to that Court in accordance with
the Tax Court of Canada Act and the applicable rules of court made
thereunder.
[Emphasis Added]
For all relevant periods under appeal, before an
appeal lies to the Tax Court of Canada under subsection 28(1) of the CPP,
a decision must have been rendered by the Minister.
Employment/Unemployment Insurance
[48] Subsection 70(1) of the UIA was the statutory appeal provision
that was in force prior to June 30, 1996. That subsection read as follows:
70.(1) The
Commission or a person affected by a determination by, or a decision on an
appeal to, the Minister under section 61 may, within ninety days after the
determination or decision is communicated to him, or within such longer
time as the Tax Court of Canada on application made to it within those ninety
days may allow, appeal from the determination or decision to that Court in the
manner
prescribed.
[Emphasis added]
The introduction of the EIA in 1996, provided a
new statutory appeal mechanism in subsection 103(1), effective on and after
June 30, 1996, which reads as follows:
103.(1) The
Commission or a person affected by a decision on an appeal to the Minister
under section 91 or 92 may appeal from the decision to the Tax Court of Canada
in accordance with the Tax Court of Canada Act and the applicable rules
of court made thereunder within 90 days after the decision is communicated
to the Commission or the person, or within such longer time as the Court
allows on application made to it within 90 days after the expiration of those
90 days.
[Emphasis Added]
Effective
June 18, 1998, the statutory mechanism was amended by S.C. 1998, c.19, s.268 to
read as follows:
103.(1) The
Commission or a person affected by a decision on an appeal to the Minister
under section 91 or 92 may appeal from the decision to the Tax Court of Canada
in accordance with the Tax Court of Canada Act and the applicable rules
of court made thereunder within 90 days after the decision is communicated
to the Commission or the person, or within such longer time as the Court
allows on application made to it within 90 days after the expiration of those
90 days.
[Emphasis added]
Similar to the CPP, appeals during the relevant
periods under the EIA or UIA require a decision to have been made
by the Minister.
[49] In Power v. Minister of National Revenue, 2005 TCC 200, Mr. Justice
Bowie held that, a refusal to consider an appeal to the Minister on the grounds
that it was out of time, was not a decision by the Minister. Mr. Justice Bowie
stated that the appropriate course of action was to seek a Mandamus Order from
the Federal Court requiring the Minister to exercise its jurisdiction and to
make a decision. In that case, the appeal related to CPP and EIA
determinations of insurable employment and pensionable employment. The decision
of CRA on the basis of a limitation period to refuse to deal with the
objections of the Appellant on the CPP and EIA determinations is
no decision at all for the purpose of the CPP and EIA. The remedy
for the Appellant is not an appeal to the Tax Court of Canada but to seek an
order for Mandamus from the Federal Court directing the Minister to exercise
its jurisdiction to make a decision and if and when the Minister makes a
decision and if the Appellant is still unsatisfied, the Appellant could proceed
with a Notice of Appeal to the Tax Court of Canada.
[50] The motion as it relates to CPP assessments and EIA
assessments would be granted because the Minister has not made a decision that
can be appealed to at this stage and therefore no appeal lies to the Tax Court
of Canada. However, this is not the case in relation to assessments under the ITA.
Under paragraph 169(1)(b) of the ITA, there is a right of appeal
to the taxpayer even when no decision has been made by the Minister. Failure of
the Minister to make a decision is fine provided 90 days have elapsed from the
Notice of Objection in which case the Tax Court of Canada has jurisdiction over
the ITA assessments, and as such the motion in relation to the ITA
on this argument would fail.
In summary, the result on the Motion to Quash is:
(a) the Motion to Quash is dismissed as it relates to
the ITA assessments.
(b) the Motion to Quash is granted as it relates to the
CPP assessments and the EIA/UIA assessments.
(c) There will be no order as
to costs.
Signed at Ottawa,
Canada, this 30th day of January, 2008.
"E. P. Rossiter"
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