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Citation: 2004TCC235
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Date: 20040331
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Docket: 2003-3659(IT)I
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BETWEEN:
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TEFIK SHABANI,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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___________________________________________________________________
Agent for the Appellant: Margareta Hinrichsen
Counsel for the Respondent: Louis A.T. Williams
___________________________________________________________________
REASONS FOR JUDGMENT
(Delivered orally from the Bench at
Edmonton, Alberta, on February 3, 2004)
Bowie J.
[1] I am going to deal first with the
four points that are made in the Notice of Appeal. The first of
those is that you filed a Notice of Objection and that it was not
dealt with in a satisfactory manner. I take that to mean that it
was not dealt with nearly quickly enough, and I could not agree
more. Two and a half years to confirm a notice of assessment in a
case like this strikes me as an unjustifiably long time and
deserving at least of some explanation from Canada Customs and
Revenue Agency (CCRA). I have seen nothing to explain it.
However, that is not a matter as to which I can grant any
relief.
[2] It has been raised as an issue
before in this Court, and it has been raised as an issue in the
Federal Court of Appeal, and the Federal Court of Appeal has made
it quite clear that the fact that Revenue Canada (or CCRA as it
is now called) takes an unreasonable length of time to deal with
a Notice of Objection does not give rise to any relief that this
Court can grant. One of the reasons the Federal Court of Appeal
took that position is that subsection 169(1) of the Income Tax
Act gives the taxpayer a remedy. It provides that if you file
a Notice of Objection and you have not heard from anybody at the
end of 90 days, then you can file a Notice of Appeal in this
Court and you will be heard right away. Unfortunately, that is an
obscure section of the Act. I do not know whether the
Notice of Assessment or any of the other communications that are
sent out routinely from CCRA to Appellants bring that provision
of the Act to their attention, but I would have thought
probably not, because more people would take advantage of it and
simply come directly to this Court rather than wait for what are
sometimes unreasonably long delays in hearing from the
so-called appeals branch of CCRA. I will come back to the
matter of delay later, but it is not a ground on which I can
allow the appeal.
[3] The second ground set out in the
Notice of Appeal is, and it is perhaps important to read the
exact words:
... I wish to advise that when the Government of Canada hired
me, no one advised me that I was working as a consultant or that
I would be deemed to be self-employed. I completed time sheets
and I was paid according to them.
Now, the issue in this case, as I said earlier in the
proceedings, has been framed, inappropriately, by the Deputy
Attorney General of Canada through his agent C. Ritchie who
drafted the Reply, as being whether the income is income from
employment or income from business or property. That is not the
issue in this case at all. It does not matter whether income is
from employment or whether it is from business or property. If it
is income then it is subject to tax. If it were income from
business or property, then of course the question would arise,
were there any expenses that had to be laid out in order to earn
that income. But it has never been suggested, either in the
Notice of Appeal or here today that Mr. Shabani had to pay
any expenses that were not reimbursed. So the income, the revenue
if you like, the $42,000, whether it comes from employment or
whether it comes from a contract for services, either way it is
all income.
[4] The third item raised in the
Notice of Appeal is and again I quote:
... if this amount was deemed as income from a business,
expenses incurred as a result of conducting that business, namely
hotel accommodations, meals, transportation costs, telephone
charges, and etc. should be allowed to be deducted from this
total, should it not?
If Mr. Shabani paid them out of his own pocket they would be
deductible, if it were income from a business. But the evidence
is quite clear that Mr. Shabani was reimbursed. He was given
money for his expenses, his hotel bill was paid, and there is no
suggestion anywhere that he had to pay any of that out of his own
pocket.
[5] The fourth item raised is that
four years has lapsed:
... and I only received Calgary's decision regarding
my notice of objection on May 1, 2003, ... despite the fact that
the original notice of objection was filed on November 26, 2001.
...
And that is simply a reiteration of the first complaint,
namely that it took far too long to deal with this matter. During
the course of the hearing, the suggestion was raised that the
Appellant thought that the income that he received was received
as an employee of the United Nations. I say two things in respect
of that. First, I am extremely dubious about the veracity of it,
and the reasons I say that are twofold. The first one is that it
is mentioned nowhere in the Notice of Appeal, and I would have
thought that if Mr. Shabani had held the impression throughout
all this period of time since he earned this income in 1999 that
it was exempt as being earnings from employment with the United
Nations, that that would have in some way found its way into the
Notice of Appeal, but it did not. I view it as an afterthought.
And if he had really wondered about whether it was earnings from
the United Nations, I should have thought that looking at his pay
cheque and seeing that it says on the left-hand edge in large
letters "Canada" and across the top "Citizenship
and Immigration Canada/Citoyenneté et Immigration
Canada" that would have dispelled any misconception about
the source of the income. So I am really very dubious about Mr.
Shabani's claim that he thought it was income from the United
Nations.
[6] But nevertheless, what he thought
is not what gives rise to taxability or the absence of it, and it
is certainly clear on the evidence before me that whatever Mr.
Shabani may have thought, this income did not come from the
United Nations. His employment was by an agency of the Government
of Canada, and so it is not exempt under section 81 of the
Act, or any other provision.
[7] The other matter raised during the
course of the appeal on Mr. Shabani's behalf is that
Employment and Immigration Canada did not deduct any income tax
at source. That was probably because the employment was casual
employment. There was no written contract prior to the expiry of
the first two-month period. There apparently was a written
contract of employment after that. It might be arguable that
source deductions should have been made at least from that point
onward, but I am not here to decide whether Immigration Canada
did or did not have an obligation to deduct at source.
[8] The Income Tax Act is very
clear that income is taxable and that the people who earn it have
an obligation to pay income tax. Employers, under certain
circumstances, have an obligation to deduct at source, but their
failure to deduct at source does not mean that the person
employed has some sort of holiday from tax. I readily accept that
if an employer fails to deduct at source, it may lull the
employee into feeling that he has no obligation, but at law there
is no merit to that position. The employee may go and spend the
money on other things and no doubt that is a detriment to him,
but it does not relieve him of the obligation to pay tax. The
primary obligation to pay income tax arises from sections 2 and 3
of the Act. Section 2 provides that an income tax shall be
paid, as required by this Act, on the person's taxable
income for each taxation year of every person who is resident in
Canada at any time in the year; and section 3 provides that:
The income of a taxpayer for a taxation year for the purposes
of this Part is the taxpayer's income determined by the
following rules...
And those rules, while somewhat complicated, make it very
clear that income from employment and income from a business are
both within that which is made subject to tax by section 2. So I
have no alternative but to dismiss this appeal.
[9] Now, I said I would come back to
the matter of delay. It seems to me, Mr. Shabani, that
Revenue Canada has been remiss in the way that they have dealt
with your Notice of Objection. I have not heard evidence from
Immigration Canada as to why they did not deduct income tax at
source, but the combination of those two things has probably
given you a substantial liability for interest on top of that
tax. The Minister of National Revenue has authority under the
Income Tax Act to waive interest in an appropriate case,
and I would suggest to you that this is a case in which you
should approach CCRA with a view to seeking to have the interest
that has accumulated on your tax waived, because there is a good
deal of conduct on the part of at least one of the two government
agencies involved in this case that has contributed to that
liability for interest.
[10] Mr. Williams may be able to assist you
by telling you where you would go with that application, but that
is a matter that is purely within the sphere of the Minister of
National Revenue. This Court has no jurisdiction to deal with
that.
Signed at Ottawa, Canada, this 31st day of March, 2004.
Bowie J.
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