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Citation: 2003TCC736
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Date: 20031014
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Docket: 2003-351(IT)G
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BETWEEN:
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BRENT GLYNN McCLELLAND,
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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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REASONS FOR JUDGMENT
Sarchuk J.
[1] This is a motion by the Respondent
for an Order quashing the appeals of Brent Glynn McClelland[1] or, in the
alternative, for an Order granting the Respondent 90 days from
the receipt of the Order to file its Reply to the Notice of
Appeal. The grounds for the foregoing motion are that two
required condition precedents have not been met, more
specifically:
a) The
Appellant failed to serve Notices of Objection on the Minister
within the time limit prescribed by subsection 165(1) of the
Income Tax Act, R.S.C. 1985 (5th Supp.), c.1 (the
"Act") and thereby failed to fulfill a required
condition precedent to institute a valid appeal as set out in
section 58(3)(b) of the Tax Court of Canada Rules
(General Procedure). SOR/90-688 (General Procedure
Rules).
b) In
addition, or in it alternative, the appellant instituted the
appeal outside the time requirements prescribed by subsection
169(1) of the Act and thereby failed to fulfill a required
condition precedent to institute a valid appeal as set out in
section 58(3)(b) of the General Procedure
Rules.
[2] In support of its motion, the
Respondent filed the affidavit of Cheryl Ritchie which
states:
1. I am employed as an Officer of the
Canada Customs and Revenue Agency (the "CCRA") in the
Tax Litigation Office, Appeals Division, in Edmonton, Alberta,
and as such have personal knowledge of the matters hereinafter
deposed to, save and except what is stated to be based on
information and belief and, where so stated, I believe it to be
true.
2. I have charge of the CCRA file
relating to the Appellant's appeal with respect to the 1998,
1999, 2000 and 2001 taxation years and the appropriate records in
the CCRA relating to the Appellant and the appeal (the
"Records").
3. I have knowledge of the practice of
the CCRA.
4. It is the practice of the CCRA that
officers of the CCRA exercising the powers of the Minister in the
Winnipeg Taxation Centre enter information into the computer
system of the CCRA from the return of income of a taxpayer and
the information entered results in an assessment being
electronically generated by the CCRA.
5. It is the practice of the CCRA that
assessments electronically generated by the CCRA computer system
in the Winnipeg Taxation Centre, where a refund is owed to the
taxpayer, are directed to the Public Works Canada Centre in
Winnipeg in order that refund cheques can be prepared. It is then
the practice that both assessment and refund are printed and
placed into envelopes which are then mailed to the taxpayer from
the Public Works Canada Centre in Winnipeg to the address located
on the return of income.
6. It is the practice of the CCRA that
assessments electronically generated by the CCRA computer system
in the Winnipeg Taxation Centre, in all other cases, including
direct deposit of a refund, than as stated in paragraph 5 of this
my Affidavit, are printed and placed into envelopes which are
then mailed to the taxpayer from the Winnipeg Taxation Centre to
the address located on the return of income.
7. It is the practice of the CCRA
that, in assessing a taxpayer by use of the CCRA computer system,
the Winnipeg Taxation Centre does not create a paper copy of the
assessment issued for the CCRA records.
8. It is the practice of the CCRA that
the vast majority of assessments of returns of income are
electronically generated in the above-noted manner and only a
very small number of assessments are generated otherwise. The
assessments at issue in the within application were generated in
accordance with the above-noted manner.
9. It is the practice of the CCRA that
assessments are stored in the CCRA computer system and are
inaccessible to tampering or altering by any person once the
assessments are issued.
10. It is the practice of the CCRA that assessment
information stored in the CCRA computer system is available in
printed format by computer printout of the electronic journal, or
by reconstruction of the assessment by an officer of the
Minister.
11. It is the practice of the CCRA that the
reconstruction of an assessment is done only by an officer of the
Minister designated to do so and only upon request from another
officer of the Minister.
12. It is the practice of the CCRA that the
officer of the Minister designated to issue a reconstructed
assessment extracts the information of the original assessment
from the computer system and generates the reconstructed
assessment.
13. It is the practice of the CCRA, that the
reconstructed assessment is issued only by the Ottawa Tax
Services Office.
14. I have carefully examined and searched the
CCRA records, and they show that a Notice of Assessment for the
1998 year of the Appellant was mailed on June 20, 2002; that a
Notice of Assessment for the 1999 year of the Appellant was
mailed on June 20, 2002 and that a Notice of Assessment for the
2000 year of the Appellant was mailed on July 25, 2002, to the
Appellant at 10300 Tuscany Hills Way N.W., Calgary, Alberta,
T3L 2G5.
15. I have carefully examined and searched the
CCRA records, and have been unable to find that the Minister has
assessed the 2001 year of the Appellant, or that the Appellant
has filed a return of income for the 2001 taxation year.
16. I requested reconstructed Notices of
Assessment of the 1998, 1999 and 2000 years of the Appellant from
Sylvain Allaire, Appeals Division, Ottawa Taxation Office, and I
was provided with the documents attached to this my Affidavit as
Exhibits "A", "B" and "C",
respectively. Based on my request, I am informed and believe that
Exhibits "A", "B" and "C" are
printouts of electronic documents which are reproduced from the
electronic entry in the CCRA's computer system of the
assessments referred to in paragraph 14 of this my Affidavit.
17. A Notice of Objection in respect of the 1998,
1999, 2000 and 2001 years for the Appellant was received by the
CCRA on November 5, 2002.
18. A Notice of Appeal in respect of the 1998,
1999, 2000 and 2001 years for the Appellant was transmitted to
the CCRA on February 3, 2003.
19. I have made a careful examination and search
of the records, and have found no indication that the Notices of
Assessment for the 1998, 1999 and 2000 years for the Appellant
were returned to the Minister by the post office.
20. I have compared the reconstructed Notices of
Assessment attached to this my Affidavit as Exhibits
"A", "B" and "C" with the
information available to me in the CCRA computer system and I
attest that the contents of the reconstructed Notices of
Assessment so attached are identical to the information in the
CCRA computer system and are evidence of the nature and contents
of the original Notice of Assessments.
21. I make this Affidavit in support of the
Respondent's application for an Order dismissing the
Appellant's appeal number 2003-351(IT)G with respect to the
1998, 1999, 2000 and 2001 taxation years and for no other, or
improper, purpose.
It is appropriate at this point to observe that the Appellant
did not cross-examine the deponent, Cheryl Ritchie, nor did he
lead any evidence to contradict or refute her affidavit.
[3] The Appellant, McClelland, also
filed an affidavit which reads as follows:
1. On September 16, 2002, I mailed a
Notice of Objection dated September 16, 2002 (attached to this
Affidavit as Exhibit A), objecting to Canada Customs and Revenue
Agency ("CCRA") assessments. This Notice of Objection
was mailed to M. Janikowski, Calgary Taxation Centre, CCRA, at
330 - 220 4th Ave. S.E., Calgary, Alberta, T2G
0L1.
2. On January 8, 2003, I mailed a
letter dated January 7, 2003 (attached to this Affidavit as
Exhibit B) to M. Janikowski, Calgary Taxation Centre, CCRA, at
330 - 220 4th Ave. S.E., Calgary, Alberta, T2G 0L1,
stating that I had sent a Notice of Objection to the same M.
Janikowski on September 16, 2002, and enclosed a copy of said
Notice of Objection with that letter.
3. On January 8, 2003, I mailed a
letter dated January 7, 2003 (attached to this Affidavit as
Exhibit C) to Chief of Appeals, CCRA, Winnipeg Taxation Centre,
66 Stapon Road, Winnipeg, Manitoba, stating that I had sent a
Notice of Objection to M. Janikowski on September 16, 2002, and
enclosed a copy of said Notice of Objection with that letter.
[4] The parties agree that the
Appellant did not file returns of income for the three years
1998, 1999 and 2000 and that as a result the Minister made
arbitrary assessments pursuant to subsection 152(7).[2] Furthermore, although
the Appellant made reference to the 2001 taxation year in his
letters, he does not dispute that no return was filed for that
taxation year nor has there been any assessment by the Minister
of that year.
Has the Minister met the burden of proving the existence of
the Notices of Assessment and the date of their mailing?
[5] The Respondent's position is
premised on the admissibility and acceptability of the
reconstructed Notices of Assessment as proof of their date of
mailing. Section 244(9) provides:
244(9) An affidavit of an officer of the Canada Customs
and Revenue Agency, sworn before a commissioner or other person
authorized to take affidavits, setting out that the officer has
charge of the appropriate records and that a document annexed to
the affidavit is a document or true copy of a document, or a
print-out of an electronic document, made by or on behalf of the
Minister or a person exercising a power of the Minister or by or
on behalf of a taxpayer, is evidence of the nature and contents
of the document.
Ms. Ritchie in her affidavit described the manner in which
assessments are recorded in the computer system, made
invulnerable in the system and then only taken out of the system
in the form of a reconstructed notice by one of two persons who
are entitled to do so in the Minister's office. Her detailed
testimony convinces me that the contents of the reconstructed
assessments before the Court as exhibits contain all the
information that was contained in the original Notices of
Assessment sent to the taxpayer and that includes the date of
mailing because, as indicated by the affidavit, the date of
mailing as it is recorded on those reconstructed Notices of
Assessment are the dates of mailing of the original
assessments.[3]
There is no basis upon which it would be appropriate to reject
the reconstructed Notices of Assessment. The provisions of
subsection 244(9) may be relied upon by the Respondent and
accordingly, I accept that the affidavit of Cheryl Ritchie is
evidence of the nature and contents of the documents.
Did the Appellant serve a Notice of Objection on the
Minister within the time limit prescribed by subsection 165(1) of
the Act?
[6] Notices of Assessment for the 1998
and 1999 taxation years of the Appellant were mailed on June 20,
2002 and a Notice of Assessment for the 2000 taxation year was
mailed on July 25, 2002. The Appellant's position is that he
mailed a notice of objection with respect to the three
assessments in issue on September 16, 2002. His counsel contends
that the Appellant's letter of this date constitutes an
appropriate Notice of Objection and that accordingly, the
Respondent's motion for an order quashing the appeals should
be dismissed.
[7] Subsection 165(2) of the
Act provides:
165(2) A notice of objection under this section shall be
served by being addressed to the Chief of Appeals in a District
Office or a Taxation Centre of the Canada Customs and Revenue
Agency and delivered or mailed to that Office or Centre.
It is not disputed that the Appellant sent the September 16,
2002 letter to one M. Janikowski, a Collection Enforcement
Officer, Tax Services, 330-220 4th Ave. S.E., Calgary, AB, T2G
0L1. The letter is headed:
Re: Letter dated September 9, 2002
from Rev. Can. concerning tax arrears
(my emphasis)
In his letter the Appellant refers to the fact that a number
of his appeals with respect to certain taxation years commencing
in 1988 were "currently before the Federal Court of
Appeal" and that in his view, the issues before that Court
would impact on tax owing for those and subsequent years. There
is no reference in this letter, either direct or oblique, to the
assessments of his 1998, 1999 and 2000 taxation years.
[8] There is no merit in the
Appellant's submission that the letter of September 16,
2002 is a valid objection to the assessments in issue. To accept
this argument, it would be necessary to completely ignore the
language of the relevant provision, being subsection 165(2)[4] which, as has been
observed by this Court on previous occasions, sets out in clear
and unambiguous language how service of an objection is to be
effected. Counsel for the Appellant contends that subsection
165(2) must be read that the Notice of Objection can be sent to
the Chief of Appeals in a District Office or to a Taxation Centre
of the Canada Customs and Revenue Agency. He argues that the
language is disjunctive and that accordingly, the Appellant's
letter of September 16, 2002 to M. Janikowski is sufficient. I do
not agree. The clear requirement set out in subsection 165(2) is
that a Notice of Objection, regardless of form, must be sent to
the Chief of Appeals in a District Office or in a Taxation Centre
of Canada Customs and Revenue Agency. There is substantial logic
in that requirement since the Appeals Division is the body
legislatively authorized to review the facts and make the
recommendation upon which the Minister may carry out his duties
pursuant to the provisions of subsection 165(3) of the
Act.
[9] As the Appellant stated in his
affidavit, it was not until January 8, 2003 that the Appellant
mailed a letter dated January 7, 2003 to the Chief of Appeals as
required by the provisions of the Act. In this letter he
stated that "I had sent a Notice of Objection to M.
Janikowski on September 16, 2002" and enclose a copy
thereof. I have already concluded that the letter of September
16, 2002 was not a Notice of Objection. Furthermore, even
accepting that his letter of January 7, 2003 was intended to
be a Notice of Objection, the Appellant has not established that
he served it in accordance with the Act. More
specifically, September 17, 2002 is 90 days after the mailing of
the 1998 and 1999 Notices of Assessment and October 22, 2002 is
90 days after the mailing of the 2000 notice of assessment and
thus, he has not complied with the provisions of subsection
165(1) of the Act.
Did the Appellant receive the assessments in issue?
[10] The Appellant takes the position that
he never received the documents in issue. I must note that there
is no clear and unequivocal denial in the Respondent's
affidavit that he received the Notices of Assessment, nor was any
oral evidence adduced to that effect. Subsection 152(2)
reads:
152(2) After examination of a return, the Minister shall
send a notice of assessment to the person by whom the return was
filed.
Section 165 provides in part:
165(1) 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,
(a) where the
assessment is in respect of the taxpayer for a taxation year and
the taxpayer is an individual (other than a trust) or a
testamentary trust, on or before the later of
(i) the day
that is one year after the taxpayer's filing-due date for the
year, and
(ii) the day that is
90 days after the day of mailing of the notice of
assessment; and
(b) in any
other case, on or before the day that is 90 days after the day
of mailing of the notice of assessment.
(my emphasis)
In The Queen v. Adele Schafer,[5] the Federal Court of Appeal
considered the provisions of subsections 300 and 301 of the
Excise Tax Act. These two subsections read:
300(1) After making an assessment, the Minister shall
send to the person assessed a notice of the assessment.
301(1.1) Any person who has been assessed and who
objects to the assessment may, within ninety days after the day
notice of the assessment is sent to the person, file with the
Minister a notice of objection in the prescribed form and manner
setting out the reasons for the objection and all relevant
facts.
With respect to these sections, Isaac J.A. made the following
comments:
[8] The requirement
in subsection 301(1.1) of the ETA is that the objection to
the Minister's assessment be made within ninety days after it
has been "sent." The Tax Court found, and the
respondent does not dispute, that the Minister placed the notice
of assessment in the Canada Post mail bag on 2 September, 1993.
The implication of the interpretation placed on subsection
301(1.1) by the Tax Court is that the word "sent" means
"received" by the taxpayer.
[9] I am aware that
the Tax Court has interpreted almost identical sections of the
Income Tax Act to mean that the limitation period does not
start to run unless the taxpayer receives the notice of
assessment within the statutory time limit. However, this Court
has criticized that approach in the past. In Canada v.
Bowen, 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.
[10] The Supreme Court in
Alberta (Treasury Branches) v. M.N.R. held that, in the
absence of ambiguity in the statutory language, the ETA
must be applied strictly and without regard to its object or
purpose. Cory J., writing for the majority, stated that:
... when there is neither any doubt as to the meaning of the
legislation nor any ambiguity in its application to the facts
then the statutory provision must be applied regardless of its
object or purpose.
[11] In a number of cases
decided under the Income Tax Act, the Supreme Court of
Canada has taken a similar approach. For example, in Shell
Canada Ltd. v. Canada, McLachlin, J., as she then was,
expressed her views of the matter at paragraphs 40-41:
Second, it is well established in this Court's tax
jurisprudence that a searching inquiry for either the
"economic realities" of a particular transaction or the
general object and spirit of the provision at issue can never
supplant a court's duty to apply an unambiguous provision of
the Act to a taxpayer's transaction. Where the
provision at issue is clear and unambiguous, its terms must
simply be applied: Continental Bank, supra at para. 51,
per Bastarache, J.; Tennant, supra, at para. 16, per
Iacobucci, J.; Canada v. Antosko, [1994] 2 S.C.R. 312, at
pp. 326-27 and 330, per Iacobucci, J.; Friesen v. Canada,
[1995] 3 S.C.R. 103, at para. 11, per Major, J.; Alberta
(Treasury Branches) v. M.N.R., [1996] 1 S.C.R. 963, at para.
15, per Cory, J.
It is my respectful view that by paying insufficient attention
to these very important principles, the Minister and the Federal
Court of Appeal fell into error.
[12] It is my respectful view
that the principles laid down in those passages apply with equal
force in this case and that we should avoid inviting further
censure from on high by adopting the approach of the Tax Court.
Paragraph 304(5)(a) does not require the Minister to
serve the notice of assessment on the taxpayer, personally, or
even that the notice be received by the taxpayer. The paragraph
merely states that the Tax Court shall not hear an application
for an extension of time if it is brought more than one year
beyond the expiration of time limited by subsection 301(1.1).
Subsection 301(1.1) states that the limitation period begins to
run ninety days after the notice is "sent." Therefore,
the only requirement is that the Minister demonstrate that the
notice was sent. There is no requirement that the notice be
received in order to start the limitation period running. The
language of subsection 301(1.1) is clear and unambiguous and must
be applied regardless of its object and purpose.
[11] It is clear from the foregoing that the
position advanced by the Appellant cannot be sustained.
[12] For the foregoing reasons, the
Respondent's motion is granted and the Appellant's
purported appeals from assessments made for the taxation years
1998, 1999, 2000 and 2001 are quashed, with costs to the
Respondent.
Signed at Ottawa, Canada, this 14th day of October, 2003.
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