REASONS FOR ORDER
D'Auray J.
INTRODUCTION
[1]
The case of Les Monarques complexe pour
retraités Inc. (the applicant) was heard on semi-common evidence with the
application of Le Sage au piano, limited partnership. Some elements were common
to both files, for example, the companies belong to the same corporate group
and the witnesses were the same; the evidence was different given the orders
made in each file.
[2]
On February 5, 2014, the applicant filed with
the Court an application under Part IX of the Excise Tax Act (the ETA)
to extend the time to file a notice of objection in respect of the assessment
dated June 3, 2013, for the period from September 1, 2010, to September
30, 2010.
[3]
The issues are as follows:
−
Does the presumption under subsection 334(1) of
the ETA apply?
− Does the applicant meet the conditions set out in subsection 304(5)
of the ETA?
FACTS
[4]
The applicant is a company whose headquarters
are located at 465 Rue Bibeau, door 600, Saint-Eustache, Quebec.
[5]
Since September 1, 2010, the applicant has been operating
a residence for semi-independent seniors located at 495 Rue Bibeau in
Saint-Eustache. The applicant is the owner of a multiple-unit residential
complex that is used as the residence.
[6]
On May 2, 2011, the Agence du revenu du Québec
(ARQ) assessed the applicant, for and on behalf of the Minister of National
Revenue (the Minister), for the period from September 1, 2010, to
September 30, 2010, under the ETA.
[7]
This assessment followed the determination by the
ARQ of the fair market value (FMV) of the residential complex and involved the
amount of net tax reported by the applicant in relation to the FMV.
[8]
The applicant contends that it filed an
objection to the May 2, 2011, assessment within the time period prescribed
by the ETA.
[9]
On May 6, 2011, the ARQ sent the applicant a
final notice of payment. The applicant accordingly paid the amount in the
notice.
[10]
In 2013, the applicant was audited by the ARQ.
On May 27, 2013, the ARQ sent the applicant the results of the audit.
[11]
On June 3, 2013, the ARQ assessed the applicant
under the ETA for the period from September 1, 2010, to September 30, 2010
(the period at issue).
[12]
The assessment dated June 3, 2013, was the
result of a higher assessment by the ARQ of the FMV of the complex and involved
the amount of net tax reported by the applicant in relation to the FMV.
[13]
Ms. Forget, accountant and comptroller for the
applicant, testified that the assessment dated June 3, 2013, dealt with the
same issues as the assessment dated May 2, 2011, the FMV of the complex.
[14]
On June 20, 2013, the ARQ sent the applicant,
for the period at issue, a request for payment and a statement of account. Ms.
Forget stated that she paid the balance indicated on the request for payment.
[15]
It should be noted that the statement of account
attached to the request for payment refers to the assessment dated June 3,
2013.
[16]
The applicant did not file a notice of objection
to the June 3, 2013, assessment within 90 days of the date the notice
of assessment was sent.
[17]
Ms. Forget testified that the applicant never
received the notice of assessment dated June 3, 2013. She stated that the
applicant learned only on September 16, 2013, that an assessment had been made
on June 3, 2013. Ms. Forget learned about this from a telephone
conversation with Ms. Bouchard, the ARQ auditor on the file. Following this
conversation, Ms. Bouchard sent the notice of assessment, which the applicant
received on September 23, 2013.
[18]
Ms. Forget stated that the applicant had always
intended to file an objection to the assessment and had similarly filed an
objection to the FMV established by the ARQ in the assessment dated May 2,
2011, for the same immovable.
[19]
On October 8, 2013, the applicant filed with the
Minister an application to extend the time to file a notice of objection and
attached the notice of assessment.
[20]
On January 8, 2014, the ARQ informed the
applicant that its application to extend the time to file a notice of objection
could not be granted because the assessment had been sent to the applicant's
address and that, under subsection 334(1) of the ETA, the notice of assessment
is deemed to have been received by the applicant on the day it was mailed. The
ARQ also informed the applicant that it should be aware that the assessment existed
because the assessment had been paid.
[21]
On February 5, 2014, the applicant filed with
the Court an application to extend the time to file a notice of objection for
the period at issue.
[22]
At the hearing, Ms. Privé, analyst at ARQ's
Division du flottage, de l’impression, de l’expédition et l’insertion massive,
explained ARQ's procedure for sending communications and the deposit to Canada
Post of the notice of assessment dated June 3, 2013.
[23]
Ms. Privé submitted a file containing details of
the communication to the applicant, including the applicant's taxation number,
the production date and the production number (31501) of the notice of
assessment, the applicant's postal code, the physical lot number and the
specific number given to the communication. Ms. Privé also filed an
excerpt of the page for physical lot number 0151, which included the notice of
assessment dated June 3, 2013, as well as the sequence report by document
number indicating that the notice of assessment was part of a lot of
1,689 items processed that day. The witness filed the worksheet for June
3, 2013, for a document entitled “DDE Quotidien” showing that the notice of GST
assessment bearing the production number 31501 and physical lot number
0151 was part of a lot of 1,689 communications included in the
21,947 items processed that day. The witness filed a document from Canada
Post called a deposit summary indicating that on June 3, 2013, the ARQ
deposited 21,947 (mail) items, which corresponds to the total number of items
indicated on the DDE Quotidien worksheet.
Analysis
[24]
The applicant submits that it did not file a
notice of objection to the Minister within the time prescribed by the ETA
because it never received the notice of assessment dated June 3, 2013. It maintains
that the presumption under subsection 334(1) of the ETA cannot apply.
[25]
However, the respondent maintains that the
assessment was duly sent and consequently the presumption under subsection
334(1) of the ETA applies.
[26]
It should be noted here that the applicant does
not allege that there was an error in the address used by the ARQ in the notice
of assessment.
[27]
Subsection 334(1) of the ETA provides that
anything sent by first class mail shall be deemed to have been received on the
day it was mailed. That subsection reads as follows:
334(1) Sending by
mail - For the purposes of this Part and subject to subsection (2), anything
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.
[28]
When a taxpayer claims that he or she did not
receive a document and believes that the document was not sent, the appropriate
taxing authority has the burden of proving that the document was sent. This
principle was noted by the Federal Court of Appeal in Aztec Industries Inc v
Canada, [1995] FCJ No 535, 95 DTC 5235. The Federal Court of Appeal
stated the following:
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.
[29]
Subsection 334(1) of the ETA creates an
irrebuttable presumption, the Minister must prove that the notice of assessment
was sent and not that the notice was received by the taxpayer. In Schafer v
Canada, [2000] FCJ No 1480, 2000 DTC 6542, Justice Sharlow, of the
Federal Court of Appeal, wrote the following at paragraph 24 of his
reasons regarding subsection 334(1) of the ETA:
[24] The
statutory provisions for assessments, objections and appeals are intended to
provide clear rules for determining when the Minister's obligation to make an
assessment is fulfilled, and to provide procedures by which taxpayers may
challenge assessments that may be mistaken. Parliament has chosen to adopt a
rule that makes no allowance for the possibility, however remote, that the
taxpayer may miss the deadline for objecting or appealing because of a failure
of the postal system. I do not understand why Parliament has chosen to deprive
taxpayers of the chance to challenge an assessment of which they are unaware,
but that is a choice that Parliament is entitled to make.
[30]
In this case, the Minister has proven that the
notice of assessment dated June 3, 2013, was sent to the taxpayer's
address. Ms. Privé's testimony is conclusive in that regard. By describing the
procedure, Ms. Privé demonstrated, with supporting documentation, that the
notice of assessment dated June 3, 2013, was sent on June 3, 2013. The evidence
clearly establishes all the steps in the mailing procedure. Consequently,
pursuant to subsection 334(1) of the ETA, the notice of assessment is deemed to
have been received by the applicant on the day the notice was mailed, June 3,
2013.
[31]
It should be noted that identical evidence was
recently established in Déjoie c La Reine, No 2013-4773(GST)APP, on May
1, 2014. In that case, a manager from the mail branch of the ARQ also testified
to explain ARQ's procedure for sending communications. The manager also
submitted a file similar to the one submitted by Ms. Privé. In his judgment,
Justice Favreau found that the ARQ manager had proven that the notice of
assessment was sent and that the notice was thus deemed to have been received
by the taxpayer.
[32]
Now we must analyze the conditions set out in
subsection 304(5) of the ETA by which the Court may grant an application for
extension of time to file a notice of objection.
[33]
The applicant submits that it has met all the
conditions set out in subsection 304(5) of the ETA.
[34]
The respondent submits that it has not
established that it has met all the conditions set out in subsection 304(5) of
the ETA.
[35]
This subsection sets out the conditions that
must be met to allow an application for extension of time to file a notice of
objection. These conditions are cumulative and must all be met for the Court to
allow an application.
304(5) When
application to be granted - No application shall be granted under
this section unless
(a) the application was made
under subsection 303(1) within one year after the expiration of the time
otherwise limited by this Part for objecting or making a request under
subsection 274(6), as the case may be; and
(b) the person demonstrates that
(i) within
the time otherwise limited by this Act for objecting,
(A) the
person was unable to act or to give a mandate to act in the person’s name, or
(B) the
person had a bona fide intention to object to the assessment or make the
request,
(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, and
(iii) the
application was made as soon as circumstances permitted.
304(5)(a)
[36]
There is no issue with the condition set out in
paragraph 304(5)(a) of the ETA. No one is challenging the fact that the
one-year time limit was respected.
304(5)(b)(i)
[37]
The applicant must establish that within the
time limited for objecting,
− it was unable to act or to give a mandate to act in its name, or
[38]
The applicant is deemed to have received the
notice of assessment dated June 3, 2013, pursuant to subsection 334(1) of the
ETA. In this case, the applicant has not submitted any evidence that it was
unable to act or to give a mandate to act in its name and file a notice of
objection within the time allowed. On the contrary, it is clear from the
documentary evidence that the document attached to the request for payment
dated June 20, 2014, the statement of account, refers to the assessment of June
3, 2013. Thus, the applicant was aware of the assessment of June 3, 2013, or at
least should have been if it had paid attention to that document. At that
point, the applicant was still within the time period allowed for filing an
objection under the ETA.
[39]
In Canada v Louisbourg SBC, 2014 FCA
78, Chief Justice Blais of the Federal Court of Appeal stated at paragraph
14 that the respondent could clearly attempt to establish that it had been
impossible to act, but it also had to demonstrate that the error was not the
result of its own negligence.
[40]
Also in Louisbourg, Chief Justice Blais
noted that it is not because a taxpayer has not received a notice of assessment
that the taxpayer is incapable of acting.
− it had a bona fide intention to object to the assessment
[41]
The applicant contends that it always had a bona
fide intention to object to the assessment. To support its argument, it notes
past actions such as the fact that the assessment of June 3, 2013, is identical
to the assessment of May 2, 2011, for which it filed an objection.
[42]
In my opinion the applicant did not succeed in
proving that it had a bona fide intention to object to the assessment for the
following reasons:
− Ms. Forget's testimony
[43]
Ms. Forget testified that she works for a group
of about thirty companies that includes the applicant. She testified that she
is responsible for the accounting, end-of-year transactions and everything
involved in being the comptroller for the applicant and the limited partnership
Le Sage au piano.
[44]
Given Ms. Forget's professional training and
work experience, it is difficult for me to accept that Ms. Forget did not know
that a taxpayer would not receive a final notice of payment without an
assessment first being issued. In this regard, the evidence established that
the notice of payment dated June 20, 2013, was clearly related to the
assessment of June 3, 2013, since there was no balance owing for the previous
assessments.
[45]
I also question Ms. Forget's testimony when she
stated that she did not know that the applicant had an assessment dated June 3,
2013. Yet the statement of account attached to the request for payment dated
June 20, 2013, clearly refers to it.
[46]
Moreover, during her testimony in chief, Ms.
Forget testified that she had sent the request for payment dated June 20, 2013,
to the applicant's counsel, Mr. Fournier, and that he had indicated that
they had to wait for the assessment before filing an objection. However, under
cross-examination, she stated the opposite, that she had not sent the request
for payment to Mr. Fournier; she did not have to do so since she knew that for
GST, she had to pay it. In my opinion, the request for payment was not sent to
Mr. Fournier; what was sent to Mr. Fournier was the draft assessment dated May
31, 2013, and that was when Mr. Fournier told her to wait for the assessment.
− lack of evidence; past actions of the applicant
[47]
In her testimony, Ms. Forget noted that the
applicant had taken steps with respect to the assessment of May 2, 2011, and it
had mandated the applicant’s counsel to file an objection. She stated that a
notice of objection was accordingly filed within the prescribed time period.
She stated that the subject of the assessment of June 3, 2013, is identical to
the assessment of May 2, 2011, and the period at issue is the same, September
1, 2010, to September 30, 2010.
[48]
I believe Ms. Forget’s statement that the subject
of the assessment of May 2, 2011, is the same as that of the assessment of June
3, 2013. This evidence in itself does not prove that the applicant had a bona
fide intention to object to the assessment of June 3, 2013. The applicant did
not submit evidence of the notice of objection to the assessment dated May 2,
2011. The respondent does not acknowledge that the applicant objected to the
assessment of May 2, 2011. Filing this notice of objection would have
corroborated Ms. Forget’s testimony and would have provided important
documentary evidence for the assessment of the applicant’s true intention.
−
the actions of the applicant regarding the
assessment dated June 3, 2013
[49]
Exhibit I-4, [Translation]
“audit results”, received on May 31, 2013, by the applicant states the
following: [Translation] “However,
the notices of assessment for these adjustments will be sent to you separately
in the next few days.”
[50]
Moreover, Exhibit I-2, [Translation] “request for payment,” dated June 20,
2013, included a statement of account in which an amount appears in the owing column
with the description [Translation]
“reassessment” and the date “2013-06-03”.
[51]
Furthermore, on July 10, 2013, Ms. Tessier, the
applicant's accounting technician, phoned Ms. Moraga of the ARQ to ask about
the $99 file handling fee, which seems to me to be another indication that
an assessment has been made. In Déjoie c La Reine, No 2013-4773(GST)APP,
May 1, 2014, Justice Favreau stated the following at paragraph 24:
[Translation]
...On April 11,
2013, the applicant received the added file handling fee and on April 16, 2013,
the final notice, without doing anything to obtain more information about his
tax liability and the associated assessments and to find out why his file was transferred
to the enforcement division. When the applicant received both documents, he was
still within the 90-day period for filing a notice of objection, but he did not
do so. ...
[52]
I believe that Justice Favreau's statement
applies to this applicant. It is difficult to understand why the applicant did
nothing, either through Ms. Forget or a member of its team, to find out the
reasons why the applicant’s file had been transferred to the enforcement
division, particularly in light of the request for final payment and the statement
of account dated June 20, 2013, which refers to the assessment of June 3, 2013.
It seems to me that if the applicant had not received the notice of assessment
of June 3, 2013, as it claims, after reviewing the statement of account, it
would have promptly contacted the ARQ to obtain a copy. It should be noted that
when the applicant received the documents from the ARQ, including the statement
of account in June 2013, and at the time of the telephone conversations between
Ms. Moraga and Ms. Forget and between Ms. Moraga and Ms. Tessier, the applicant
was still within the 90-day period for filing a notice of objection.
[53]
Thus, in light of the evidence on the record, I am
of the view that the applicant did not prove that it had a bona fide intention
to object to the assessment dated June 3, 2013.
[54]
As I stated at paragraph 36 of the reasons
for this order, the conditions set out in subsection 304(5) of the ETA are
cumulative and the applicant must meet all the conditions under that subsection
to obtain an extension. Since the applicant did not prove that it met one of
the conditions set out in subparagraph 304(5)(b)(i), I do not have to
review the other conditions set out in subsection 304(5) of the ETA.
DISPOSITION
[55]
First, I find that the presumption under
subsection 334(1) of the ETA applies since the Minister proved that the
assessment dated June 3, 2013, was sent.
[56]
Second, since the applicant did not prove that it
met all of the conditions set out in subsection 304(5) of the ETA, the
application for an extension of time for filing a notice of objection in
respect of the assessment dated June 3, 2013, is dismissed.
Signed at Ottawa,
Canada, this 28th day of October 2014.
"Johanne D'Auray"
Translation certified true
on this 3rd day of December 2014
Monica F.
Chamberlain, Translator
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