Date: 20090826
Docket: T-465-09
Citation: 2009
FC 846
Toronto, Ontario, August 26, 2009
PRESENT: Kevin R. Aalto, Esquire, Prothonotary
BETWEEN:
MARC
CARTER
Applicant
and
HER
MAJESTY THE QUEEN
Respondent
REASONS FOR ORDER AND ORDER
[1]
The Respondent
seeks an order striking this application essentially on the basis that as the matters
in dispute deal with “assessments” those are matters that are within the sole
jurisdiction of the Tax Court of Canada. Thus, there is no jurisdiction for this
application to be heard in this Court and must be struck. In order to put the
issue in context, a brief review of the chronology is necessary.
Background Facts
[2]
On
December 10, 2006, the Applicant sent a Notice of Change of Mailing Address to
the Sudbury Tax Services Office. As of that date, the Applicant’s address was an
address in Markham,
Ontario.
[3]
On April
3, 2007, the Applicant sent a further Notice of Change of Mailing Address to
the Sudbury Tax Services Office. Effective on that date, the Applicant’s
mailing address was another Markham address (the “Second Markham Address”).
[4]
The
Minister of National Revenue (the “Minister”) reassessed the Applicant for the
2003-2004 taxation years. The notices of assessment were each dated July 10,
2007 and were sent to the Applicant at an address in Markham, Ontario, which was not the Second Markham
Address.
[5]
Thus, the
July 10, 2007 notices of assessment were sent to the original Markham address notwithstanding that
the Applicant’s mailing address had changed to the Second Markham Address. The
Minister also reassessed the Applicant for the 2005 taxation year by notice of
assessment dated December 10, 2007. That notice of assessment was also not
sent to the Second Markham Address.
[6]
Subsequently,
the Applicant learned of the notices of assessment and on November 4, 2008 the
Applicant filed notices of objection to the notices of assessment for the
taxation years 2003-2005.
[7]
By letter
dated March 3, 2009, the Minister advised the Applicant that the notices of
objection with respect to the 2003-2004 taxation years could not be accepted as
they were filed more than 90 days from the mailing date on the notices of
assessment. The Minister further advised the Applicant that the time to file
notices of objection to the reassessments of the 2003-2004 taxation years could
not be extended as the Applicant had not made an application to extend the time
within one year of the expiration of the prescribed period for serving the
notices of objection.
[8]
It appears
that the notice of objection for the 2005 taxation year was within time and
accepted by the Minister.
[9]
The letter
dated March 3, 2009 from the Minister advising that it could not accept the
2003-2004 taxation year notices of objection and would not allow an extension
of time are the subject of this judicial review. In essence, the Applicant
seeks judicial review of whether or not the Minister issued valid notices of reassessment
on the basis that they were not sent to the Applicant’s mailing address, which
the Minister had on file.
Issues
[10]
As is
often the case, simple facts such as these create a legal conundrum for the
parties.
[11]
The issues
raised on the application are:
(a)
is the
validity of the notices of reassessment subject to judicial review pursuant to
sections 18 and 18.1 of the Federal Courts Act;
(b)
if the
validity of the notices of reassessment is subject to judicial review, did the
Applicant commence this application within the period prescribed by subsection
18.1(2) of the Federal Courts Act; and
(c)
whether
the decision of the Minister to refuse to accept the Applicant’s notice of
objection to the assessments of the 2003 to 2004 taxation years is subject to
judicial review pursuant to sections 18 and 18.1 of the Federal Courts Act.
[12]
The issue
on the motion is whether the letter from the Minister deals with assessments
that are within the sole jurisdiction of the Tax Court. If so, this
Application must be struck. In these unique circumstances, for the reasons
that follow the Application should be allowed to proceed.
Analysis
[13]
There is
authority for the proposition that if the Minster has not issued a valid notice
of assessment, the taxpayer cannot file a notice of objection in response to
it. Pursuant to subsection 152(2) of the Income Tax Act, the Minister
issues an assessment when it sends a notice of assessment to a taxpayer. Where
the notice of assessment is sent to an address other than the taxpayer’s
mailing address on file, the notice of assessment is not a valid assessment (236130
British Columbia Ltd. v. R., 2006 D.T.C. 2053).
[14]
The 236130
British
Columbia case
is a decision of Justice Bell of the Tax Court. The proceeding before Justice
Bell was the determination of a question of law. It resulted from a reference
under s.173 of the Income Tax Act. The Appellant in that case sought a
determination that the Minister did not validly reassess the 1995-1996 taxation
years of the Appellant. The argument of the Appellant was that the Minister
sent the notices of assessment to the wrong address. There was extensive
evidence before the Court from various individuals regarding what information
the Minister had and whether the assessments were mailed in a timely way to the
proper address. The onus is on the Minister to establish that assessments are
mailed in a timely manner to the proper address of the taxpayer. The net
result of the hearing was a finding by Justice Bell that the Minister had
failed to meet that onus and therefore the reassessments were not valid.
[15]
In this
case, the Applicant argues that the reassessments for the 2003-2004 taxation
years were not sent to the correct address and therefore the Minister failed to
issue valid notices of assessment. Without valid notices of assessment, the
Applicant cannot file notices of objection pursuant to section 165 of the Income
Tax Act and therefore cannot file an appeal to the Tax Court pursuant to
section 169 of the Income Tax Act.
[16]
Section
165 of the Income Tax Act requires that a notice of objection be sent
within 90 days of the receipt of the day of mailing of the notice of assessment.
A taxpayer may apply to the Canada Revenue Agency to file a notice of objection
late provided that the application is made within a one year period of the date
of the notice of assessment (section 166.1). If the Canada Revenue Agency
refuses to grant an extension, the taxpayer may apply to the Tax Court for an
extension but such application must be made within 90 days of the decision of
the Canada Revenue Agency. An appeal to the Tax Court from a notice of assessment
cannot be taken unless a notice of objection is first filed with the Canada
Revenue Agency.
[17]
Thus, the
Applicant argues that he has no mechanism by which a determination of the
validity of the notices of assessment can be determined in the Tax Court. More
than one year and 90 days has elapsed since the mailing of the notices of
assessment to the wrong address. As there is no right of appeal to the Tax
Court, so the Applicant argues, the exclusive jurisdiction granted to the Tax
Court concerning assessments under the Tax Court of Canada Act, R.S.C.
1985 c. T-2, does not apply. Therefore, this application must proceed under
section 18.5 of the Federal Courts Act.
[18]
The
Applicant further argues that the Tax Court has recognized that it does not
have jurisdiction in circumstances such as this in respect of whether or not a notice
of assessment issued by the Minister is valid. This argument flows from the
decision of the Tax Court in Corsi v. The Queen, 2008 TCC 472. This
case involved a motion by the Minister to dismiss the appeal of the taxpayer on
the ground that the appeal was frivolous because the taxpayer did not first
file a timely objection or make a timely application to the Tax Court for an
extension of time in which to do so.
[19]
On the
facts of the case, it appears that the taxpayer did not receive the notice of
assessment and that it was returned to the Canada Revenue Agency. The notice
of assessment was not sent to the authorized mailing address, which was the address
of the taxpayer’s accountant. Subsequently, it was sent to the accountant’s
address but more than one year and 90 days had elapsed since the mailing of the
original notice of assessment. A notice of objection was filed but was
rejected by the Canada Revenue Agency as being out of time.
[20]
Justice Boyle
determined on the facts of the case that a valid appeal had not been
instituted, neither from the assessment, because no valid notice of objection
had been filed nor from the late-filed notice of objection because such an
appeal had to be taken within 90 days of the decision of the Canada Revenue
Agency. However, Justice Boyle went on to comment as follows:
[30] It may be that Ms. Corsi can seek a
remedy in respect of the assessment, on the basis it was never valid, in a
different Court. I will leave that to the taxpayer and her advisers.
[31] It may also be that Ms. Corsi’s
remedy may be in another Court, if any of her several professional
advisors did not properly advise her or represent her. (emphasis added)
In this case, the Applicant argues the decision of Justice
Boyle in Corsi supports the proposition that this Court is the
“different” court or “another” court, which has the jurisdiction to deal with
the “assessments” in issue in this case.
[21]
Thus, the
conundrum: if the Applicant has no appeal rights to the Tax Court does he have
any right of proceeding by way of judicial review in this Court? The Applicant
argues that as the Minister failed to observe procedural fairness and the
principles of natural justice, the Applicant is left without any right to file
a notice of objection or an appeal under the Income Tax Act.
[22]
It would
appear that the proceeding contemplated in section 173 of the Income Tax Act,
that is, a reference to the Tax Court to determine a question of law or mixed
fact and law, as used in the 236130 British Columbia case, supra, has not
yet been pursued. It also appears that no appeal to the Tax Court has been
taken under section 169(1) nor has the extension of time to appeal under
section 167(1) of the Income Tax Act been pursued which may give
the taxpayer an avenue of appeal to the Tax Court. It is to be noted that the
Applicant argues in its written submissions the following:
27. In the Minister’s March 3, 2009
letter, the Minister did not refuse the [sic] grant an application
for an extension of time to file the notices of objection, but rather stated
that it could not grant and [sic] application for extension due to the
fact that the objections were filed beyond the time limit in paragraph
166.1(7)(a) of the ITA. The Minister considered the July 10, 2007
reassessments to be valid, therefore, the Minister believed that it did not
have jurisdiction to grant the extension. The Minister did not refuse to grant
the extension; he was unable to grant the extension. The Minister did not make
a decision because, in the Minister’s interpretation, he did not have the
jurisdiction to exercise his discretion under section 166.1 of the ITA.
[23]
There is
no decision for the Tax Court to review under section 166.2 of the Income
Tax Act, thus the Tax Court does not have jurisdiction.
[24]
The
Minister’s argument that assessments fall exclusively within the jurisdiction
of the Tax Court is correct. However, if there is no “valid” assessment, which
triggers the relief available to a taxpayer, then the matter falls to be
determined by this Court. It is to be noted that in Krahn v. Canada (Customs and Revenue Canada) [2005] F.C.J. No. 582 at para. 11, Deputy
Judge Strayer stated:
If,
indeed, the Applicant here is not challenging the assessment of February 9,
1999, and is only arguing that what has happened since that assessment, and its
confirmation by the Tax Court of Canada, has involved some enforcement or
collection decisions involving the kind of error normally reviewable under
section 18.1, it may be difficult to say that judicial review of such a
decision could never be available. If it is enforcement action alone, and not
the assessment, which is under attack, it is clear that the taxpayer cannot
challenge that by the usual Tax Court procedure. Therefore this Court should be
open to considering whether a remedy is available here in respect of official
action which is not reviewable by the Tax Court. For example this Court
hears applications for judicial review in respect of the exercise of ministerial
discretion under subsection 223(3.1) concerning the waiver of penalties or
interest, a matter not reviewable in the Tax Court: see Sharma v. Canada
(2001), 206 F.T.R. 40; MacKay v. Canada, [2002] 2 C.T.C. 130; and Case
v. Canada, [2004] F.C.J. No. 1026. (emphasis added)
[25]
In my
view, Justice Strayer’s observation applies in this case. This Court should be
open to considering whether a remedy can be granted as it appears the notices
of assessment are not reviewable by the Tax Court. It may very well be that
there are other avenues that can be pursued in the Tax Court such as a
reference under s. 173 of the Income Tax Act if the parties agree to
pursue such a reference. That section provides as follows:
173(1) Where the Minister and the
taxpayer agree in writing that a question of law, fact or mixed law and fact
arising under this Act, in respect of any assessment, proposed
assessment, determination or proposed determination, should be determined by
the Tax Court of Canada, that question shall be determined by that Court.
[26]
Such a
proceeding would put the issues in this application squarely before the Tax
Court as it did in the 236130 British Columbia case. If such were to happen then
proceedings in this Court could be stayed or otherwise disposed of pending the
outcome of such proceedings. However, as the Minister and taxpayer have not
pursued that option and no such proceedings are pending then the Applicant
should not be prejudiced by having this Application struck on motion by the
Minister. To do so would be to leave the Applicant without a remedy.
Conclusion
[27]
In the
result, the motion is dismissed but given the novel issue raised there will be
no costs. Further, the Respondent is granted an extension of time of 30 days
within which to file its responding affidavits and documentary exhibits.
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