Docket: A-15-16
Citation:
2017 FCA 60
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CORAM:
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NEAR J.A.
RENNIE J.A.
GLEASON J.A.
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BETWEEN:
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VINCENT DICOSMO
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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 OF THE COURT
(Delivered from the Bench at Toronto, Ontario, on March 28, 2017)
[1]
This is an appeal from the judgment of the Tax
Court of Canada, whereby the Court dismissed the appellant’s challenge to the
Minister’s reassessments for the 2003, 2004 and 2005 taxation years. The
appellant claimed that the Minister erred in not allowing his claims for
additional employment expenses, allowable business losses and a representation
fee in respect of the 2005 taxation year. At the hearing of this appeal, the
appellant abandoned the appeal in respect of the deduction for allowable
business losses and the representation fee.
[2]
In dismissing the appeal, the judge found that
the appellant’s evidence fell far short of establishing a prima facie
case that the reassessments were incorrect. This conclusion was predicated on
her finding that the testimony of the appellant’s witnesses was unreliable as
well as the absence of any supporting documentation. The judge also found that
the appellant may well have fabricated evidence with an intention to mislead,
and had tendered that evidence to the Court.
[3]
The Court made specific findings with respect to
whether the appellant had raised a prima facie case on each of the three
issues before it. With respect to the employment expense issue, the judge
concluded that the appellant’s testimony was “completely
unsatisfactory”; with respect to the allowable business investment loss
claim, the judge found the appellant’s testimony unconvincing and noted that no
documentation was produced supporting the claim that a loan had been made to
the business as claimed. The judge found that no investment had in fact been
made. The Court dismissed the claim for the representation fee, noting that
there was insufficient evidence to link the expenditure to a permitted
deduction.
[4]
Before the Tax Court the appellant raised the
issue whether the reassessments were statute-barred. The judge declined to
consider the issue as it had not been raised by the appellant in his Notice of
Appeal.
[5]
In considering an appeal from a decision of the
Tax Court, this Court is guided by the principles expressed in Housen v.
Nikolaisen 2002 SCC 33 at para. 8. Questions of fact or mixed fact and law
are reviewable on the basis of palpable and overriding error; questions of law,
or extricable questions of law, are reviewable on the basis of correctness. Here,
in requiring the appellant to establish a prima facie case that the
Minister’s assumptions were incorrect, the judge identified the correct legal
standard. In applying that standard to the facts before her, no reviewable
error has been demonstrated. The judge had the benefit of hearing and observing
the witnesses, and in our view, the conclusions as to their veracity and
reliability had a solid foundation in the record. Equally, the inferences which
she drew from the absence of documentation in circumstances where it would be
reasonable to expect documentation as in the claim for allowable business
investment loss, were also reasonably open to her.
[6]
The final ground of appeal concerns the failure
of the Court to find that the reassessments were statute-barred.
[7]
While the question of whether an assessment is
statute barred is assessed against a correctness standard, no error has been
established. In the absence of an allegation or assertion that the claims were
statute-barred, the Minister has no obligation or onus to prove that the
reassessments were made within the normal reassessment period; Last v. R,
2014 FCA 129 at para. 54.
[8]
Counsel relied on the decision of the Tax Court
of Canada in Yunus v The Queen, 2015 TCC 272, in support of the
proposition that the fact that a reassessment is statute-barred can be inferred
and be put in issue from the Minister’s Reply pleading.
[9]
In our view, the jurisprudence of this Court
requires that the issue of whether an assessment is statute-barred must be
specifically pleaded. The underlying rationale is to ensure fairness and to
permit all evidence relevant to be before the Court.
[10]
We therefore dismiss the appeal with costs.
"Donald J. Rennie"
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