Citation:
2017 TCC 116
Date:20170627
Docket: 2016-2656(IT)APP
BETWEEN:
TIMOTHY
E. NICKSY,
Applicant,
and
HER
MAJESTY THE QUEEN,
Respondent.
REASONS
FOR ORDER
Bocock J.
[1]
This is an application by you, Mr. Nicksy, for
an extension of time to file either a notice of objection or a notice of appeal
in respect of his previously subsisting notice of objection. The Minister
asserts that such notice of objection was nullified by a request for an
amendment, and the subsequent notice of reassessment issued by the Minister.
Facts:
[2]
Aside from that rather complicated statement, the
application relates to the following facts. In the 2005 taxation year, Mr.
Nicksy filed his tax return and claimed charitable donation receipts in respect
of a charitable donation program. This involved ParkLane Financial Group. It
involved $7,500 as a cash donation and other claimed forms of charitable
donations in kind. Mr. Nicksy received a charitable donation receipt for
$30,000.
(a) Original Objection
[3]
The Minister originally assessed the return as
filed. However, in a first notice of reassessment issued January 27, 2009, Mr.
Nicksy, the Minister reassessed you and disallowed the full charitable donation
deduction and the related charitable donation tax credit.
[4]
Subsequent to that, a letter from Mr. Grisé,
chief of appeals, was issued June 29, 2009 to Mr. Nicksy. The following are excerpts
from that letter:
“This is to
advise you that your file is currently being held in abeyance as part of the
'Donations Canada Charitable Donation Program 2005' project.”
“As the objection
relates to an issue that is shared by several other taxpayers, the decision on
your file will be deferred pending resolution of related objections.”
[5]
Mr. Nicksy, this is quite common. The Canada
Revenue Agency (“CRA”) wants to deal with these thousands of donation receipts
administratively, rather than having the Court be flooded with thousands of
notices of appeal all related to the same set of facts. The donation receipts
are identical, but the amounts donated are not. However, the legal principles, the
property and the percentage of cash are normally identical. Therefore administratively,
the CRA and the Minister try to deal with these appeals without clogging up the
court system.
[6]
Mr. Grisé also writes:
“Please be
advised that while collection action is suspended until the objection is
resolved...”
[7]
This is very important to taxpayers, who want to
know that property is not being seized.
“…interest
continues to accumulate on the unpaid disputed balance and will be collected
when the objection is resolved.”
[8]
That is code for: "If you win, there's no
interest; if we win, there is.”
[9]
And then the letter also says:
“You can avoid
further interest if you pay us the money now.”
You indicated that you did that. That is the letter of June 29, 2009.
(b) Unrelated Adjustment Request
[10]
In a totally unrelated matter, you indicated, for
tax years 2005 to 2010, with the assistance of your accountant, you filed an
adjustment request, usually in the form of a T1 adjustment. This was related to
disability tax credits for your daughter. You were granted those disability tax
credits. And in that context, there was a notice of reassessment that was
issued. Exhibit A-2 is an excerpt or copy of it dated September 16, 2010. It
effectively reassessed your 2005 tax return, amongst other tax years, but
particularly in this case the 2005 tax year. So a new reassessment was issued
on that date. And that was September 16, 2010. There is no dispute, you admit
that you received that.
[11]
There was a subsequent letter issued. This is
the letter which is in dispute. That was signed by Ms. Renzella of the CRA dated
October 27, 2010. It was addressed to the same address as the notice of
reassessment and all the other correspondence that you received from CRA over
the years. You testified to this fact.
[12]
In that letter of October 27, 2010, Ms. Renzella
indicates to you that as a result of that 2005 income tax return, and related
assessment, the Canada Revenue Agency issued a reassessment dated September 16,
2010. Again, Exhibit A-2, which you did receive. Ms. Renzella states, “This
reassessment nullifies the earlier reassessment and the objection filed.
However, you can re-object.” Mr. Nicksy, you have to do that within 90
days of the mailing of the notice of reassessment, dated September 16, 2010. Alternatively,
you have the right to appeal directly to the Tax Court of Canada within 90 days
of the mailing of that second notice of reassessment dated September 16, 2010.
[13]
Now Ms. Renzella testified that she works out of
the Sudbury TSO, I believe, and that she signed the letter and put it in the
outgoing mailbox. And after that, it goes into the usual delivery system of the
CRA and is mailed. There is an affidavit on file, at least with respect to the
system followed by the Canada Revenue Agency with respect to all mail. But
there is no dispute, as I mentioned, with respect to the 2005 reassessment,
dated September 16, 2010. You received that.
(c) No Action on Original Objection
[14]
Nothing further happened, Mr. Nicksy, other than
in late 2015 or early 2016, you testified you started to become suspicious
because other people involved in the donation program were receiving
administrative offers to settle from the CRA. As that particular group program
progressed administratively, between the CRA and taxpayers, and not before the
Court offers to reassess on a certain basis were issued.
[15]
As a result of that, you logically telephoned
the CRA. You were told that your objection could not be dealt with because it
had been nullified by the September 16, 2010 reassessment for the 2005 taxation
year. As a result of that, at that point you indicated you filed a T1
adjustment request with respect to your 2005 taxation year. This was done in
the hopes that the Minister would look at that, reassess you and revive
whatever administrative offer had been made to other taxpayers and would make
it to you, and that you would accept.
[16]
And so those are the facts. They are not materially
in dispute, with the exception, Mr. Nicksy, of the receipt of the letter dated
October 27, 2010.
The Law and Decision:
[17]
Unfortunately, Mr. Nicksy, I cannot grant your
application. The reason for that is, as Ms. White has pointed out, there is
much case law on this topic which indicates that if a second notice of
reassessment is issued, in respect of a specific taxation year, it nullifies
all previous objections. That is how the Income Tax Act works,
reasonably and rationally. However, if one does not know about the rule, it can
work to one’s disadvantage.
[18]
And in this particular case, when that second
notice of reassessment was issued in September of 2010 regarding 2005,
admittedly, for a reason that is completely unrelated, it nullified your previous
objection relating to the donation appeal. If at that point you had already
filed a notice of appeal which you had a right to do, your appeal would still
be subsisting. Based upon the legal authorities such as Bormann v. Canada,
2006 FCA 83 unless you have an objection, or an appeal, the Court does not have
jurisdiction to consider it. The time frames are very clear under the Act.
[19]
The time frames are a conjunction of sections
165 through to 169 of the Income Tax Act. Because there are 35 million
taxpayers, the Minister has to have some finality for assessment. And in its
wisdom, Parliament has said, "Here is how it is going to work for
everyone." With respect to any specific taxation year and a reassessment
that is issued, a taxpayer, upon receipt of a notice of reassessment, has 90
days to file a notice of objection. If the taxpayer fails to do that, the
taxpayer then has another year to do so after that. So, 90 days “as of right”
and a one year “grace period”. The taxpayer must file within those periods of time
in respect of a reassessment in respect of a taxation year. Section 165 is very
clear on that particular issue.
[20]
Section 166 relates to objections to the
Minister. 167 relates to objections to the Tax Court. Section 169 relates to
appeals. They all use the same time frames.
[21]
Once you have an objection filed, if the
Minister issues a subsequent reassessment, the taxpayer has an option: she or
he can file a notice of objection or a notice of appeal, but the taxpayer must
do so within the 90-day period or make an application within the one-year
period.
[22]
I fully accept that you did not know the impact
of the 2010 reassessment, but you do not dispute that you got the notice of
reassessment. If I were to simply rule that because a taxpayer did not know the
impact, or did not receive the courtesy because (the Minister is not under an
obligation to advise people of the law), I would be incorrect. I also pointed
out that Mr. Grisé’s letter was unnecessary.
[23]
Both the letters of Ms. Houde for the 2004
taxation year and the letter of Ms. Renzella (2005) pointed out that you had
two options: you could file a new notice of objection or you could file a
notice of appeal. You may have received the first letter, but you indicated that
you did not receive the other for certain. In any event, the 2010 reassessment
does have that legal effect. It nullified all previous objections. It likely
was something that your accountant could have mentioned in passing when you
filed the T1 adjustment request, but he did not do that either.
Possible Alternatives:
[24]
Now, let me reference the adjustment request you
have made for the 2005 taxation year that is pending, but held in abeyance, based
upon what the CRA official has told you. As a result of the dismissal of this
application, you might consider going back and lifting that T1 adjustment
request from abeyance. Whether you are within the time frame or not, I cannot
comment. That will depend on the dates you filed and ministerial discretion. It
will depend on the circumstances of this case. But I can only say to you that
given the nature of the adjustment request in 2010, which had the effect of
nullifying a completely unrelated notice of objection in 2005, I would think
that the Minister will seriously consider exercising her discretion in that
regard but it is up to her whether she does or not.
[25]
With respect to the Fairness Committee, a
committee of the CRA to which taxpayers may make application for interest and
payment relief, there could be grounds you might utilize. If you search on the
internet for "CRA Fairness Committee", the website will tell you the
grounds upon which you can make such an application.
[26]
In this particular instance, the application by
you in 2010 related to your daughter's disability tax credits and the resulting
nullification represents a remarkable coincidental inequity. The Fairness
Committee might consider the interest related to that period of time when an
administrative offer might otherwise have been made, but could not be made
because you did not have a subsisting objection simply because of your granted
T1 adjustment request. Again, that is not my decision to make, but I will
certainly ensure that the parties receive a copy of these reasons for order, to
the extent they may assist you before the Fairness Committee and with respect
to your T1 adjustment request.
Summary:
[27]
These conclude my reasons for order in this
matter. As mentioned, Mr. Nicksy, you have not managed to fall within the
jurisdiction of the Court to issue an order for an extension. If you take a
look at the language, specifically in sections 166.1 or 167(5.1), you will see that
Parliament has said, "No order shall issue." Those are the opening
words. Nothing could be clearer from Parliament that the Court does not have
jurisdiction where the time frames are not met. The case law which has been
laid before the Court, but not enunciated by Ms. White, is very clear on that: there
is simply no jurisdiction to grant the application, where that application has not
been filed within the 90-days as of right period or the one-year extension
period.
[28]
Accordingly, the application is dismissed.
Signed at Toronto, Ontario, this 27th day
of June 2017.
“R.S. Bocock”
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