REASONS
FOR JUDGMENT
Russell J.
[1]
These are reasons for decision in the
application under section 304 of the federal Excise Tax Act (Act) of the
corporate entity Maple Tree Community Housing Corporation (Maple) for extension
of time to file a notice of objection. The issue is whether the application was
filed on a sufficiently timely basis to permit it to be allowed.
[2]
Subsection 304(5) of the Act specifies that no
section 304 application to this Court may be granted unless, amongst other
things, an application for extension of time to file a notice of objection had
been made to the Minister of National Revenue (Minister) per section 303 of the
Act within one year following the ninetieth day after the making (and mailing)
of the assessment intended to be objected to. The issue in this matter is
whether this application has been made on a timely basis.
[3]
Maple is a not-for-profit corporation
incorporated in 2007 principally by two faith-based communities in Goderich,
Ontario, to build a multi-unit affordable housing complex for qualifying
occupants. The funding for this commendable project was provided by the
Province and by Huron County (HC), of which Goderich is the county seat. The
evidence of Robert Evans, a volunteer principal of Maple, was that after
carrying out construction of the relevant 12 unit building, funded through
public monies as aforesaid, in spring of 2013 Maple submitted to the Minister
an application for a GST/HST New Residential Rental Property Rebate.
[4]
The Minister received this Rebate application
April 17, 2013. About a month later, on May 14, 2013 the Minister received from
Maple a second Rebate application. Both were based on expenses incurred in
respect of the said housing complex.
[5]
In the days following, Canada Revenue Agency
(CRA) caused a Rebate amount of approximately $35,000 to be paid into Maple’s
bank account.
[6]
Thereafter the Minister on June 6, 2013 responded
to the later filed (on May 14, 2013) Rebate application, denying it. The amount
shown on the related notice of (re)assessment as assessed was nil.
[7]
An email dated June 27, 2013 to a Maple
principal from local accountant Ron Burt, CA (Ex. A-11), acting in a volunteer
capacity on behalf of Maple, states that earlier that month CRA had sought
additional information pertaining to the Rebate applications. In that month and
continuing at least to some extent there was communication between Mr. Burt’s
firm on behalf of Maple, and CRA.
[8]
The Burt email states that CRA was seeking of
Maple,
… to self assess
on HST and therefore be responsible for paying HST on the FMV of building and
getting a reduced amount in rebate back.
It states also
that Mr. Burt’s accounting firm tried to clarify the situation with the CRA
representative and that the latter recommended the matter be referred to CRA
Rulings, and that Mr. Burt’s firm concurred with that. The email says also
that,
Our firm has made
initial contact with CRA rulings branch and are in the process of working
through the situation. Our expectation is that we should get a clear
understanding on how CRA would like to treat CRA [sic, presumably Maple intended]
before the end of July. At that time Mapletree will need to decide if the
treatment is correct from [its] perspective.
[9]
The email then states, “If
Mapletree disagrees then objections can be filed.” It concludes by
stating that the amount involved could exceed $100,000 and that Maple treasurer
George Land has delivered information to the accountant “that will help with the Rulings branch”.
[10]
Shortly thereafter, on July 17, 2013 the
Minister denied the Rebate application received April 17, 2013. The related
reconstructed notice of (re)assessment showing mailing date of July 17, 2013,
stated an amount assessed of $36,411.
[11]
The ninetieth day following the aforementioned
June 6, 2013 and July 17, 2013 assessment dates were, respectively,
September 4, 2013 and October 15, 2013. The Respondent says that no notice of
objection was filed by Maple within either of these two ninety day periods.
[12]
Further, the Respondent maintains, without
evidence from Maple suggesting otherwise, that no section 303 application for
extension of time to file a notice of objection in respect of either assessment
was filed with the Minister within one year following the last day of either of
the two said ninety day periods. The expiry dates of those two one year periods
commencing October 15, 2013 and September 4, 2013 were October 15,
2014 and September 4, 2014 respectively.
[13]
Maple filed with the Minister on January 4, 2016
a purported notice of objection in respect of both 2013 assessments. It is a
letter dated December 30, 2015 signed by Mr. Evans. In response, on
February 2, 2016 the Minister sent a letter so dated to Maple, informing that
the purported notice of objection filed January 4, 2016 could not be accepted
as a validly filed notice of objection as it not been filed within either of
the two pertinent ninety day periods aforementioned. The letter advised also
that an application for extension of time to file a notice of objection could
not now be granted as the applicable one year period for each of the two
subject assessments, also aforementioned, had expired. Thereafter the herein
application was filed with this Court on February 23, 2017, i.e. more
than a year later.
[14]
At the hearing of this application Messrs. Burt
and Land each testified. Mr. Burt stated that sometime after his email of June 27, 2013
he had prepared a notice of objection. Mr. Burt had no file or other copy
of the notice of objection that he said he had drafted. He said he drafted it
on a date close to the deadline, but could not be more precise as to when. Mr.
Land was to pick it up and mail it. Mr. Burt said he assumed that had happened.
Mr. Land, outside the courtroom during Mr. Burt’s testimony, subsequently
testified that he arrived at Mr. Burt’s office “and
they filled out the form” for the notice of objection, referring to
himself and Mr. Burt. He thought it was late on a Friday, but could not be more
specific. He says he took it and mailed it to CRA Appeals in Summerside, PEI.
[15]
I have difficulty with this testimony, based
purely on memory of over four years ago, over and above the fact that the
Minister says no notice of objection was ever received. First, there is no
file, or file copy or other copy whatsoever of any such notice of objection
available, notwithstanding that this pro bono work was done in an
accounting firm office. Nor does Mr. Land have any copy or other documentary
corroboration. Messrs. Burt and Land’s accounts differ significantly - the
former says he prepared the notice of objection and left it for the latter to
pick up, and the latter says they both “filled out the
form”.
[16]
Also, I question this because there are no
subsequent references throughout the active timeline of this matter indicating
that either of these persons or anyone else from Maple ever sought follow-up
regarding the notice of objection ostensibly sent - so as to resend it or make
then rather than only now an application for extension of time to file or
refile.
[17]
Lastly, the above-referenced December 30, 2015
letter from Maple to CRA received January 4, 2016, taken as being a purported
notice of objection, consists of a four page chronology of pertinent events. In
this chronology there is no reference, suggestion or claim that any notice of
objection previously had been filed or that there had been any attempt to so
file. There is a statement in the letter recounting, in respect of a CRA
officer saying to Mr. Evans by telephone in late-December 2015 that a notice of
objection should have been filed “years ago”,
that “[w]e certainly have been led to believe that our
matter had merit, and that it was being looked into by CRA.”
[18]
Maple submits that in all the circumstances it
should be considered as having constructively filed a notice of objection. What
are these circumstances?
[19]
I do not intend to repeat all the evidence. Mr.
Evans testified that in mid-2013 more funding was granted by the Province and
by HC. HC then held the granted money and took over from Maple as project
manager of the affordable housing project. This at least initially was welcomed
by the volunteers of Maple, who had been managing this housing project. The
July 17, 2013 notice of (re)assessment or a copy thereof was forwarded by Maple
to HC on or before December 2013. HC was said to be wearing two hats -
custodian of the project funds and spender of the funds. In late 2013 and
moving into 2014 Maple sought from HC copies of records of spending by HC so
Maple could get its financial statements prepared. Maple was the owner of the
affordable housing building.
[20]
Apparently HC was not forthcoming with the
records, and a major dispute in this regard arose between HC and Maple. This
dispute was worsened by the discovery that HC had claimed input tax credits
(ITCs) on this project based on the expenditures it had made. This prevented
Maple from making, as it had intended, its own further GST/HST submission for
refund, from which proceeds Maple had anticipated it could pay off the subject
assessed sum.
[21]
By this time, in early 2014, CRA Collections was
calling. Ex. A-17 is a copy of an email from Mr. Evans showing date of January
9, 2013 but presumably from context of the message itself the actual date was
in or about early 2014. I hasten to add I attribute no improper motive for this
mistaken date. The email is to Mr. Land it asks that he handle follow-up of a
call from CRA. It seems this was CRA Collections calling. The email makes
mention of intent to try to pay the owed amount through
..many hundreds
of thousands of dollars spent since the HST refund was applied for and paid to
us, no doubt for which we should be claiming some HST Refund, and that, if this
present Claim is valid (and I’m not sure that it fully is), hopefully there
will be some credit balance resulting which could offset the Claim.
It was after this that Maple determined that HC had submitted for
ITCs and resultant refunds, that Maple considered it should have been able to
seek.
[22]
Maple then engaged a local law firm to seek a
ruling from CRA. The ruling request, submitted February 13, 2014, was to
confirm Maple was right in its dispute with HC as to who properly could claim
ITCs and accordingly a GST/HST refund for expenditures HC had incurred,
ostensibly as agent for Maple in completing work on the building that Maple
owned and operated. From my understanding of the record, nothing definitive
came of this ruling request. It is hardly mentioned if at all after having been
submitted.
[23]
As well, Maple obtained an “expert” opinion from an accounting firm dated March 1,
2015 in respect of its dispute with HC, to the effect that Maple was entitled
to the funds HC had managed and thus was entitled, rather than HC, to submit a
further rebate or refund application based on the further work done. Again Maple’s
plan was that these further monies could be used to pay back the Rebate
received in 2013 that had to be repaid.
[24]
Maple also took steps to discuss this with CRA,
particularly with calls coming in from Collections. In mid-2015 Maple sent to a
CRA Collections officer in B.C. a detailed and documented submission telling
the whole story from Maple’s perspective to see what could be done. No response
was received; it appears that this Collections officer was reassigned off the
Maple file, and the matter had been left without timely response and sometime
thereafter was referred to another CRA officer.
[25]
Also, the above noted December 30, 2015 letter
signed by Mr. Evans was sent to the CRA Appeals office in Sudbury, Ontario. It
states in part, as referred to above, that,
In a telephone
discussion a week ago with Ms. Mayzes, she indicated that Maple Tree should
have filed an Objection years ago. We certainly have been led to believe that
our matter had merit, and that it was being looked into by CRA.
Analysis and Conclusion
[26]
Maple submits that the circumstances as a whole
support the granting of this application to extend time to file a notice of
objection. In this regard, Maple principally cites the decision of Schneidmiller
v Her Majesty, 2009 TCC 354.
[27]
In the case of Maple, the applicable 90 day
periods for filing a notice of objection for either or both of the subject
assessments passed on September 4, 2013 and October 15, 2013. No
notice of objection was filed, nor anything else that could reasonably be
construed as a notice of objection, by either of these two dates. Nor was there
any attempt to so file, until early 2016 when CRA received Maple’s letter dated
December 30, 2015 and construed it as being an intended notice of objection. Unfortunately
the legislated time period of one year from expiry of the applicable 90 day period
for seeking an extension of time to file a notice of objection had long past
for each of the two subject assessments - by September 4, 2014 and October 15,
2014. Indeed these dates had passed the better part of a year before even the
package of materials was assembled and sent to the B.C. based CRA Collections
officer.
[28]
In retrospect, it seems Maple may have allowed
itself to become unduly preoccupied with its dispute with HC. A ruling was
requested re the legal situation vis-a-vis HC in early 2014 and
an expert opinion on the same topic was prepared in early 2015. Perhaps the
lack of focus in the meantime on the subject assessments and the time
requirements for filing a notice of objection were, at least in part that Maple
seemed to have adopted the view that those assessments were not at least
entirely in error and that the solution ultimately was in a further GST/HST rebate
or refund application that Maple intended to make that could generate the funds
to repay the earlier Rebate in 2013 that the Minister had assessed as being
required to be paid back. But the dispute with HC prevented, delayed or
rendered more difficult the making of that further GST/HST application. Whether
Maple has any valid legal claim against HC in this situation, which has only
been generally set out herein, is not for this Court to opine on.
[29]
As for the Schneidmiller decision, in
that case the taxpayer had received notices of reassessment that he disagreed
with, so well within the applicable 90 day period he contacted CRA to discuss. CRA
sent him “T1 Adjustment Request” forms to fill out and submit, which the
taxpayer did, still well within the applicable 90 day period. These completed
forms were lost by CRA apparently. So, after the taxpayer had followed up by
enquiry, the taxpayer was provided, and he completed and submitted, fresh such
forms, by now being 18 months after the subject reassessments. Thereafter
he was advised to file a notice of objection which he did but by then the
taxpayer was well beyond the 90 days plus a year period for extension of time.
[30]
What Beaubier, J. of this Court did in that
case, on the application for extension of time to file a notice of objection,
was recognize the initial T1 Adjustment Request forms which CRA had given the
taxpayer and which the taxpayer dutifully completed and submitted to CRA, well
within the applicable 90 day period, as substantively being notices of
objection. The taxpayer thus was successful.
[31]
However I am unable to apply that decision to
this case at bar. In this present case, there is no evidence of anything
particularly expressing objection having been filed with CRA within the
applicable 90 day periods, or thereafter. Even the package of materials sent in
2015 to the CRA Collections officer in B.C. occurred, as noted above, well
beyond the applicable 90 day periods and as well the better part of a year
after expiry of the herein applicable one year periods ending September 4, 2013
and October 15, 2013 for seeking an extension of time.
[32]
Here the time period legislatively provided per
section 304 of the Act for making an application for extension of time was
egregiously exceeded. The time periods expired in September and October of
2014. This application for extension of time was not brought until February of
2017, approximately 2.5 years later. As stated above, subsection 304(5)
specifies that no section 304 application may be granted unless the application
for extension had been made to the Minister per section 303 within one year
following the applicable 90 day period.
[33]
Therefore, and with all due respect for the good
works of Maple in instituting this affordable housing project in its home
community, I conclude that this application must be dismissed, albeit without
costs.
Signed at Ottawa, Canada, this 30th day of October 2017.
“B. Russell”
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