Docket: A-388-15
Citation:
2017 FCA 238
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CORAM:
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PELLETIER J.A.
STRATAS J.A.
DE MONTIGNY J.A.
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BETWEEN:
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CECIL PEREIRA (PH.D.)
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Appellant
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and
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THE ATTORNEY GENERAL OF CANADA
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Respondent
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REASONS
FOR JUDGMENT
STRATAS J.A.
[1]
The appellant appeals from the judgment dated
May 13, 2015 of the Tax Court of Canada (per Paris J.). The Tax Court
upheld the assessment of tax for the appellant’s 2013 taxation year under the Income
Tax Act, R.S.C. 1985, c. 1 (5th Supp.).
[2]
The Tax Court held that the appellant was
properly assessed with interest because he failed to pay required instalments
of tax due for the 2013 taxation year. The Tax Court found that the appellant
was indeed required to pay instalments of tax due. Since he did not do so on a
timely basis, he was liable for interest.
[3]
On this, the Tax Court’s conclusion is an issue
of mixed fact and law. Unless the appellant can demonstrate an error in law or
in extricable legal principle, he must persuade us that the Tax Court’s
conclusion is vitiated by palpable and overriding error: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.
Palpable and overriding error is a high threshold for interference: Benhaim
v. St-Germain, 2016 SCC 48, [2016] 2 S.C.R. 352 at para. 38, citing Canada
v. South Yukon Forest Corporation, 2012 FCA 165, 4 B.L.R. (5th) 31 at para.
46.
[4]
Was the appellant required to pay instalments of
tax due for the 2013 taxation year? This is governed by paragraph 156.1(2)(b)
of the Income Tax Act. This paragraph provides that a taxpayer does not
need to pay tax in instalments if “the individual’s net
tax owing for the particular year [here 2013], or for each of the 2 preceding
taxation years [here 2011 and 2012], does not exceed the individual’s
instalment threshold for that year.” The
instalment threshold in this case is $3,000.
[5]
The appellant cannot establish either branch of
paragraph 156.1(2)(b):
•
In the Tax Court, the appellant admitted that
his net tax owing for the 2013 taxation year was greater than $3,000, namely
$6,207.75.
•
The Tax Court did not examine whether the appellant’s net tax owing in each of 2011
or 2012 was less than $3,000. But according to a proper assumption made by the
Minister and not addressed by the appellant, the appellant’s net tax owing for
the 2011 taxation year was over $3,000: see Reply, para. 7(d).
[6]
In the Tax Court, the appellant submitted that
he was misled by instalment reminders sent out to him by the Canada Revenue
Agency. He submitted that the notices told him that his net tax owing for 2013
was only $2,888. But the Tax Court found that the notices told him that $2,888
was the total of the instalments he was required to make, not his net tax owing
for 2013. Thus, on the facts, the Tax Court found that the reminders were not
misleading.
[7]
I am not persuaded that the Tax Court erred in
law or in extricable legal principle or committed any palpable and overriding
error in making the findings and conclusions it did.
[8]
In this Court, the appellant also alleged that
the Tax Court hearing was procedurally unfair. He pointed to the fact that the
Tax Court asked him whether he shared his documents with the respondent but
never asked the respondent if it shared its documents with the appellant. In my
view, this was not procedurally unfair. I note that the only exhibit produced
by the respondent arose in cross-examination and even in more formal
proceedings under the Tax Court of Canada Rules (General Procedure), SOR
90-688a that sort of document need not be disclosed in advance: see Rule 89(2).
I also note that during the hearing in the Tax Court the appellant did not
express any concern about procedural unfairness and, judging by the transcript,
he felt free to speak up whenever he needed to. Having read the transcript of
the hearing, I conclude that the hearing in the Tax Court was procedurally fair
in all respects.
[9]
In this Court, the appellant raises additional
issues and seeks relief for those issues.
[10]
The starting point for analysis is the principle
that this Court is restricted to the issues raised in the appellant’s notice of
appeal in this Court.
[11]
To the extent that the notice of appeal in this
Court raises issues that were not before the Tax Court, this Court ordinarily should
not entertain them, particularly where they are fact-based and evidence in the
record is lacking: Quan v. Cusson, 2009 SCC 62, [2009] 3 S.C.R. 712; Performance
Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19,
[2002] 1 S.C.R. 678. The record before us, which includes a full transcript of
the hearing before the Tax Court, is not sufficient to deal with the additional
issues the appellant urges upon us. In this case, this Court should not deal
with issues that were not before the Tax Court.
[12]
During oral argument in this Court, we asked the
parties questions concerning the issues that were before the Tax Court. The
appellant suggests that he placed much more than the issue of instalments before
the Tax Court. The respondent submits that the Tax Court had only two issues
before it: an issue about enforcement action taken by the Canada Revenue Agency
that the Tax Court had no jurisdiction to decide, and the tax instalment issue
that the Tax Court decided on its merits.
[13]
For the reasons that follow, I agree with the
respondent.
[14]
In the Tax Court, the appellant set out only two
grounds in his notice of appeal. One of the two grounds was the Canada Revenue
Agency’s garnishing of the appellant’s pension while his appeal was in
progress.
[15]
The Tax Court had no jurisdiction to deal with
this ground. The Tax Court can deal only with the validity of an assessment,
not enforcement action taken by the Canada Revenue Agency. Challenges to
decisions concerning enforcement can be pursued in the Federal Court by way of
judicial review, but not in the Tax Court. See, e.g, A&E
Precision Fabricating and Machine Shop Inc. v. Canada, 2013 FCA 173 at
para. 9.
[16]
The other ground in the appellant’s notice of
appeal in the Tax Court was as follows: “a critical
fact…was ignored by [a Canada Revenue Agency official], who focused 99% on
items, irrelevant to [the appellant’s] claim, that in 2013, allowed taxes were
paid in full and on time.”
[17]
The Tax Court characterized this ground as
relating only to the issue of the tax instalments.
[18]
In reaching this characterization, the Tax Court
put to the appellant at the beginning of the hearing that the issue of the tax
instalments was the only issue in play. The appellant seemed to accept this.
See transcript of the hearing at p. 5, ll. 8-19.
[19]
There is more to support the Tax Court’s
characterization. The appellant’s testimony in the Tax Court largely concerned
the issue of the tax instalments and only that issue. Only later in his testimony
did the appellant start to discuss briefly an issue relating to foreign
property and rent. But in submissions at the end of the hearing, the appellant
restricted himself to the issue of the tax instalments. And when the Tax Court
asked the appellant at the end of his submissions if he had more to add, the
appellant confirmed he did not.
[20]
Finally, and most importantly, the appellant admitted
in the Tax Court that his net taxes owing for the 2013 taxation year were as
assessed by the Minister, namely $6,207.75: Appeal Book, p. 7. The Tax Court
cannot be faulted for concluding that the appellant’s taxable income was
correctly determined, leaving the issue of instalment interest as the only
matter for it to determine.
[21]
The record before us suggests that the appellant
may be confusing the 2013 taxation year, which is in issue here, with other
taxation years. For example, at one point when discussing other issues during
the hearing in the Tax Court the appellant referred to income using numbers
found in his assessment for the 2010 taxation year, not the 2013 taxation year.
[22]
Overall, I see no ground to interfere with the
Tax Court’s characterization of this ground of appeal as being restricted to
the issue of the tax instalments. The Tax Court’s characterization is a
factually suffused one based on the material before it and on its evaluation of
the responses and reactions, both verbal and non-verbal, of the appellant to the
questions and comments it made during the hearing. Absent palpable and
overriding error—and none has been demonstrated here—we cannot set its
characterization aside.
[23]
Therefore, for the foregoing reasons, I would
dismiss the appeal with costs. The Crown seeks its costs. Costs should follow
the event. Thus, I would award the Crown its costs. In the circumstances, I
would fix costs in the amount of $500, all inclusive.
"David
Stratas"
“I agree
J.D. Denis Pelletier J.A.”
“I agree
Yves de Montigny
J.A.”
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