Ntakos Estate – Tax Court of Canada finds that reassessments at the request of a taxpayer lacking mental capacity were void
An accountant got the taxpayer (Anna – who at that point was mentally failing), months before her death, to file T1 adjustment requests in 2003 for her 1998, 2001 and 2002 taxation years to allocate increased management fees and employment income to her by the family companies. This apparently had the effect of improving the tax position of one of Anna’s brothers, for whom the accountant was also acting. Over 10 years after the resulting reassessments of Anna (i.e., well beyond the s. 166.1(7)(a) deadline), her estate filed notices of objections or applications for an extension of time to file a notice of objection. Bocock J found:
Non est factum is available where a person is not capable of both reading and sufficiently understanding a document. …
… Anna from and after her diagnosis date, lacked mental capacity to execute or did not execute and file the 2003 filings… . Therefore, the notices of reassessments responsive to the 2003 filings … were void. … [T]he reassessments were consequential to invalid or unlawful filings and issued by the Minister under innocent mistake of fact. Accordingly, no objection was required to the void reassessments. …
Bocock J went on to vacate those reassessments.
He was striving for an equitable result. He did not explain how lack of mental capacity to make or adjust a return for a taxation year invalidates an assessment of that year.
Neal Armstrong. Summary of Ntakos Estate v. The Queen, 2018 TCC 224 under s. 166.