3087-1883 Québec – Federal Court finds that a determination of CRA not to reassess a taxpayer is a reviewable decision
Two co-owners paid a portion of the expropriation proceeds received for one of their properties to their affiliated tenant of that property. However, when CRA treated that receipt in the tenant’s hands as a s. 9 receipt, rather than as a s. 12(1)(x) receipt that was eligible for the s. 13(7.4) election, the two co-owners and the tenant requested CRA (within the normal reassessment period) to amend their returns for the year of expropriation to treat the amount that had been paid to the tenant not as income to the tenant but instead as capital gains realized by the co-owners. CRA essentially refused this request. The taxpayers considered it to be unfair that CRA had not issued any reassessment that they could appeal, and applied for an order of mandamus compelling CRA to reassess in some manner.
Walker J found that the refusal of CRA to reassess was a decision that could be subject to judicial review (e.g., if the decision was unreasonable) – although, of course, the substantive question of whether the requested adjustment was correct could not be reviewed by her. However, this decision was not before her because their application had not been brought on a timely basis and the criteria for extending the 30-day period for bringing such an application had not been made out.
In any event, CRA had no legal obligation to issue a reassessment notice following the taxpayer request – that was a decision that was within its discretion (s. 152(4) used the word “may”).
Neal Armstrong. Summary of 3087-1883 Québec Inc. v. Canada (National Revenue), 2019 CF 785 under s. 152(4).