Mackenzie v. R., [1996] 2 CTC 2153

Lamarre J.T.C.C. (orally): — This is an application for extension of time within which a notice of objection may be filed with respect to the 1990 taxation year. Counsel for the respondent opposed the application on the grounds that the application was filed outside the time limit set by paragraph 166.1(7)(a) of the Income Tax Act (the “Act”). In support of his position, counsel for the respondent filed an affidavit sworn by an officer of the Department of National Revenue, Mr. Warren O’Dwyer, stating that the Minister of National Revenue (the “Minister”) reassessed the applicant in respect of the 1990 taxation year on September 7, 1993 and sent by mail, a notice of Reassessment to him on that day, and that no notice of objection had been received.

The applicant denies that a notice of reassessment was issued on September 7, 1993 and pleads that if such reassessment existed, it was never mailed to him as he never received such a notice of reassessment (and consequently never had knowledge of it) at his long-time residence, which is at 37 Whitney Avenue, Toronto, Ontario M4W 2A7. The applicant testified he remained unaware that he had been reassessed until he was contacted by Revenue Canada Taxation, Collections, in late December 1994, regarding arrears of taxes for his 1990 taxation year. The applicant stated that he has been living at the above-mentioned address for almost ten years and that he practices medicine as an anaesthetist in Toronto. In 1987, 1988 and 1989, he suffered losses from the sale of securities which he claimed as business losses in his tax returns for those years. The Minister disallowed such losses by way of reassessments against which the applicant filed notices of objection. Said notices of objection are still pending and have not yet been vacated, confirmed or varied by the Minister. In 1990, the applicant again suffered losses in the amount of approximately $187,000 from the sale of securities which he claimed as business losses in his 1990 tax return. The applicant testified that he received a statement from Revenue Canada in the summer of 1991 accepting his tax return as filed and never received anything else after with regard to his 1990 taxation year. It is only in late December 1994, when he received that phone call from Revenue Canada, Collections, that he was made aware that he owed money to Revenue Canada with regard to his 1990 taxation year. He then contacted his tax advisor who thereafter found out about that alleged reassessment of September 7, 1993. An application for an extension of time was filed in March 1995, in accordance with subsection 166.1(3) of the Act, to the Chief of Appeals, who dismissed the application. That decision is now appealed before this Court. The applicant testified that had he known about the alleged reassessment of September 7, 1993, he surely would have objected as he did for the previous taxation years.

Mr. William Vasko Mafilovich, consultant with MacGuire Associates which is the tax firm appointed by the applicant to deal with his business affairs, also testified. He said that he dealt with the applicant’s tax returns since 1987 and he had knowledge of the objections filed by the applicant for the years 1987, 1988 and 1989. He also mentioned that he did not know that the business losses had been disallowed to the applicant in 1990 up until the end of December 1994, when the applicant received that phone call from Revenue Canada. He also mentioned that the assessments are normally sent to their client’s address and not to his office.

Mrs. Mackenzie, the applicant’s wife, also testified to explain that her husband asked her, at the request of Mr. Mafilovich, to obtain a print-out from Revenue Canada of the money owed by the applicant; she did it a short time after her husband received that phone call from Revenue Canada. They were never given a copy of that alleged notice of reassessment of September, 7 1993. She did not recall having discussions with Revenue Canada in the summer of 1994 or thereafter with regard to the applicant’s 1990 taxation year.

Finally, Mr. Warren O’Dwyer testified. He mentioned right at the beginning that he was not the officer who dealt with the applicant’s file prior to his application for an extension of time. His knowledge of the applicant’s file was drawn from an examination of the records kept by Revenue Canada, Collections’ officers. From these records, he quoted some documents, prepared by the auditor, that would have provided the basic information to prepare a reassessment with regard to the applicant’s 1990 taxation year. Nothing in those records shows that if a notice of reassessment was issued, it was actually mailed to the applicant.

Under subsection 166.2(5) of the Act, there is a time limit after which no extension of time may be granted; that limit is one year after the expiration of the time otherwise limited for serving a notice of objection. Under subsection 165(1) of the Act, the time limit to file a notice of objection that would potentially be applicable in the present instance is the day that is 90 days after the day of mailing of the notice of assessment. Thus, as was stated by the Federal Court of Appeal, in Aztec Industries Inc. v. R., (sub nom. Aztec Industries Inc. v. Canada), [1995] 1 C.T.C. 327, 95 D.T.C. 5235, at page 329 (D.T.C. 5236), “the date from which the calculation of time must be reckoned is the ‘day of mailing of the notice of assessment’”. The burden of proving the existence of the notice and the date of its mailing falls on the Minister where, as in the present case, the applicant alleges not only that he has not received the notice of assessment but that no such notice was ever issued.! [1] In the instant case, I am of the opinion that the evidence did not reveal that the Minister ever sent the alleged notice of reassessment dated September 7, 1993 to the applicant. As a matter of law, the assessment itself is not complete until the notice has been effectively given. [2] Accordingly, this application for an extension of time is quashed on the grounds that the Minister has failed to prove the existence or date of mailing of the alleged notice of reassessment dated September 7, 1993.

Application quashed.