Robert McGowan v. Her Majesty the Queen, [1995] 2 CTC 18

McDonald J.A.:-This is an application under section 28 of the Federal Court Act, R.S.C. 1985, c. F-7, for judicial review of an order of the Tax Court of Canada. [1] The Minister of National Revenue (the "Minister”) reassessed the applicant’s 1986 and 1987 tax years and claims to have mailed the applicant a notice of assessment for the 1986 tax year on February 21, 1992 and another notice of assessment for the 1987 tax year in December 1991. The applicant claims that he did not receive either notice and was not aware of the reassessments until a Revenue Canada collections officer contacted him in August 1992. By that time, the applicant’s prescribed time period in which to serve the Minister with notices of objection had expired. Subsection 165(1) of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the ’’Act”) prescribes the time period in which to serve the Minister with a notice of objection:

165(1) A taxpayer who objects to an assessment under this Part may serve on the Minister a notice of objection, in writing, setting out the reasons for the objection and all relevant facts,

(a) where the assessment is in respect of the taxpayer for a taxation year and the taxpayer is an individual (other than a trust) or a testamentary trust, on or before the later of

(i) the day that is one year after the balance-due day of the taxpayer for the year, and

(ii) the day that is 90 days after the day of mailing of the notice of assessment; and

(b) in any other case, on or before the day that is 90 days after the day of mailing of the notice of assessment.

Subsequently, on September 8, 1992 the applicant applied to the Minister for an extension of time in which to serve the notice. Subsection 166.1 of the Act details the applicant’s right to apply for such as extension:

166.1(1) Where no notice of objection to an assessment has been served under section 165, nor any request under subsection 245(6) made, within the time limited by those provisions for doing so, the taxpayer may apply to the Minister to extend the time for serving the notice of objection or making the request.

The Minister denied this application on the basis that ’’the applicant did not demonstrate that he was unable to act or to instruct another to act in his name.’’ [2] He notified the applicant of his decision by mail on November 2, 1992.

On February 4, 1993, the applicant, in accordance with subsection 166.2(1) of the Act, applied to the Tax Court of Canada for an extension of time to file his notices of objection. Subsection 166.2(1) of the Act reads:

166.2(1) A taxpayer who has made an application under subsection 166.1 may apply to the Tax Court of Canada to have the application granted after either

(a) the Minister has refused the application, or

(b) 90 days have elapsed after service of the application under subsection 166.1(1) and the Minister has not notified the taxpayer of the Minister’s decision,

but no application under this section may be made after the expiration of 90 days after the day on which notification of the decision was mailed to the taxpayer.

[Emphasis added. I

The applicant did not submit his application for an extension of time to the Tax Court of Canada within 90 days of the Minister’s decision.

The decision below

The trial judge found that the applicant did not apply to the Tax Court of Canada within 90 days of receiving notification of the Minister’s decision by mail. Therefore, he rejected the application because it was made out of time.

Submissions

The applicant claims that the Minister cannot prove the mailing date of the notices of reassessment. He submits that he filed his notices of objection within 90 days of becoming aware of the existence of the notices of reassessment. Therefore, he asks this Court to dismiss his application as being unnecessary because he filed his notices of objection within the time allowed.

The respondent submits that subsection 166.2(1) clearly bars the making of an application to the Tax Court of Canada more then 90 days after the Minister notifies a taxpayer of his decision by mail. Here, the applicant allowed the 90 days to expire. Therefore, the trial judge could not even consider the application.

Analysis

I believe that the applicant has missed a vital prescription period. Specifically, subsection 166.2(1) clearly bars the making of an application to the Tax Court of Canada for an extension of time to file a notice of objection more then 90 days after the Minister notifies a taxpayer of his decision by mail. The Parliament emphasizes the need to file an application within 90 days by stating in subsection 166.2(1):

NO application under this section may be made after the expiration of 90 days after the day on which notification of the decision was mailed to the taxpayer.

The applicant did not present any evidence or offer any explanation to the Tax Court of Canada as to why he could not honour this 90-day time limit. I want to make perfectly clear that the 90-day limit has nothing to do with the 90-day limit specified in subsection 165(1) for the filing of a notice of objection. Before the trial judge could properly entertain arguments on the filing date of the notices of objection, the applicant had to file his application with the Tax Court of Canada within 90 days of the Minister’s decision. He did not. Therefore, in accordance with subsection 166.2(1), the trial judge properly rejected the application.

The applicant constructs his submission in order to achieve a result similar to that in Aztec Industries Inc. v. Canada, [1995] 1 C.T.C. 327 (F.C.A.). In Aztec, the applicant wanted to file notices of objection against notices of assessments allegedly issued by the Minister more then ten years earlier. Consequently, the applicant applied to the Minister for an extension of time in which to file the notices of objection. [3] The Minister rejected the application because paragraph 166.1(7)(b) requires an applicant to file an extension application within one year of the expiration date (90 days plus one year). Next, the applicant applied to the Tax Court of Canada for an extension of time within 90 days of the Minister mailing the applicant a notification of his decision. The Tax Court of Canada agreed with the Minister’s decision and also rejected the application. The applicant then requested this Court to judicially review the decision of the Tax Court of Canada. [4]

Hugessen J. A. found that subsection 165(1) fixes the triggering date for the applicable prescription periods as "90 days after the day of mailing of the notice of assessment" (although he refers to paragraph 165(l)(b), the wording is identical in subparagraph 165( 1 )(a)(ii)). [5] When he found that the trial judge erred in finding a date of mailing without an evidential basis, the whole question of timing became irrelevant because there was no date of mailing upon which to trigger the subsection 166.2(5) prescription period. Therefore, he dismissed the application for an extension of time as being unnecessary because he could not establish when, or if, the Minister mailed the notices of assessment and therefore he could not establish the subsection 166.2(5) triggering date.

The present applicant claims that there is no proof as to the date of mailing of the notices of assessments and therefore there is "no triggering date" to start the prescription periods. However, unlike the applicant in Aztec, the present applicant did not apply to the Tax Court of Canada for an extension of time within 90 days of the Minister’s decision. The "triggering date" for this 90-day prescription period, November 2, 1992, is not in dispute, nor is the fact that the applicant did not submit his application within 90 days of that date. As a result, and in accordance with subsection 166.2(1), neither the Tax Court of Canada nor this Court can consider the applicant’s application or his arguments about the mailing date of the notices of assessment.

Conclusion

This section 28 application should be dismissed.

Stone J.A. (Robertson concurring):- I share the opinion of my colleague McDonald J.A., that this application should fail.

Like my colleague, I am of the view that the Tax Court of Canada did not err in quashing the applications for extensions of time within which to file notices of objection. As the learned Tax Court judge stated in his reasons:

Application was made to the Minister for an extension of time for the filing of the notices of objection, which was denied. The taxpayer then had 90 days from the date of the rejection, being November 2, to make application to this court for an extension of time in which to file a notice of objection. That application was February 4, 1993, which was in excess of 90 days from November 2.

I also agree that the decision of this Court in Aztec Industries Inc. v. Canada, [1995] 1 C.T.C. 327 (F.C.A.), is of no assistance to the applicant. That case turned on the failure of the Minister to prove that he had issued and mailed notices of assessment. It was clear that the applications to the Tax Court for extensions of time therein were made within the 90 day time limit specified in subsection 166.2(1) of the Income Tax Act.

In the present case, it is not contested that the notices of assessment were issued. That they were issued on the date they were mailed, which was proved, may be presumed by virtue of subsection 244(15) of the Act, which reads:

244(15) Where any notice of an assessment has been sent by the Minister as required by this Act, the assessment shall be deemed to have been made on the day of mailing of the notice of the assessment.

The presumption of due issuance created by this subsection was not rebutted by any evidence to the contrary.

In summary, the only reason the Tax Court quashed the applications made under subsection 166.1(1) of the Act was simply because they were made out of time. The 90 day period of limitation specified in subsection 166.2(1) had already expired by the time the applications were made.

I would dismiss the section 28 application.

Application dismissed.