Mary Beth Susan Stiege v. Minister of National Revenue, [1991] 2 CTC 2005, 91 DTC 808

Mogan, T.CJ.:— When filing her 1987 income tax return, the appellant claimed Ontario tax credits of $500. By notice of reassessment, she was allowed. an Ontario tax credit of only $42.20. She served a notice of objection but the respondent confirmed the reassessment with the following words which were typed on the notification of confirmation:

The Ontario Tax Credit has been calculated according to the provisions of Section 7(2) of the Ontario Income Tax Act, and the tax payable by you under Part I of the Act upon your taxable income for the year has been properly determined in accordance with the provisions of Section 117 of the Act.

After the appellant filed a notice of appeal in this Court, the respondent applied to the Court for an order in the following terms:

.. .an order quashing the purported appeal for the 1987 taxation year, on the grounds that the appellant has not raised an issue with respect to the validity of the assessment of tax, interest or penalty under the Income Tax Act, R.S.C. 1952, c. 148 ("Federal Act"), but has raised an issue with respect to the determination of a property tax credit pursuant to the Income Tax Act (Ontario), R.S.O. 1980, c. 213, and therefore, there is no issue properly before this Court on which the Court could make an order pursuant to subsection 171(1) of the Federal Act.

The Province of Ontario has enacted valid legislation to levy a tax on the income of an individual: see Income Tax Act, R.S.O. 1980, c. 213 (referred to herein as the "Ontario Act"). The Ontario Act has the usual statutory provisions concerning liability for tax, computation of the tax, tax credits, returns, assessments, objections and appeals. The extraordinary feature of the Ontario Act is that the Province of Ontario has entered into a tax collection agreement with the federal government with the following relevant provisions:

2. (1) The Province will, in respect of each year during the term, impose individual income tax under the provincial act in the following manner:

(a) in the case of an individual who resides in the Province on the last day of the year in respect of which the tax is imposed and who has no income earned in the year outside the Province, individual income tax shall be expressed as a constant percentage (in one or more half percentage points) of the federal tax payable by that individual for the year;

6A. (1) Canada, as agent for the Province, will administer for and on behalf of the Province, in accordance with the provisions of this section and this agreement, the Ontario Tax Credit System enacted by the provincial act for each of the years comprising the term of this agreement in respect of which the system is applicable under the provincial act.

10. (1) The Minister of National Revenue, the Deputy Minister of National Revenue for Taxation and other officials of the Taxation Division of the Department of National Revenue of Canada will administer the provincial act for and on behalf of the Province.

14. (1) Actions, suits, prosecutions or other legal proceedings required to be brought or taken under the provincial act shall be brought or taken by Canada on behalf of the Province

(a) in the same name in which such action, suit, prosecution or other legal proceeding would be brought or taken if brought or taken under corresponding provisions of the federal act, or

(b) in such other name as would be appropriate if such action, suit, prosecution or other legal proceeding were brought or taken by Her Majesty in right of the Province on the Province's own behalf;

15. (1) Where, in respect of any year during the term, amounts are required to be paid by a taxpayer on account of the tax payable under the provincial act and under the federal act and the Minister of National Revenue receives a payment on account of the tax payable by the taxpayer for that year under either or both of such acts, the payment so received shall be applied by the Minister of National Revenue towards the tax payable by the taxpayer under the provincial act for that year, and the remainder, if any, shall be applied towards the tax payable by the taxpayer for that year under the federal act.

The Province has in subsection 10(1) of the tax collection agreement delegated the administration of the Ontario Act to the Taxation Division of the Department of National Revenue. The result of this delegation is far-reaching because individuals residing in Ontario file only one income tax return (with the federal Department) in which they compute both federal and provincial taxes and any relevant federal or provincial tax credits. Also, they receive only one notice of assessment determining the aggregate federal and provincial taxes owing. If an individual disputes any item in the assessment and files a notice of objection, the objection is processed by the federal Department which responds by reassessment or confirmation. If the individual is not content with the response, the only remaining avenue of relief is an appeal to the court. It is important to remember that when the federal Department has responded to a notice of objection by a particular individual for a particular taxation year, the administration of the Ontario Act by the federal Department for that individual and that year has ended.

An appeal to the court lifts the matter out of the hands of the federal Department as administrator of the Ontario Act and places the individual's dispute in a new jurisdiction (i.e., the court). In the Ontario Act, there is a specific provision for appeals.

21. (1) A taxpayer who has served a notice of objection to an assessment under subsection 20(1) may appeal to the Supreme Court to have the assessment vacated or varied after either,

(a) the Provincial Minister has confirmed the assessment or reassessed; or

(b) ninety days have elapsed after service of the notice of objection and the Provincial Minister has not notified the taxpayer that he has vacated or confirmed the assessment or reassessed,

but no appeal under this section may be instituted after the expiration of ninety days from the day notice has been mailed to the taxpayer in accordance with subsection 20(3) that the Provincial Minister has confirmed the assessment or reassessed.

21. (2) An appeal from an assessment under this Act may be taken in respect of any question relating to the determination of,

(a) his residence for the purposes of this Act;

(b) his income earned in the taxation year in Ontario as defined in clause 3(6)(b);

(c) the amount of tax payable for a taxation year based on the tax payable under the Federal Act for that year as defined in clause 3(6)(a);

(d) any deduction under subsection 7(2) or (6); or

(e) the application of any amount pursuant to subsection 7(7),

but no appeal from an assessment lies in respect of the computation of the tax payable under the Federal Act as defined in clause 3(6)(a).

Under the Ontario Interpretation Act, any reference in a statute to the "Supreme Court” means the Supreme Court of Ontario. I am satisfied from the provisions of subsection 21(1) and clause 21(z)(d) of the Ontario Act that the Province has not delegated its appeal procedure to any federal courts but has specifically reserved for the Ontario Supreme Court the jurisdiction to determine the amount of any tax credit which is permitted under subsection 7(2). Under the Tax Court of Canada Act, R.S.C. 1985 chapter T-2, this Court is granted (section 12) exclusive original jurisdiction to hear appeals arising under the federal Income Tax Act but I can find no jurisdiction to hear an appeal on any matter specifically reserved to the Ontario Supreme Court under subsection 21(2) of the Ontario Act.

From a review of the Ontario Act, the provisions of the tax collection agreement and section 12 of the Tax Court of Canada Act, I have concluded that this Court has no jurisdiction to entertain an appeal from an assessment of tax under the Ontario Act. My view is reinforced by the decisions of the Federal Court of Canada in The Queen v. Bowater Mersey Paper Co., [1987] 2 C.T.C. 159; 87 D.T.C. 5382 (F.C.A.) at 162 (D.T.C. 5384) and Lornex Mining Corp. v. M.N.R., [1988] 2 C.T.C. 195; 88 D.T.C. 6399 (F.C.T.D.) at 197 (D.T.C. 6400) and by the decision of the Tax Review Board in Latham v. M.N.R., [1980] C.T.C. 2166; 80 D.T.C. 1136 at 2170 (D.T.C. 1138).

The appellant purports to appeal from an assessment made by the Minister of National Revenue with respect to Ontario property tax credits permitted as deductions under subsection 7(2) of the Ontario Act. The authority granted to the Minister of National Revenue to administer the Ontario Act does not bestow upon this Court the jurisdiction to hear an appeal from assessment concerning only the Ontario Act.

With some regret, I will grant the respondent's application and issue the requested order quashing the purported appeal herein. My regret is based on an assumption that most individuals residing in Ontario would not know that there was an Ontario Income Tax Act and a separate appeal to the Supreme Court of Ontario for disputes relating to matters arising under that Act. Such individuals have contact with only the federal Department of National Revenue concerning income tax matters: filing the tax return; subsequent inquiries; receiving a notice of assessment; serving an objection; receiving a reassessment or confirmation. At that point, most individuals would expect (as the purported appellant herein) to follow the well-worn path of appeals under the federal Income Tax Act. It is regrettable that the appellant must learn at this late stage in the proceedings that she has appealed to the wrong court.

Appeal dismissed.