Ginette Chalifoux v. Minister of National Revenue, [1991] 2 CTC 2243, 91 DTC 946

Couture, C.T.C.J. [Translation] :—The appellant is not disputing the validity of the assessments, but is asking the Court to issue an order directing the respondent to refund amounts of $1,317.04 and $1,318.90 for the 1984 and 1985 taxation years, which she overpaid on account of her income tax for the said years.

Acting for herself, she submitted to the Court that at the time she had to file the tax returns in question she was experiencing difficulty in her life, which she also explained, and that filing her returns was a somewhat secondary problem for her at the time. She accordingly delayed in filing them. She added that she knew she had overpaid and that a delay in filing would not cause any problem under the provisions of the Income Tax Act, R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63) (the "Act").

The evidence showed that on July 18,1989 the appellant filed her tax returns for the 1984 and 1985 taxation years, that is, over four years after the end of the year for the 1984 taxation year and over three years after the end of 1985.

By notices of assessment dated August 28, 1989 for the taxation years in question, the respondent determined that the appellant had overpaid amounts of $1,317.06 and $1,318.90 respectively. On each of these notices of assessment the following remarks were entered:

[Translation]

Since your 1984 return was not filed within three years after the end of 1984, the tax overpayment cannot be issued pursuant to s. 164(1) of the Income Tax Act. [1]

Counsel for the respondent in the reply to the notice of appeal argued as follows:

[Translation]

9. the respondent accordingly submits that the appellant does not meet the provisions of s. 164 of the Act and, in accordance with the Income Tax Act, the respondent is therefore not required to refund the overpayment by the appellant on her income tax;

10. the respondent contends that since the appellant did not challenge the tax payable for each of the 1984 and 1985 taxation years, this Honourable Court has no jurisdiction to hear this appeal, which concerns solely the tax refund.

It is clear on the evidence that the appellant filed her tax returns for the years under appeal beyond the deadlines provided in subsection 164(1) of the Act and the respondent therefore relies on this subsection in support of his assessment. It reads:

164.(1) Refunds. — If the return of a taxpayer's income for a taxation year has been made within 3 years from the end of the year, the Minister

(a) may, on or after mailing the notice of assessment for the year, refund without application therefor, any overpayment for the year, and

(b) shall, with all due dispatch, make such a refund after mailing the notice of assessment if application therefor has been made in writing by the taxpayer within

(i) the 6 year period referred to in paragraph 152(4)(b), where that paragraph applies, and

(ii) the 3 year period referred to in paragraph 152(4)(c), in any other case.

Notwithstanding the application of the provisions of subsection 164(1), I am in complete agreement with the argument of counsel for the respondent that the Court did not have jurisdiction to hear the appeal in question since the appellant was not asking for a rectification of the assessment on appeal, but a tax refund.

Section 169 reads:

169. Appeal.— Where a taxpayer has served notice of objection to an assessment under section 165, he may appeal to the Tax Court of Canada to have the assessment vacated or varied after either

(a) the Minister his confirmed the assessment or reassessed, or

(b) 90 days have elapsed after service of the notice of objection and the 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 90 days from the day notice has been mailed to the taxpayer under section 165 that the Minister has confirmed the assessment or reassessed.

[Emphasis added.]

The word "assessment" has been interpreted as meaning fixing or determining the tax payable of a taxpayer by the respondent. [2]

For these reasons the appeals are dismissed. [3]

After having taken cognizance of the severity of the impact of section 164, I cannot abstain myself from formulating the following comments. I find it difficult to justify the fact that in 1991 in a so-called democratic society which purports to protect the civil liberties of its people a provision as section 164 of the Act is still in force in the Statute.

The application of this section as it was applied by the respondent in the instant case may be assimilated to a sort of confiscation of the appellant's property. Though authorized by the legislation, it relieved nonetheless the appellant of what legally belongs to her, and does so on the sole ground that a relatively short period had elapsed at the time she filed her tax returns claiming a refund of an "overpayment" within the meaning of subsection 164(7), amounts to which she was legally entitled but for section 164.

What makes the situation still more regrettable in the circumstances is that the taxpayer was thus deprived of her property without being given expressly any remedy by the legislation. This abrogation of a taxpayer's right of ownership, one of the most fundamental rights in a democratic society, seems to me to be abusive on the part of the legislature and should be removed from the statute book, at least in its present form.

I do not deny the legislature the right to legislate in the terms of section 164 of the Act, but what I deplore is the period of only three years given to taxpayers to claim their property, and what is still more deplorable is the absence of a judicial remedy to determine the validity of the application of the legislation in such a situation. If this legislative provision must remain in the Act, whatever the number of years selected by the legislature, it would be preferable, to mitigate its effect, if taxpayers could be given an appeal to the Court whereby they could explain the reasons for their delay in claiming their property. If those reasons were regarded as reasonable in the circumstances and the delay caused no injury to the public treasury the Court could authorize the respondent to make refunds to them. This type of appeal currently exists in the legislation in connection with delay in filing a notice of objection or notice of appeal within the prescribed period (section 167). Such a procedure would make the application of the Act more democratic, as experience has shown in respect of section 167, and would be much more consistent with the democratic principles which should govern our society.

In view of the foregoing, I strongly recommend that the respondent take the necessary steps with the Treasury Board for the latter to authorize him to return to the appellant the moneys belonging to her as confirmed in the notices of assessment.

Appeals dismissed.