Brian J. Toner v. Minister of National Revenue, [1990] 2 CTC 2130, 90 DTC 1675

Mogan, T.CJ.:—The appellant filed his 1983 income tax return on or about March 17, 1987. The Department of National Revenue, Taxation Division, issued to the appellant a notice of assessment dated July 8, 1988 with respect to his 1983 taxation year showing the assessment of both federal and provincial tax and a "refund" in the amount of $2,531.47. On the face of the notice of assessment, the following statement was typed:

Since your 1983 return was not filed within three years from the end of the year 1983, a refund of the overpayment of tax cannot be issued pursuant to subsection 164(1) of the Income Tax Act.

The appellant filed a notice of objection asking for the refund and, when the respondent replied by confirming the assessment, the appellant appealed to this Court.

When this appeal came on for hearing, counsel for the respondent brought a preliminary motion to have the appeal herein dismissed on the basis that this Court does not have jurisdiction to determine the issue of whether a taxpayer has the right to a refund of an overpayment of tax because such issue does not involve a plea to have the assessment "vacated or varied” pursuant to section 169 of the Income Tax Act. In the course of arguing the preliminary motion, the appellant acknowledged that he did not want the amounts of the assessment changed and that he would be content with a refund in the amount of $2,531.47 if he could only obtain payment of such refund.

There is significant judicial authority for the proposition that an assessment is the ascertainment and fixation of liability; it is the determination of the amount of tax chargeable to a given taxpayer. See Pure Spring Co. v. M.N.R. [1946] Ex. C.R. 471; [1946] C.T.C. 169 at 198; 2 D.T.C. 844 at 857. This judicial interpretation of "assessment" is consistent with the use of the word in subsections 152(1) and (4).

152(1) The Minister shall, with all due dispatch, examine a taxpayer's return of income for a taxation year, assess the tax for the year, the interest and penalties, if any, payable and determine

152(4) The Minister may at any time assess tax, interest or penalties . . .

Section 169 of the Income Tax Act provides that a taxpayer "may appeal to the Tax Court of Canada to have the assessment vacated or varied . . .". Subsection 171(1) provides that the Court may dismiss an appeal or allow it and (i) vacate the assessment, (ii) vary the assessment, or (iii) refer the assessment back to the Minister for reconsideration and reassessment. And in The Queen v. Garry Bowl Ltd., [1974] 2 F.C. 146; [1974] C.T.C. 457; 74 D.T.C. 6401, the Federal Court of Appeal held that there was no appeal from a "nil" assessment because the taxpayer had nothing to complain of in his appeal to the Court. See also the earlier decision of the Supreme Court of Canada in Okalta Oils Ltd. v. M.N.R., [1955] S.C.R. 824; [1955] C.T.C. 271; 55 D.T.C. 1176. Therefore, the appeal which may be instituted under section 169 of the Income Tax Act must be an appeal from an assessment of tax, interest or penalty.

If the Minister has assessed tax against a particular taxpayer, and if that taxpayer does not challenge the amount of tax which the Minister has assessed, it is difficult for me to comprehend how that taxpayer can institute an effective appeal under section 169 of the Income Tax Act because he is not attempting to have the assessment "vacated or varied” within the meaning of section 169. Also, there does not appear to be any remedy which the Court could grant under subsection 171(1) if the taxpayer were to be successful in his appeal.

As stated above, the respondent's preliminary motion was to have the appeal dismissed on the basis that the Court lacks jurisdiction to determine the right of a taxpayer to a refund. Alternatively, the respondent could have sought an order quashing the appellant's appeal on the basis that it was not an appeal from an assessment under section 169 but a claim for a debt owing. When giving judgment in the Garry Bowl case, supra the Federal Court of Appeal stated at page 460 (D.T.C. 6403):

The only other point in the case is whether the judgment of the Board must be treated as a nullity from which no appeal to the Trial Division would lie under section 60 of the Income Tax Act with the result that the Crown's remedy would be limited to certiorari to quash or an application under section 28 of the Federal Court Act.

On this point I think the Tax Review Board, which is constituted as a court of record to hear appeals in taxation matters had jurisdiction to entertain the appeal for the purpose of ascertaining whether the appellant had a right to relief from an assessment of tax. While it ought to have been apparent immediately that there was no relief to which the appellant was entitled or which the Board could properly grant and that the appeal should be dismissed on the principle of the Okalta judgment I do not think this by itself went to the jurisdiction of the Board to deal in that way with what purported to be an appeal to it under section 59 of the Act.

Relying on the position adopted by the Federal Court of Appeal in the Garry Bowl case, I have concluded that this Court has jurisdiction to entertain the appeal herein for the purpose of ascertaining whether the appellant is seeking relief from an assessment of tax. On the simple facts herein, I have no difficulty in deciding that the appellant is not seeking relief from an assessment of tax but is seeking recovery of a debt alleged to be owing. Accordingly, I order that the appeal herein be quashed because the appellant has not instituted an appeal from an assessment within the meaning of section 169 of the Income Tax Act.

Appeal dismissed.