Christie,
ACJTC:—This
appeal
relates
to
the
appellant’s
1979,
1980
and
1981
taxation
years.
The
issue
is
whether
the
respondent
is
correct
in
his
contention
that
the
appellant
is
liable
to
pay
interest
on
tax
payable
and
on
unpaid
instalments
of
tax
under
subsections
161(1)
and
(2)
of
the
Income
Tax
Act
(“the
Act”).
The
amount
involved
is
$1,182.20.
There
is
no
real
dispute
between
the
parties
regarding
the
essential
facts.
They
are
that
in
1979
the
appellant
sold
a
parcel
of
land
to
Kochan
Investments
Limited
of
which
he
was
the
majority
if
not
the
sole
shareholder.
The
profit
on
the
transaction
was
$31,276
and,
in
the
appellant’s
1979
return,
it
was
reported
as
business
income
in
respect
of
which
he
claimed
a
deductible
reserve
of
$21,149,
leaving
$10,127
as
the
amount
included
in
calculation
of
total
income.
In
1980
he
included
in
calculation
of
total
income
$10,574
from
the
sale,
this
amount
being
the
difference
between
the
1979
reserve
and
a
1980
reserve
of
$10,575.
In
1981
he
included
the
balance
of
the
profit
on
the
sale,
namely,
$10,575
in
his
calculation
of
total
income.
By
notices
of
reassessment
dated
January
10,
1983,
the
respondent
disallowed
the
claimed
reserve
in
1979
in
total
and
the
tax
liability
of
the
appellant
was
adjusted
accordingly
for
the
years
1979
to
1981
inclusive.
The
notices
of
objection
and
the
notice
of
appeal
do
not
challenge
the
disallowance
by
the
respondent,
but
are
confined
to
the
issue
whether
interest
is
payable
under
subsections
161(1)
and
(2)
of
the
Act
in
relation
to
the
consequential
change
in
the
tax
liability
of
the
appellant
arising
out
of
the
reassessments.
The
crux
of
the
appellant’s
position
is
that
when
he
erred
in
making
the
estimate
of
the
amount
of
tax
payable
by
him
as
required
by
subsection
150(1)
and
section
151
of
the
Act,
the
basis
of
the
error
was
evident
on
the
face
of
the
returns
filed
for
the
years
under
review.
In
its
notices
of
assessment
sent
to
the
appellant
for
1979,
1980
and
1981,
which
are
dated
July
21,
1980,
September
25,
1981
and
August
19,
1982
respectively,
the
manner
in
which
the
appellant
had
dealt
with
the
profit
of
$31,276
in
his
returns
was
not
contradicted
by
Revenue
Canada.
This
did
not
occur
until
the
reassessments
of
January
10,
1983.
It
is
the
contention
of
the
appellant
that,
in
the
circumstances,
the
amounts
in
respect
of
which
interest
is
claimed
should
be
dealt
with
as
being
“in
effect
a
refund”
or
“similar
to
a
refund”
although
no
refund
was
in
fact
made.
The
appellant
goes
on
to
invoke
the
decision
of
the
Federal
Court
of
Appeal
in
Rath
v
The
Queen,
[1982]
CTC
207;
82
DTC
6175.
In
this
case
the
appellant
had
received
refunds
under
subsection
164(1)
of
the
Act
in
respect
of
his
1974
and
1975
taxation
years.
These
refunds
arose
out
of
claimed
deductions
for
moving
expenses
which
were
subsequently
disallowed
by
the
Minister
of
National
Revenue.
Upon
reassessment,
the
refunded
amounts
were
treated
as
unpaid
taxes
in
respect
of
which
interest
was
levied
pursuant
to
subsection
161(1)
of
the
Act.
It
was
held
that
there
was
nothing
in
the
wording
of
the
subsection
which
authorized
such
a
computation
or
imposed
an
obligation
to
pay
interest
so
computed.
Consequently
the
appeal
was
allowed
on
this
point
which
was
subsidiary.*
The
appeal
was
dismissed
on
the
principal
issue,
but
that
issue
is
of
no
interest
for
present
purposes.
In
my
opinion
Rath
is
of
no
assistance
to
the
appellant.
There
a
refund
was
made,
while
here
no
refund
was
made.
What
occurred
was
a
failure
to
detect
and
rectify
by
way
of
reassessments
for
some
considerable
time,
errors
in
returns
filed
by
the
appellant.
This
cannot
be
equated
to
the
making
of
a
refund.
The
right
of
the
respondent
to
assess
interest
under
subsection
152(4)
of
the
Act
is
not
in
any
way
circumscribed
by
the
facts
of
this
case.
The
interest
was
calculated
at
the
rates
prescribed
by
subsection
4300(1)
of
the
Income
Tax
Regulations
and
the
appellant
must
pay
it
under
subsections
161(1)
and
(2)
of
the
Act.
The
appeal
is
dismissed.
Appeal
dismissed.
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