Carson R Thistle v. Minister of National Revenue, [1983] CTC 2656, 83 DTC 586

Taylor, TCJ:—This application for an order extending the time within which to serve notices of objection for the years 1974, 1975, 1977 and 1978 was heard by me in St John’s, Newfoundland, on July 4, 1983 in my capacity as a member of the Tax Review Board but this decision is rendered in my present capacity as a judge of the Tax Court of Canada.

The circumstances surrounding the application and the perspective I take on the issue are best dealt with by reciting in detail the information provided by the parties:

BRADBURY AND BUSSEY CONSULTANTS LIMITED

Income Tax and Management Consultants

Registered

December 9, 1982

The Registrar

The Tax Review Board

Kent Professional Building

381 Kent Street,

Ottawa, Ontario

K1A 0M1

Dear Sir:

Re: Carson R Thistle

Our client, the above referenced, received notices of reassessment as follows:

For the		Last Date for Filing
Year	Date of Notice	Notice of Objection
1974	December 30, 1981	March 30, 1982
1975	December 30, 1981	March 30, 1982
1977	January 25, 1982	April 25, 1982
1978	January 11, 1982	April 11, 1982

On July 21, 1982 Mr Thistle came to us and outlined his income tax position. He explained that, while officials of Revenue Canada had adjusted the four years mentioned above and raised reassessments resulting in additional tax payable of approximately $34,000.00, all based on additions to income, they had not given any consideration to additional expenses, relating in part to his business in general.

At this time, we telephoned Mr F Hussey, Acting Chief of Audit, in the St John’s, Newfoundland office of Revenue Canada. Mr Hussey advised us that any adjustments which could be shown as applicable to Mr Thistle’s returns, for the years concerned, would be given consideration and deductions would be allowed to Mr Thistle where considered just and equitable.

At this point in time (July 21, 1982) we realized that the 90-day time limit for filing a “Notice of Objection” had expired for all years in question and, we therefore felt that our client was receiving fair treatment from the Department.

Almost all of the information necessary to support Mr Thistle’s request for adjustment of his 1974, 1975, 1977 and 1978 income tax returns had to come from banks, mortgage companies and other similar organizations. On October 15, 1982 we contacted Revenue Canada and advised them that we had gathered the necessary information, which would form the basis for our request for adjustment. In fact, for greater certainty we had gathered information for the years 1974 to 1981, a total of eight years. It took our staff together with the unending assistance of Mr Thistle almost three months to gather the information we considered necessary to make proper representation to Revenue Canada on behalf of Mr Thistle.

On December 2, 1982 we were contacted by a representative of Revenue Canada, who advised that he was not in a position to discuss any possible adjustment to Mr Thistle’s returns, which were NOT STATUTE BARRED. This, of course, only left 1978 open for discussion.

The Board may well ask why Mr Thistle did not ensure that Notices of Objection were filed 90 days from the date of the Notices of Reassessment; secondly, why did he take until July 21, 1982 to request our firm to act on his behalf and, thirdly, why is our firm at this late date requesting an extension of time in which a Notice of Objection may be served.

These three points are considered below:

(1) Under ordinary circumstances it may have been possible to gather the information necessary to present to Revenue Canada respecting the years 1974, 1975, 1977 and 1978. However, because it was now early 1982 (8 years after 1974) most of the information, which was required from various financial institutions, was in storage and some of the banks and mortgage companies were reluctant to dig out the information and/or had great difficulty in locating it, thus taking an unusual amount of time. In addition, Mr Thistle’s, on staff, accountant had been hospitalized with cancer and died late in 1981. Thus, much of the information that would otherwise have been immediately available was in disarray because of the absence of his accountant. It took our firm an additional ten to twelve weeks to assemble the information. Hence, it would have been impossible for Mr Thistle to make an acceptable Notice of Objection submission within ninety days in any event.

(2) Due to business pressures placed on Mr Thistle as a result of the death of his accountant, the economic times, and the threat of foreclosure proceedings by his bankers, time was not available to Mr Thistle to do everything. When time did permit he immediately took action to resolve his income tax problems.

(3) Had it been realized on July 21, 1982 that the department would only consider information presented relating to the 1978 reassessment, our firm would have immediately requested the extension of time to serve a Notice of Objection. However, we were given to understand that any information presented relating to the years for which reassessments were received would be given consideration by the department.

In closing, we again point out that because of the age of the information, the quantity and the number of sources from which it had to be obtained and the fact that once it was gathered, it would have been impossible to assemble in presentable form within a 90-day period.

On the basis of the above explanations, we request on behalf of Mr Thistle, your approval for an extension of time in which to file Notices of Objection for the years 1974, 1975, 1977 and 1978. In this regard, we enclose three copies of this application, together with three copies of the Notice of Objection forms.

Yours truly,

J N Bradbury

The response from the Minister read:

REASONS FOR OPPOSING APPLICATION FOR EXTENSION OF TIME

The Deputy Attorney General of Canada on behalf of the Respondent, the Minister of National Revenue, states that the application for an Order extending the time within which to serve Notices of Objection with respect to the 1974, 1975, 1977 and 1978 taxation years will be opposed for the following reasons:

1. The Notices of Reassessment for the Applicant’s 1974, 1975, 1977 and 1978 taxation years were dated as follows:

Year	Date of Notice
1974	December 30, 1981
1975	December 30, 1981
1977	January 25, 1982
1978	January 11, 1982
1978	January 25, 1982

2. The 90th day following the date of each Notice of Assessment for the Applicant’s 1974, 1975, 1977 and 1978 taxation years was as follows:

3. On or about July 21, 1982, the Applicant’s representative contacted the Respondent with respect to the Applicant’s 1974, 1975, 1977 and 1978 taxation years. This was the first contact made with the Respondent by or on behalf of the Applicant subsequent to the Notices of Assessment referred to in paragraph 1.

Year	90th Day
1974	March 30, 1982
1975	March 30, 1982
1977	April 25, 1982
1978	April 11, 1982
1978	April 25, 1982

4. The Applicant has not served a Notice of Objection on the Respondent for any one of his 1974, 1975, 1977 and 1978 taxation years.

5. The application for an order to extend the time within which a Notice of Objection may be filed was received by the Tax Review Board on December 17, 1982, as indicated by the Registrar’s stamp on the letter of application and the Notices of Objection filed therewith.

6. December 17, 1982, was in excess of the 90-day time limit prescribed by Section 165 of the Income Tax Act by the following number of days:

Year	No of Days Late
1974	261
1975	261
1977	236
1978	250
1978	236

7. The Respondent puts the Applicant to the strict proof that he has complied with the requirements of subparagraph 167(5)(c)(i) of the Income Tax Act.

8. The Respondent submits that this application clearly was not brought as soon as circumstances permitted, and therefore, this Honourable Board is without jurisdiction to grant the order requested by virtue of subparagraph 167(5)(c)(ii) of the Income Tax Act.

9. The Respondent submits that this application does not disclose any reasonable grounds for objecting to the reassessments within the meaning of subparagraph 167(5)(c)(iii).

10. The Respondent submits that this application does not disclose any circumstances for which it would be just and equitable to grant the order requested, and therefore, this Honourable Board is without jurisdiction to grant the order sought under subsection 167(1) of the Income Tax Act.

Attached to the letter from the applicant were the appropriate notice of objection forms, a separate one for each of the taxation years in question, giving a summary of the information referred to in the letter. The notice of objection form for the year 1977 is typical and reads in this way, in the section headed “Statement of Facts and Reasons”:

In reassessing the 1977 return to include additional taxable income, no consideration or allowance was given to interest and property tax expenses incurred in earning income.

During 1977 interest and property tax expenses were incurred for which no deduction was allowed, in the amount of $16,480.21 (actual expense incurred $29,575.06 — (amount allowed $12,040.85 + $1,054.00)).

Also, the calculation of the taxable capital gain per the reassessment is in error by the net amount of $837.50 in excess of the amount it should be, ie; taxable capital gain per reassessment $2,412.50, actual $1,575.00. This results from incorrect cost and outlay amounts used in the calculation.

Mr Thistle testified regarding the events and circumstances which he believed had interfered with the filing of the notices of objection within the 90-day statutory period — primarily that his business was in serious financial difficulties during the latter part of 1981 and the first several weeks of 1982, which caused him to consider filing personal bankruptcy. He remembered receiving the notices of assessment but regarded them not only as simply adding to his already monumental problems, but as just one more demand for payment from a creditor such as his bank, his suppliers or finance companies. He recognized that the income tax assessments should have been treated more directly and with a higher priority but said, that under the circumstances which then existed, he was doing all he could to save his business and personal situation. He noted that he had met with some success in this and that the situation started to “turn around” by the early summer of 1982, and he had made steady progress since that time. The income tax liability would be a serious blow and he asserted that he should be provided an opportunity to at least contest it in the light of the information which has now been accumulated by himself and his agent.

Mr Bradbury, in dealing with the reasons for his firm taking about five months before filing the necessary notice of objection forms, stressed that just as the state of his client’s affairs had impeded his client in his efforts to file within the 90-day period, so too had the continued preoccupation of Mr Thistle with resolving his own difficulties protracted the time period necessary for the accumulation and review of the material and documentation required to properly fill out the notice of objection forms. Mr Bradbury was of the view that Revenue Canada was not only aware of the efforts going on to obtain information, but was sympathetic to the efforts of Bradbury and Bussey. His personal conversations with Revenue Canada led him to this conclusion. By the account of Mr Bradbury, there had been no time wasted. The complexity and volume of the material he had gathered to contest the assessments warranted the time he had taken. It was Mr Bradbury’s contention that to do a proper job of filling out the notice of objection forms and to fulfill the requirements therein, he could not have provided them to Revenue Canada at any earlier date. He contended that simply filling out a notice of objection form with a statement not much more explanatory than “I object” would have served no purpose and probably not been acceptable to Revenue Canada.

The Court notes with appreciation the consideration and flexibility with which counsel for the respondent conducted this matter on behalf of the Minister, as well as the effectiveness of counsel’s cross-examination in bringing out for the Board’s attention all the circumstances which might have relevance in making a determination.

It is my view that the initial delay of more than the statutory 90 days has been adequately explained to the Board, particularly when the comments in Tic Toe Tours Ltd v MNR, [1982] CTC 264; 82 DTC 6231, are taken into account. The only point remaining as a basis for the Minister’s objecting to granting the application therefore is whether the terms of subparagraph 167(5)(c)(ii) of the Act have been met:

the application was brought as soon as circumstances permitted it to be brought

I am struck by the argument of Mr Bradbury on that point. He forcibly brought to the Board’s attention the demands and parameters outlined for filing a notice of objection and, in particular, quoted subsection 165(1) of the Act:

A taxpayer who objects to an assessment under this Part may, within 90 days from the day of mailing of the notice of assessment, serve on the Minister a notice of objection in duplicate in prescribed form setting out the reasons for the objection and all relevant facts. (Italics mine)

The prescribed form is of course that entitled “T400A — Notice of Objection”, so, as I read it, no other format is acceptable. Further, Form T400A reinforces subsection 165(1) above in a section on it specifically entitled “Statement of Facts and Reasons” in the following way:

Provide a complete statement of the Facts upon which the objection is based and set out the Reasons for the objection: (If space insufficient, attach a separate sheet)

I would assume that in practice, something less than a “complete statement of the Facts” if it is filed, may be accepted by Revenue Canada. But I am not aware of any statutory requirement which would ensure a taxpayer that such would be the case. In a situation such as that before the Board in this matter, when the primary ninety-day period has already elapsed, I can understand an agent for the taxpayer taking extra precautions to ensure that “all relevant facts” (subsection 165(1)) are known to him and explained to Revenue Canada. I am satisfied that in acting for the taxpayer, Mr Bradbury wasted no substantial amount of time in getting together that which he believed would be not only useful, but vital, to him in contesting the assessments. In the circumstances of this application, the argument of the agent for the taxpayer must be accepted. If Revenue Canada will settle for some “pro forma” type of notice of objection, or less than the detail called for in the Act, or on Form 400A, then that climate of receptivity should be made more clear to taxpayers than it now seems to be. I would further add that the judgments of the Supreme Court of Canada in Cite de Pont Viau v Gauthier Mfg Ltd [1978] 2 SCR 516 and Murray Bowen v City of Montreal [1979] 1 SCR 511 might support a view that the impact of subparagraph 167(5)(c)(ii) of the Act falls on the applicant, not the agent and that when he had engaged Mr Bradbury, the applicant had done all that was required of him. I do not find it necessary in the circumstances of this case to examine that point in depth, but it is noted for the record.

The application is allowed.

Application allowed.