Keith Lehrer v. Minister of National Revenue, [1982] CTC 2152, 82 DTC 1161

The Chairman:—This is an application under section 167 of the Income Tax Act by which Mr Keith Lehrer seeks to obtain an Order from the Board extending the time in which he may, after expiration of the prescribed delay, file Notices of Objection with respect to the 1977 and 1978 taxation years.

The Minister of National Revenue had mailed Notices of Reassessment with respect to the appellant’s 1977 and 1978 taxation years on March 24, 1981. The application now being considered is dated October 29,1981, four months after June 22, 1981, the expiry date of the 90-day statutory delay for serving Notices of Objection under section 165 of the Act.

Counsel for the taxpayer’s position is twofold:

1. There was no valid reassessment of the taxpayer in March 1981.

2. The taxpayer met the pertinent conditions of subsections 167(2) and 167(5) of the Act necessary for the granting of the application.

The respondent contends that:

1. The Minister’s reassessments of March 24, 1981 were completed and valid.

2. The taxpayer failed to disclose reasonable grounds for objecting to the assessments and does not meet the condition of subparagraph 167(5)

(c) (iii) of the Act.

3. The application was not brought as soon as circumstances permitted as required by subparagraph 167(5)(c)(ii) of the Act.

4. The taxpayer would not have served Notices of Objection within the prescribed time even if the circumstances described in the application had not existed, (subparagraph 167(5)(c)(i) of the Act).

5. No reason was given why filing Notices of Objection within the prescribed time was not possible, (subsection 167(2) of the Act).

Facts:

The taxpayer, a professor, had received a letter from Mr Kulidjian, a representative of the Department of National Revenue in mid-October 1980 with respect to four items in the taxpayer’s amended 1978 tax return. The letter remained unanswered but an interview between the taxpayer and Mr Kulidjian had been arranged. Owing to the illness of the taxpayer’s mother in England, the meeting did not take place. In December 1980 the taxpayer travelled abroad twice in connection with his mother’s illness, returning to Canada from the last trip in late December 1980.

As I understand the evidence, the taxpayer had a business at 173 Queen Street East where he sometimes resided, and had another abode on Russell Hill Road where he also resided. Early in 1980 he ceased to do business on Queen Street and rented the premises to another tenant with the understanding that the new tenant would keep his business correspondence until he called for it. Other correspondence was addressed to the Russell Hill Road property.

The taxpayer claimed that after moving from Queen Street, he often returned there to pickup his business correspondence. The Notices of Reassessment which had been forwarded to that address were inadvertently placed in a desk by the new tenant and it was only in September 1981, six months after their mailing date, that the applicant found the Notices of Reassessment. He filed his application three weeks after becoming aware of their existence.

From January to September 1981, the taxpayer was teaching on a full- time basis; he was also preparing academic papers, preparing conferences and working on his PhD thesis, with a view to obtaining his tenure at the institution at which he taught. During that period, the taxpayer claims to have been too busy and too emotionally and physically exhausted to attend to any other problems that may have arisen.

Findings:

The taxpayer’s first submission that there was no valid reassessment of his 1977 and 1978 taxation years is based on the premise that the Minister did not give the taxpayer the prescribed Notices of Reassessment. The Board’s decision in the application by Paul S Bhatti v MNR, [1981] CTC 2555; 81 DTC 506, was cited in support of the taxpayer’s submission.

The pertinent facts of that case are that the taxpayer had indicated in previous tax returns his then current address. The Minister of National Revenue inadvertently forwarded the Notices of Reassessment to the taxpayer’s former address and they were never received by the taxpayer. The Minister of National Revenue, by forwarding the Notices to a wrong address, failed to give the taxpayer Notices of Reassessment in the prescribed form and briefly, the Board held that there was no reassessment of the taxpayer and consquently no need to file Notices of Objection.

In his reasons, the Assistant Chairman cited the case of Lawrence B Scott v MNR, [1960] CTC 402; 60 DTC 1273, in which Mr Justice Thurlow on the subject to Notices of Reassessment stated at 416 [1280]:

I am accordingly of the opinion that the giving of notice of assessment is part of the fixation operation referred to as an assessment in the statute and that an assessment is not made until the Minister has completed his statutory duties as an assessor by giving the prescribed notice.

However at 417 [1281] the learned judge also stated:

In the present case, the notice of re-assessment which was put in the mail on May 28, 1957, while directed to the appellant, was not directed to his actual address nor was it directed to either of the addresses stated in his 1952 Income tax return. Had it been so directed — despite the fact that the appellant no longer lived at the residential address or carried on business at the business address — and even despite the fact that the assessor was aware of these facts — it might well be that in the absence of any act on the part of the appellant to notify the Minister of a change of address, he would be bound by the sending of a notice to either of the addresses so given. That, however, was not done and it is accordingly unnecessary to decide what the effect would have been if it had been done.

The facts in the application under review are quite different from those in Bhatti (supra). Here the Minister of National Revenue duly mailed the Notices of Reassessment to the address indicated in the taxpayer’s previous tax returns and they were received by the taxpayer albeit six months late. The taxpayer had at no time advised the Minister of his change of address. On the evidence and on the basis of the principles referred to by Mr Justice Thurlow in his remarks in Scott (supra), I conclude that the Minister did in this instance complete his statutory duties as an assessor and did give the taxpayer the prescribed notice. The Minister’s Notices of Reassessment dated March 24, 1981 are therefore valid and Notices of Objection served on the Minister within 90 days of the date of mailing were required if the taxpayer intended to contest the reassessments.

The issue now is whether the circumstances of this application are such that it would be just and equitable for the Board to extend the time in which the taxpayer may serve his Notices of Objection within the context of subsection 167(1) of the Act.

It is the taxpayer’s submission that he has met all the conditions of subsection 167(5) of the Act and that it would, under the circumstances, be just and equitable for the board to grant the extension.

I will accept the taxpayer’s contention that he did, pursuant to subparagraph 167(5)(c)(iii) of the Act, disclose in the last paragraph of his application reasonable grounds for objecting to the assessments. The records supporting the four items in the 1978 taxation year, which were sought by the Department of National Revenue and allegedly available, might well constitute reasonable grounds for opposing the Minister’s assessments.

However, the absence of any reply to the departmental queries and the taxpayer’s failure to discuss the matter at any time with the Department of National Revenue until October 1981 indicates a lack of concern and negligence on the part of the taxpayer, regardless of other preoccupations the taxpayer may have had at the time.

In deciding whether or not it was possible for the taxpayer to serve his Notices of Objection within the prescribed time, within the meaning of subsection 167(2) of the Act, the taxpayer’s attitude and his actions during the pertinent period must be considered.

The taxpayer contends that it was not possible to file his Notices of Objection within the prescribed time because he did not receive the assessments until six months after the date they were mailed. It was the taxpayer’s negligence in not advising the Department of National Revenue of his change of address and in not having his tenant forward all his mail to his Russell Hill Road address that made it impossible for him to file his Notices of Objection on time.

I do not believe, in interpreting subsection 167(2) of the Act, that the taxpayer’s own failure to act with reasonable care and concern in carrying out his normal responsibilities with respect to income tax matters can be considered as a valid reason why it was not possible to file his Notices on time.

The taxpayer does not, in my opinion, meet the requirements of subsection 167(2) of the Act.

Even on becoming aware in September 1981 of the existence and the date of the Notices of Reassessment, the taxpayer did not immediately communicate with Mr Kalidjian or any other representatives of the Department, as one would normally have expected him to do under the circumstances; he waited three weeks before filing his application. The application therefore was not brought as soon as circumstances permitted and the taxpayer does not meet the requirement of subparagraph 167(5)(c)(ii) of the Act.

I conclude that the taxpayer has failed to meet some of the required conditions of subsection 167(5) of the Income Tax Act and the circumstances of this case therefore are not such that it would be just and equitable for the board to make an Order extending the time to file Notices of Objection within the meaning of subsection 167(1) of the Income Tax Act.

The application is refused.

Application dismissed.