Garry Bowl Limited v. Minister of National Revenue, [1973] CTC 2047, 73 DTC 39

A W Prociuk (orally):—The respondent, in assessing the appellant for taxation years 1967, 1968 and 1969, added to its income the following amounts: $29,425 for the year 1967, $29,425 for the year 1968, and $9,150.94 for the year 1969. Notwithstanding these additions, there was still no taxable income and the result was a “nil” assessment in each year. The appellant has appealed from these assessments on the ground that said amounts added are capital income and ought not to be included as income in the process of assessment.

The appellant’s notice of objection was duly received by the respondent, who confirmed his “nil” assessments in each case by notification dated June 29, 1971, under section 58 of the Act. A notice of appeal was filed with the Registrar of the Tax Review Board on September 23, 1971 and the respondent filed his reply to the said notice of appeal on February 3, 1972. The case was set down for hearing at the current sittings of the Board at Winnipeg, Manitoba commencing on January 22, 1973.

By notice of motion filed on January 17, 1973, the respondent applied for an order to quash the appeal on the ground that no appeal lies from a “nil’ assessment and, accordingly, the Board is without jurisdiction to hear such an appeal.

The matter was argued in some detail on January 23, 1973 and, on request of counsel for the respondent, an adjournment was granted to January 25, 1973, at 2 pm, for further argument. In the course of the argument the following were some of the cases cited and considered: Okalta Oils Limited v MNR, [1955] SCR 824; [1955] CTC 271; 55 DTC 1176: Anjulin Farms Ltd v MNR, [1961] Ex CR 381; [1961] CTC 250: 61 DTC 1182; Newfoundland Minerals Ltd v MNR, [1969] CTC 639: 69 DTC 5432; Louis J Harris v MNR, [1966] SCR 489; [1966] CTC 226; 66 DTC 5189; Ernest G Stickel v MNR, [1972] CTC 210; 72 DTC 6178; Falconbridge Nickel Mines v MNR, [1971] CTC 789; 71 DTC 5461; Pure Spring Ltd v MNR, [1946] Ex CR 471; [1946] CTC 169; 2 DTC 844; Bert W Woon v MNR, [1950] Ex CR 327; [19501 CTC 263; 4 DTC 871; Rainbow Pipe Line Co Limited v MNR, [1972] CTC 2127; 72 DTC 1132; Zomac Holdings Limited v MNR, [1972] CTC 2191; 72 DTC 1150; Andrew A Wurz v MNR, [1972] CTC 2294; 72 DTC 1238; T Desmond Earl v MNR, 40 Tax ABC 329; 66 DTC 192; Ontario Culvert & Metal Products Ltd v MNR, 38 Tax ABC 256; 65 DTC 379.

A notice of assessment or reassessment is of most vital concern to a taxpayer not only from the standpoint of whether or not there is any tax liability but also from the standpoint of the method or process used in that determination. In the instant case the appellant takes the position that the respective amounts added to its income are capital in each case. Clearly the determination of this issue is of substantial importance as it undoubtedly has a bearing on other factors in the operation of the appellant’s business.

In amending the former wording of subsection 58(1) which read “any person who objects to the amount at which he is assessed” to the present wording “a taxpayer who objects to an assessment under this Part” Parliament must have given due consideration to the reasoning aforesaid and thereby gave effect to it by deleting the word “amount”.

In my humble opinion Mr Justice Cameron in Anjulin Farms Ltd (supra) properly and correctly held that an assessment includes a “nil” assessment, and I adopt his reasoning throughout. It accordingly follows that an appeal from an assessment where no tax is payable is a valid appeal.

I am, however, not unmindful of the judgment in Newfoundland Minerals Ltd (supra), where Mr Justice Gibson quashed a notice of appeal for a “nil” assessment. The circumstances of that case and the reasons for judgment are not recorded. It is unfortunately impossible for me to derive any benefit therefrom by way of analytical comparison with the instant application.

For reasons stated above the application for an order to quash the notice of appeal is dismissed, and the appellant may proceed with its appeal on the merits.

After reviewing the evidence and the cases to which I was referred, I hold that the appellant purchased the mortgages in question as an investment and not as a speculative adventure. Accordingly I allow the appeal and the matter will be referred back to the Minister for reassessment.

Appeal allowed.