Canada (Attorney General) v 18335898 Alberta Ltd (Whitecap Energy Inc), 2023 ABKB 357

The defendant (“Whitecap Energy”) was an Alberta corporation which had been wound up into its sole shareholder (“Whitecap Resources”) and dissolved. The Attorney General sought to revive Whitecap Energy pursuant to s. 208 of the Business Corporations Act (Alberta) in order that it could be assessed by CRA which, in turn, would permit an assessment of Whitecap Resources under ITA s. 160. Principally at issue was whether the Attorney General had standing as an “interested party,” which was relevantly defined in ABCA s. 206.1 to “mean … (a) … a creditor of a dissolved corporation … or (d) a person designated as an interested person by an order of the Court.”

In finding that the Attorney General was not a “creditor,” Schlosser J stated (at para. 9):

Taxpayers remain liable for tax when income is earned (s. 152(3) ITA), notwithstanding that no return is filed. The liability does not become a debt until the taxes are assessed and a Notice of Assessment is issued (sections 158, 227, and 248(2) …. and cf Brogan Family Trust …).

However, in finding that he should exercise his discretion to designate the Attorney General, he stated (at para. 14):

[T]he Attorney General of Canada has a valid interest in revival and seeks this remedy in furtherance of its valid interest for a legitimate purpose; which is to convert liability for taxes into a debt.

An Alberta corporation (Whitecap ) had been wound up into its sole shareholder. The Attorney General sought to revive Whitecap pursuant to s. 208 of the Business Corporations Act (Alberta) in order that it could be assessed by CRA. That, in turn, would permit an assessment of the shareholder under ITA s. 160.

After finding that the Attorney General had standing as an “interested party” to bring this application, Schlosser J also noted that although the time limitation of two years from the time of dissolution had passed for a person with a claim against the dissolved corporation to sue a shareholder who has received corporate property pursuant to ABCA s. 227, this limitation had been “held not to be an absolute limitation” (para. 26). Accordingly, the revival application of the Attorney General was “not without purpose” (para. 28).