Citation: 2013 TCC 285
Date: 20130913
Docket: 2013-931(IT)APP
BETWEEN:
MARTHA PALUBJAK,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Woods J.
[1]
The applicant, Martha Palubjak,
seeks an order to extend the time for serving a notice of objection. The Crown opposes
the application on the ground that the applicant did not make a timely
application to the Minister of National Revenue beforehand as required by
paragraph 166.2(5)(a) of the Income Tax Act.
[2]
The objection is with respect to
an assessment made under the Act for the 2008 taxation year. The issue
in the objection is whether Ms. Palubjak made a valid charitable donation
pursuant to a donation arrangement referred to as the “Global Learning Donation
Program.”
Applicable legislation
[3]
The requirements that must be
satisfied for this Court to grant the application are set out in subsection 166.2
of the Act. By virtue of paragraph 166.2(5)(a), Ms. Palubjak must
have applied for an extension of time to the Minister of National Revenue
within one year from the expiry of the normal deadline for serving a notice of
objection.
[4]
Subsections 166.1 and 166.2 are
both relevant and they are reproduced in part below.
166.1(1)
Extension of time by Minister. Where no notice of objection to an
assessment has been served under section 165, nor any request under subsection
245(6) made, within the time limited by those provisions for doing so, the
taxpayer may apply to the Minister to extend the time for serving the notice of
objection or making the request.
(2) Contents of
application. An application made under subsection (1) shall set out the
reasons why the notice of objection or the request was not served or made, as
the case may be, within the time otherwise limited by this Act for doing so.
(3) How
application made. An application under subsection (1) shall be made by
being addressed to the Chief of Appeals in a District Office or a Taxation
Centre of the Canada Revenue Agency and delivered or mailed to that Office or
Centre, accompanied by a copy of the notice of objection or a copy of the
request, as the case may be.
[…]
(7) When order to be made - No application shall be
granted under this section unless
(a) the application is made within one
year after the expiration of the time otherwise limited by this Act for serving
a notice of objection or making a request, as the case may be; and
(b) the taxpayer demonstrates that
(i) within the time otherwise
limited by this Act for serving such a notice or making such a request, as the
case may be, the taxpayer
(A) was unable to act or to
instruct another to act in the taxpayer’s name, or
(B) had a bona fide intention to object to the
assessment or make the request,
(ii) given the reasons set out in
the application and the circumstances of the case, it would be just and
equitable to grant the application, and
(iii) the application was made as
soon as circumstances permitted.
[…]
166.2(1)
Extension of time by Tax Court. A taxpayer who has made an application
under subsection 166.1 may apply to the Tax Court of Canada to have the
application granted after either
(a)
the Minister has refused the application, or
(b)
90 days have elapsed after service of the application under subsection 166.1(1)
and the Minister has not notified the taxpayer of the Minister’s decision,
but no application
under this section may be made after the expiration of 90 days after the day on
which notification of the decision was mailed to the taxpayer.
(2) How
application made. An application under subsection (1) shall be made by
filing in the Registry of the Tax Court of Canada, in accordance with the
provisions of the Tax Court of Canada Act, three copies of the documents
referred to in subsection 166.1(3) and three copies of the notification, if
any, referred to in subsection 166.1(5).
[…]
(5) When
application to be granted. No application shall be granted under this
section unless
(a)
the application was made under subsection 166.1(1) within one year after the
expiration of the time otherwise limited by this Act for serving a notice of
objection or making a request, as the case may be; […]
(b) the
taxpayer demonstrates that
(i) within the
time otherwise limited by this Act for serving such a notice or making such a
request, as the case may be, the taxpayer
(A)
was unable to act or to instruct another to act in the taxpayer’s name, or
(B)
had a bona fide intention to object to the assessment or make the
request,
(ii) given the
reasons set out in the application and the circumstances of the case, it would
be just and equitable to grant the application, and
(iii) the
application was made under subsection 166.1(1) as soon as circumstances
permitted.
[Emphasis added]
Background facts
[5]
The assessment history relating to
the 2008 taxation year is quite extensive. A chronology of these events as
revealed by the evidence is set out below. Some of the dates are approximate.
(a) March 26, 2009 – initial assessment issued
(b) April 1, 2010 – reassessment issued
(c) August 23, 2010 – further reassessment issued
(d) October 6, 2010 – notice of objection filed
(e) April 7, 2011 – further reassessment issued
(f) April or May, 2012 – notice of objection filed
(g) May 22, 2012 – The Canada Revenue Agency (CRA) acknowledges
that a notice of objection for the 2008 taxation year was filed on April 21,
2012, and states that the objection is not accepted as it is out of time. The
CRA further advises that an application could be made for an extension of time
and that the deadline for the application is July 6, 2012.
(h) November 30, 2012 – notice of objection filed
(i) January 24, 2013 - The CRA informs Ms. Palubjak
that the notice of objection is not accepted as it is out of time. The
correspondence also informs Ms. Palubjak that she is out of time to apply for
an extension.
(j) March 14, 2013 – Ms. Palubjak applies to the
Tax Court of Canada for an extension of time to file a notice of objection.
Analysis
[6]
In order for this application to
be granted, Ms. Palubjak must have made a similar application to the Minister
of National Revenue no later than July 6, 2012 (s. 116.2(5)(a)). This
deadline is one year after the time for filing a notice of objection to the
reassessment which was made on April 7, 2011.
[7]
As I understand Ms. Palubjak’s
submission, she argues that she did the best she could to comply with the law.
She submits that she was dealing with objections for several taxation years and
that the procedures were difficult. She testified that, when she received the
third reassessment for the 2008 taxation year dated April 7, 2011, she was
informed that further correspondence would be coming and that she filed a notice
of objection in May, 2012 as soon as the correspondence was received.
[8]
I do agree with Ms. Palubjak that
the circumstances surrounding her tax affairs were complicated. She was dealing
with objections for several taxation years at the same time, and there were
four assessments issued for the 2008 taxation year alone. Each
assessment that was disputed had to be the subject of a separate notice of
objection. Further, in addition to dealing with the appeals division, it
appears that Ms. Palubjak was also dealing with the collections department.
[9]
Ms. Palubjak’s
circumstances are by no means unique. Parliament
has enacted a complex objection procedure which taxpayers and their advisers
sometimes fail to navigate properly. The legislative requirements are strict
and relief cannot be granted on the basis of fairness alone. However, the
applicable legislative provisions should be interpreted in a manner which
encourages the resolution of disputes on their merits.
[10]
In this case, I have concluded that
Ms. Palubjak did not satisfy the requirement in s. 166.2(5)(a) that an
application to extend time be made to the Minister within the time required.
[11]
The first correspondence that was
received after the relevant reassessment was a notice of objection filed around
April or May, 2012. The CRA informed Ms. Palubjak by letter dated May 22,
2012 that her objection dated April 21, 2012 was out of time and that an
application to extend time was required. A portion of the CRA’s letter is
reproduced below.
You can apply for an
extension of time to file your objection for 2008. To do so, please submit the
following:
-
a letter addressed to the Chief of Appeals providing reasons why the
notice of objection was not filed on time; and
-
a copy of the notice of objection, stating the facts and reasons
for the objection.
Your
application must be made as soon as possible, but not later than July 6, 2012,
which is one year after the date you had to file your objection.
[12]
This letter was a
reasonable action for the CRA to take. In order for the Minister to grant an
extension, the Minister must consider why the taxpayer did not file a notice of
objection in time. The Minister invited Ms. Palubjak to provide this
information before the deadline and she failed to do so.
[13]
Ms. Palubjak testified that she
found the letter of May 22, 2012 confusing, especially since it referred to the
date of her notice of objection being April 21, 2012. She submits that the objection
was filed on May 9, 2012.
[14]
I do not find this explanation to
be satisfactory. It is clear from the CRA letter that an application to extend
time was required which gave reasons for not filing the objection on time. Even
if Ms. Palubjak filed the notice of objection on May 9, 2012, as she submits,
the CRA letter of May 22, 2012 put her on notice that this objection likely was
not adequate.
[15]
Although I have some sympathy for
Ms. Palubjak having difficulty navigating the objection requirements, the
evidence does not persuade me that she has satisfied the requirement in
s. 166.2(5)(a).
[16]
The application will be dismissed.
[17]
Finally, I would comment that at
the hearing I asked the parties to address whether the notice of objection
should be considered as an application to extend time.
[18]
Shortly after the hearing,
counsel for the Crown brought to my attention a decision of the Federal Court
of Appeal which had a bearing on this issue: Pereira v The Queen, 2008
FCA 264. The appeal was reopened to hear submissions regarding this decision.
[19]
In light of the
conclusion that I have reached, it is not necessary that I consider the
possible application of the Pereira decision, which involves facts that
are quite different from this case. That consideration is best left for another
day, but I would take the opportunity to thank counsel for the Crown for bringing
this decision to my attention.
Signed at Ottawa, Ontario this 13th day of September
2013.
“J. M. Woods”
Email this Content