Citation: 2011 TCC 293
Date: 20110608
Docket: 2011-278(IT)APP
BETWEEN:
FOLASADE LAMBO,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
Little J.
A. FACTS
[1]
The Applicant and her
husband currently reside in Vulcan, Alberta.
[2]
When the Applicant
filed her income tax returns for the 2005 and 2006 taxation years, she
claimed employment expenses and charitable donations.
[3]
The Minister of
National Revenue (the “Minister”) reassessed the Applicant for the 2005 and
2006 taxation years by Notices of Reassessment dated August 24, 2009
and the expenses and charitable donations that were claimed by the Applicant were
denied.
[4]
On June 9, 2010, the
Applicant served Notices of Objection with respect to the 2005 and 2006
taxation years.
[5]
By letter to the
Applicant dated December 21, 2010, the Minister said:
(a) the Applicant had not filed her
objection within 90 days from the mailing date of the Notice of Reassessment
(dated August 24, 2009), or one year of the due date for filing her
returns; and
(b) pursuant to subsection 166.1(7) of
the Income Tax Act (the “Act”), she had not made an application
for an extension within one year of the expiration of the time limit for
serving a Notice of Objection.
[6]
On January 5, 2011, the
Applicant served an Application for an extension of time within which to file
Notices of Objection.
B. ISSUE
[7]
The issue is whether
the Applicant should be granted an extension of time within which to file Notices
of Objection for the 2005 and 2006 taxation years.
C. ANALYSIS AND DECISION
[8]
I heard the Application
in Calgary, Alberta, on April 12, 2011. During the hearing, a number of
points came up which indicated that there were some unusual facts.
[9]
Counsel for the
Respondent filed an Affidavit of Sandra Osberg, sworn on April 5, 2011 (the
“Affidavit”). Mrs. Osberg is an Appeals Officer with the Canada Revenue Agency
(the “CRA”). The Affidavit contained a number of Exhibits hereinafter referred
to as “Exhibits (and the letter designated) of the Affidavit”.
[10]
The Notices of
Reassessment for the 2005 and 2006 taxation years were issued by the Minister
on August 24, 2009 (Exhibits A and B of the Affidavit).
[11]
The Applicant said that
she and her husband had moved from Brampton, Ontario to Vulcan, Alberta in
September, 2008, i.e., approximately 11 months before the Notices of
Reassessment were issued.
[12]
The Notices of Reassessment
were sent by the Minister to 21 Cadillac Crescent, Brampton, Ontario
on August 24, 2009. As noted, this was the former home of the Applicant in
Brampton. The Applicant moved to Vulcan, Alberta in September, 2008.
[13]
The Applicant said that
she never received copies of the Notices of Reassessment, dated August 24,
2009, until she met with her accountant in Vulcan, Alberta on June 9,
2010.
[14]
The Applicant said that
Notices of Objection to the Reassessments were sent by the accountant in
Vulcan, Alberta, to the Sudbury
office of the CRA on June 9, 2010.
[15]
The stamps on the forms
indicate that the Sudbury Office of the CRA received the Notices of Objection on
June 9, 2010. The Sudbury office of the CRA then sent the Notices of Objection
to the Appeals Division of the Burnaby Fraser office in Surrey, British Columbia. The stamps on the two Notices indicate that the
Notices of Objection were received by the Burnaby Fraser office of the CRA some
6 weeks later, i.e., July 30, 2010 (Exhibits C and D of the
Affidavit).
[16]
By an unsigned
letter dated June 17, 2010, the “Chief of Appeals” in the Western Intake Center of the CRA office in Surrey
wrote to the Applicant. The letter from the Chief of Appeals said:
This is to inform you that we have received your objection. As soon
as your objection is assigned, an officer will contact you or your authorized
representative.
…
(Exhibit E of the Affidavit)
(Note: This letter was addressed to the
Applicant at her home in Vulcan, Alberta and there is no indication that a copy of
the letter was sent by the CRA to the Applicant’s authorized representative,
i.e., Grant, Krystalowich & Bennett, of Vulcan,
Alberta, the firm which filed the Notices of Objection in June 2010.)
[17]
A letter dated December
21, 2010 from the Burnaby Fraser office of the CRA stated:
You did not file your objection within 90 days from the mailing date
of the Notice of Reassessment, dated August 24, 2009, or one year of the due
date for filing your return. Therefore, we cannot accept it under the “Income
Tax Act.”
Furthermore, we cannot grant you an extension of the time for filing
your objection. According to Subsection 166.1(7) of the Income Tax Act you must
make an application for an extension within one year of the expiration of the
time limit for serving a “Notice of Objection.”
…
(Exhibit F of the Affidavit)
[18]
It should be noted that
the letter from the Chief of Appeals in Surrey
was sent to the Applicant on June 17, 2010. However, as indicated in paragraph
[15] above, the stamps on the Notices of Objection indicate that the Burnaby
Fraser Tax Office of the CRA in Surrey did not receive the Notices of
Objection until July 30, 2010.
[19]
The Applicant said that
she did not receive any letters or phone calls from “officials” of the CRA about
the Notices of Objection that had been filed during the months of June to
November, 2010 until she received the letter from Mr. Grewal.
[20]
According to my
calculations, the 90-day period for filing Notices of Objection would expire on
November 22, 2009, i.e., 90 days from August 24, 2009. However,
November 22, 2009 was a Sunday and the deadline was Monday, November 23, 2009.
The one-year period after November 23, 2009 would expire on November 23, 2010.
In other words, the Minister’s officials did not advise the Applicant shortly
after June 17, 2010 that she should file an application to extend the time
to file Notices of Objection. The Minister’s officials waited until the
time for filing an Application to extend the time within which to file Notices
of Objection had expired, i.e., after November 23, 2010, and then
advised the Applicant that she was too late to apply for an extension of time
within which to file Notices of Objection.
[21]
There is a second point
to consider: The Applicant testified that she was back in Ontario in August, 2009 and she met with her former
accountant in Toronto – Paul Omorogieva – to discuss her tax
position for the 2005 and 2006 taxation years. She said that her former
accountant phoned the CRA offices in Toronto in her
presence and on her behalf and was told that the CRA had issued Notices of Reassessment
for her 2005 and 2006 taxation years. When the accountant received this
information from the CRA, he told the Applicant to file Notices of Objection.
She said that she signed the Notices of Objection forms in the accountant’s office
and the accountant told the Applicant that he would file the Notices of
Objection with the CRA at the following address:
Canada Revenue Agency
Technology
Centre
875 Heron Road
Ottawa, ON K1A 1B1
[22]
In Exhibit G of Mrs.
Osberg’s Affidavit, there is a copy of a letter from Diane Krystalowich (the
Applicant’s accountant in Vulcan, Alberta) addressed to Mr. Grewal. The
accountant’s letter says:
We are attaching a copy of a Notice of Objection dated August 17,
2009 filed by Mrs. Lambo’s accountant in Ontario. …
However, the Affidavit of Mrs. Osberg that is in my file does
not contain a copy of the Notices of Objection which were filed by the
Applicant on August 17, 2009.
[23]
Counsel for the
Respondent said that the Notices of Objection that were filed on August 17,
2009 were not accepted by the CRA. (Note: Sandra Osberg, the CRA
official who testified for the Respondent, said that the Notices of Objection
which were dated August 17, 2009 were never received by the CRA. Mrs. Osberg
also said:
… the reassessment date was August 24th, 2009. If we had --
if we had received that, we would have sent her out a notice saying that it
preceded the Notice of Reassessment and was invalid and that she would have to
file another one.
(Transcript, page 65, lines 2 to 8)
[24]
The Applicant maintains
that her accountant in Toronto filed Notices of Objection on August 17,
2009. The Applicant also said that she had conversations with the Collections
Section (Transcript, page 59, lines 9 to 16).
[25]
However, Mrs. Osberg
said that she only referred to the file of the Appeals Section and she did not
check the collection diary notes (Transcript, page 60, lines 3 to 5).
[26]
It can be seen that
there is a conflict between the testimony of the Applicant and the testimony of
Mrs. Osberg regarding the Notices of Objection dated August 17, 2009.
[27]
While it may not be
necessary for the purpose of this Application to rely upon the Notices of
Objection dated August 17, 2009, I accept the testimony of the Applicant on
this point.
[28]
There are a number of Court
decisions involving an Application to extend the time within which to file a
Notice of Objection.
[29]
In Aztec Industries Inc. v The
Queen, 95 D.T.C. 5235, the taxpayer applied for an extension of time and
alleged that it had not received the Notice of Assessment. In that case,
Justice Hugessen, for a unanimous Federal Court of Appeal, held that the burden
of proving the existence of the Notice and the date of its mailing falls on the
Minister. It is the Minister alone who has the knowledge of those facts and the
means of proving them. The mailing of the Notice “starts the clock ticking
against the taxpayer”, however, in this case, the Minister failed to adduce evidence
to prove that the Notices had been issued and mailed.
[30]
In 236130 British Columbia Ltd.
v The Queen, 2005 TCC 770, [2005] T.C.J. No. 599, Justice Bell of the
Tax Court relied upon Aztec Industries as authority for the proposition
that the onus is on the Minister “to establish that the reassessments
were mailed on a timely basis to the proper address”. He later quoted from the
reasons of Justice Thurlow in Scott v M.N.R., 60 D.T.C. 1273 (Exchequer
Court of Canada), as follows:
... Parliament never intended
that such a notice could be given effectively by the "mailing" of it
to a taxpayer at some wrong or fictitious address, and I find nothing in the
statute to suggest that Parliament intended that a taxpayer should be bound by
a notice of an assessment upon the posting of a notice thereof addressed to him
elsewhere than at his actual address or at an address which he has in some
manner authorized or adopted as address for that purpose.
... 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. ...
In my opinion, such a mailing or sending was not a valid mailing or sending of
a notice within the meaning of s.46(2) of the Act, and it follows that
the re-assessment was not made within the four year period limited by s.46(4).
[31]
In Rick Pearson Auto Transport
Inc. v The Queen, [1996] G.S.T.C. 44, Justice Bowman (as he then was)
dealt with an application to extend the time to file a Notice of Objection pursuant
to section 303 of the Excise Tax Act. Justice Bowman looked to Aztec
Industries and found that the Minister had failed to meet its burden to
prove that the assessment had been mailed on the date alleged.
[32]
Khan v The Queen, 2009 TCC 248, [2009] T.C.J. No. 181, dealt with an
application by the Crown to quash an appeal because it was filed after the
deadline to appeal had expired. In that case, there was doubt as to whether
the Minister had mailed the notices of reassessment to the correct address,
and there was insufficient evidence to conclude that the notices were mailed to
the address which the taxpayer had provided. Relying on Aztec Industries,
Justice Boyle of the Tax Court found that the Crown must demonstrate that
the 1-year and 90-day period had started to run. Because the Crown had failed
to prove the notices were mailed to the taxpayer, its motion to quash the
appeal was denied.
[33]
I have concluded that
the reasoning of the Courts in Aztec Industries Inc., 236130 British
Columbia Ltd., Rick Pearson Auto Transport and Khan applies
in this case. In my opinion, Counsel for the Respondent did not establish that
the Notices of Reassessment had been sent by the CRA to the proper mailing
address of the Applicant. Furthermore, it should be noted that the Applicant,
with the assistance of her accountant, filed Notices of Objection for the 2005
and 2006 taxation years on August 17, 2009. These Notices were filed when
her accountant told her that officials of the CRA had issued Notices of
Reassessment for the 2005 and 2006 taxation years.
[34]
In addition, the
Applicant was advised in an unsigned letter from the Chief of Appeals of
the CRA dated June 17, 2010, that they had received the Notices of Objection
and that “an officer will contact you or your authorized representative”.
As noted, no contact was ever made by an officer of the CRA until it was too
late for the Applicant to file an Application.
[35]
Mr. Grewal of the CRA
wrote to the Applicant on December 21, 2010 and told her that she was out of
time. (Note: If CRA officials had contacted the Applicant shortly after
June 17, 2010, she would have been aware of the one year deadline of November
23, 2010. However, CRA officials waited approximately four weeks after the
deadline had passed and then told the Applicant that she was too late to
apply for an extension.)
[36]
In these unusual facts,
I believe that it would be unconscionable for the Minister to refuse to
grant the Applicant an extension of time within which to file Notices of
Objection for the 2005 and 2006 taxation years.
[37]
I have reached this
conclusion for the following reasons:
1.
The Applicant
demonstrated her attempt to dispute the Notices of Reassessment for the 2005
and 2006 taxation years by filing Notices of Objection on August 17, 2009 and also
by filing Notices of Objection on June 9, 2010;
2.
The Applicant was
misled by the unsigned letter from the Chief of Appeals when he advised
her on June 17, 2010 that “an officer will contact you or your authorized
representative”;
3.
No contact was made by
CRA officials until Mr. Grewal advised the Applicant by letter dated December
21, 2010 that she was too late to file an Application to extend the time; and
4.
Furthermore, the CRA
sent the Notices of Reassessment, issued on August 24, 2009, to the wrong
address in Brampton, Ontario, when the Applicant had moved to Vulcan, Alberta approximately 11 months earlier.
[38]
I believe that the
Applicant has satisfied the requirement of subsection 166.1(7) of the Income
Tax Act.
[39]
I have therefore concluded
that the Application to extend the time within which to file Notices of
Objection should be granted and the Notices of Objection filed on June 9,
2010 should be accepted as valid Notices of Objection.
Signed at Vancouver, British Columbia, this 8th day of June 2011.
“L.M. Little”
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