Docket: 2007-2489(GST)G
BETWEEN:
MARIO BROUILLETTE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
__________________________________________________________________
Motion heard on September 16, 2010, at Quebec City, Quebec.
Before: The Honourable Justice Robert J.
Hogan
Appearances:
|
Counsel for the appellant:
|
Normand Roy
|
|
Counsel for the respondent:
|
Éric Labbé
|
__________________________________________________________________
JUDGMENT
Upon motion by the appellant for an order allowing
the appeal with costs, in accordance with the Amended Notice of Appeal dated
January 20, 2010;
And upon motion by the respondent for an
order quashing the appeal;
And upon hearing the parties' allegations;
The appellant's motion is dismissed, the
respondent's motion is granted, with costs to the appellant, and the appeal
from the assessment concerning the goods and services tax for the period from
November 1, 2004, to April 30, 2005, is quashed.
Signed at Ottawa, Canada, this 2nd day of December 2010.
"Robert J. Hogan"
Translation
certified true
on this 5th day of
January 2011.
Erich Klein,
Revisor
Citation: 2010 TCC 616
Date: 20101202
Docket: 2007-2489(GST)G
BETWEEN:
MARIO BROUILLETTE,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Hogan J.
[1]
The appellant has appealed
an assessment of May 11, 2006, concerning the goods and services tax (GST)
for the period from November 1, 2004, to April 30, 2005. Reassessments
were issued on March 26, 2010, replacing the previous notice of
assessment. According to these reassessments, the appellant was not required to
pay any GST for that period.
[2]
The parties acknowledge
that the Court no longer has jurisdiction to rule on the assessment of
May 11, 2006, which is the basis for the Amended Notice of Appeal dated
January 20, 2010.
[3]
The appellant brought a
motion before this Court to be disposed of without appearance by the parties
and upon consideration of written representations, under subsection 69(1) of
the Tax Court of Canada Rules (General Procedure) (the Rules).
[4]
The motion was for an
order allowing the appeal with costs, in accordance with the Amended Notice of
Appeal dated January 20, 2010, whereas the respondent applied to the Court
for an order quashing the appeal.
I. Issue
[5]
The only issue is
whether the Court should allow or quash the appeal.
II. Appellant's position
[6]
The reassessments,
which are [translation] "nil
or credit notices of assessment", constitute a confession of judgment.
III. Respondent's position
[7]
The reassessments do
not constitute a confession of judgment but, rather, were the result of an
administrative error.
[8]
This administrative error
had the effect of cancelling the previous notice of assessment. There is no
longer anything in dispute.
[9]
The respondent agreed to
pay, as costs, the expenses incurred by the appellant to institute the
proceedings before the Tax Court of Canada.
IV. Legislation
[10]
Subsection 309(1)
of the Excise Tax Act (ETA) reads as follows:
|
Excise Tax Act
|
Loi sur la taxe d’accise
|
|
309(1) Disposition of appeal
− The Tax Court may dispose of an appeal from an assessment by
(a) dismissing it; or
(b) allowing it and
(i) vacating the assessment, or
(ii) referring the assessment back to the Minister
for reconsideration and reassessment.
|
309(1) Règlement d’appel −
La Cour canadienne de l'impôt peut statuer sur un appel concernant une
cotisation en le rejetant ou en l'accueillant. Dans ce dernier cas, elle peut
annuler la cotisation ou la renvoyer au ministre pour nouvel examen et
nouvelle cotisation.
|
Subsection 171(1) of the Income Tax Act (ITA)
reads as follows:
|
Income Tax Act
|
Loi de l’impôt sur le revenu
|
|
171(1) Disposal
of appeal − The Tax Court of Canada may
dispose of an appeal by
(a) dismissing it; or
(b) allowing it and
(i) vacating the assessment,
(ii) varying the assessment, or
(iii) referring the assessment back to the
Minister for reconsideration and reassessment.
|
171(1) Règlement
d’un appel − La Cour canadienne de l'impôt
peut statuer sur un appel :
a) en le rejetant;
b) en l'admettant et en :
(i) annulant la cotisation,
(ii) modifiant la cotisation,
(iii) déférant la cotisation au ministre pour
nouvel examen et nouvelle cotisation.
|
V. Analysis
[11]
In Canadian tax law, a
taxpayer cannot appeal from a nil assessment, as issuing a notice of assessment
is not the same as an assessment. Justice Hugessen of the Federal Court of
Appeal stated the following in The Queen v. The Consumers' Gas Company Ltd.:
. . . What is put in issue on an appeal to the courts
under the Income Tax Act is the Minister's assessment. While the word
"assessment" can bear two constructions, as being either the process
by which tax is assessed or the product of that assessment, it seems to me
clear, from a reading of sections 152 to 177 of the Income Tax Act,
that the word is there employed in the second sense only. This conclusion flows
in particular from subsection 165(1) and from the well established
principle that a taxpayer can neither object to nor appeal from a nil
assessment.
[12]
Therefore, the
appellant cannot file an appeal, and, in turn, the Court cannot dispose of an
appeal under subsection 171(1) of the ITA in the absence of an assessment.
The Court can neither allow nor dismiss the appeal. It must simply quash it. This
position is consistent with the case law of the Tax Court of Canada.
[13]
In Bruner v. Canada, the taxpayer had sold a trade
name to his company for a non‑interest bearing promissory note with a
face value of $l trillion ($1,000,000,000,000) and having a maturity date
499 years in the future. He
also received a non-interest bearing promissory note in the amount of
$70 billion, which corresponds to the GST on the $l trillion. The
company therefore claimed an input tax credit of $70 billion. Mr. Bruner
asked that the two transactions be offset against each other. The Canada
Revenue Agency (CRA) refused to grant the input tax credit and made a nil
assessment under subsection 296(1) of the ETA for the reporting period at
issue. The taxpayer appealed that decision and claimed $300 million in late
refund interest. Relying on the case law on nil assessments, the Crown filed a
motion for an order quashing the appeal.
[14]
Mr. Bruner was
successful at trial. However, in a unanimous judgment, the Federal Court of Appeal
extended the case law on nil assessments to the ETA. Justice Pelletier stated
the following in Bruner:
The respondent is appealing from an assessment in which there is no
amount in dispute, a fact which he admitted before Judge Miller and which
was in evidence before Judge Bowie. The provisions of the Income Tax
Act relating to assessments and appeals are mirrored in the Excise Tax
Act and we see no reason why the principles relating to appeals from nil
assessments under the Income Tax Act should not apply to appeals under
the Excise Tax Act providing that the principles extend to input tax
credits and refunds as well as to liability for tax. Consequently, a
taxpayer is not entitled to challenge an assessment where the success of the
appeal would either make no difference to the taxpayer's liability for tax or
entitlement to input tax credits or refunds, or would increase the taxpayer's
liability for tax. When the respondent took the position that there was no
amount in dispute, the Tax Court judge should have applied the nil assessment
jurisprudence and quashed the Notice of Appeal.
[Emphasis added.]
[15]
The facts in this case
resemble those in Bruner. In both cases, the taxpayers appealed from assessments
where no amounts were in dispute. Furthermore, and contrary to what was the
case in Bruner, the appellant acknowledged in his motion that the
Court no longer has jurisdiction to rule on the assessment of May 11, 2006.
[16]
Under the circumstances,
it seems appropriate that the Court follow the ratio decidendi of Bruner
and quash the appeal rather than allow it. Accordingly, the appeal is quashed.
Signed at Ottawa, Canada, this 2nd day of December 2010.
"Robert J. Hogan"
Translation
certified true
on this 5th day of
January 2011.
Erich Klein,
Revisor
CITATION: 2010 TCC 616
COURT FILE NO.: 2007-2489(GST)G
STYLE OF CAUSE: MARIO BROUILLETTE v. HER MAJESTY THE QUEEN
PLACE OF HEARING: Quebec
City, Quebec
DATE OF HEARING: September
16, 2010
REASONS FOR JUDGMENT BY: The Honourable
Justice Robert J. Hogan
DATE OF JUDGMENT: December
2, 2010
APPEARANCES:
|
Counsel for the
appellant:
|
Normand Roy
|
|
Counsel for the
respondent:
|
Éric Labbé
|
COUNSEL OF RECORD:
For the
appellant:
Name: Normand Roy
Firm:
Saint‑Augustin‑de‑Desmaures,
Quebec
For the
respondent: Myles J. Kirvan
Deputy
Attorney General of Canada
Ottawa, Canada
Email this Content