Citation: 2010 TCC 479
Date: 20100923
Docket: 2010-551(IT)APP
BETWEEN:
THE ESTATE OF THE LATE ELENA DE LUCIA,
Applicant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Hogan J.
Introduction
[1]
Lorena De Lucia (the
“Applicant”) is the executor of the estate of her late sister, Elena De Lucia
(the “estate”). The 2005 taxation year of the estate has been reassessed by the
Canada Revenue Agency (the “CRA”). The time for the Applicant to object to this
reassessment has expired. Therefore, the Applicant is applying to the Court for
an order to extend this deadline pursuant to subsection 166.2(1) of the Income
Tax Act (the “ITA”).
Factual Background
[2]
The facts underlying
this application are largely undisputed. They are as follows:
(a) On May 26, 2006 the
original notice of assessment was issued by the CRA for the 2005 taxation year
of the estate.
(b) On November 23, 2007
the CRA sent a letter to the Applicant at her then-current address (the
“previous address”) informing her that they were proposing adjustments to the
original assessment that would significantly increase the tax payable by the
estate for the 2005 taxation year. In this letter, the CRA advised the
Applicant that she would be the only person with whom they would communicate on
this matter. They further advised that if she did not contact them within 30
days, they would proceed with the reassessment.
(c) Towards the end of
2007 or the beginning of 2008, the Applicant relocated her residence from her
previous address to a new address but did not inform the CRA of this
relocation.
(d) On February 22, 2008
the CRA issued a reassessment for the 2005 taxation year of the estate. The
Applicant did not allege that the reassessment was not properly sent, and the
CRA did not introduce evidence that it was.
(e) On May 14, 2009 the
CRA sent a new letter to the Applicant at the new address requesting payment of
the estate’s unpaid balance from the 2005 taxation year, as per the
reassessment.
(f) On May 15, 2009 the
Applicant’s accountant filed an objection to the reassessment with the CRA.
(g) On August 4, 2009 the
CRA rejected the objection on the grounds that the 90-day deadline to object
had passed. They also stated that, in addition, no request for an extension
could be granted since (as of August 4, 2009) more than one year had elapsed
from the expiry of the 90-day deadline.
(h) On February 19, 2010
the Applicant filed the motion that is now under review by the Court.
The Issue
[3]
The issue before the
Court is whether the application for an extension of time to file the notice of
objection should be granted.
Analysis
[4]
Subsection 165(1) of
the ITA allows a taxpayer to object to an assessment by the CRA subject
to certain deadlines:
165(1) Objections to assessment — A taxpayer who
objects to an assessment under this Part may serve on the Minister a notice of
objection, in writing, setting out the reasons for the objection and all
relevant facts,
(a) where the assessment is in respect of the taxpayer for a
taxation year and the taxpayer is an individual (other than a trust) or a
testamentary trust, on or before the later of
(i) the day that is one year after the taxpayer’s filing-due date
for the year, and
(ii) the day that is 90 days after the day of mailing of the
notice of assessment;
. . .
[Emphasis added.]
[5]
Sections 166.1 and
166.2 of the ITA deal with a taxpayer’s ability to obtain an extension
of the time to object:
166.1(1) Extension of time [to object] 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.
. . .
(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 [to object] by Tax Court — A taxpayer who has made an application under subsection 166.1[(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.
. . .
(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; 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 under subsection 166.1(1) as soon as
circumstances permitted.
[Emphasis added.]
[6]
The courts have firmly
established that these deadlines are mandatory and may not be set aside. In
applying section 166.1 of the ITA, Bowie J. of the Tax Court of Canada
explained that:
22 . . . neither [the taxpayer’s] misfortune nor
the apparent negligence of his solicitor gives me licence to ignore mandatory
provisions of the two statutes that were put there by Parliament in very
precise terms and for very good reasons.
Discussion
[7]
There is a lack of
evidence in this file that makes it difficult to determine exactly how the law
should be applied to the facts at hand. The Applicant did not provide the Court
with the documents that were sent to the CRA on May 15, 2009. This date fell
within the one-year and 90-day limits during which she was permitted to ask for
an extension of time for her objection. Without these documents, it is
impossible to determine if they meet the requirements set out in paragraph
166.1(7)(b) of the ITA since the Applicant has the burden of
proving that she meets the conditions which would allow the Court to grant her
an extension.
[8]
Even if we accept
(without evidence) that the Applicant fulfilled all the conditions of paragraph
166.1(7)(b), her appeal must still fail because of the prohibition
contained in subsection 166.2(1) of the ITA:
166.2(1) Extension of time [to object] by Tax Court — . . . 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.
[9]
The letter dated August
4, 2009 from the CRA to the Applicant clearly stated that they would not grant
an extension of the time for filing an objection. Thus, the Applicant had 90
days from that date in which to file the application currently under
consideration by the Court. The fact that she waited until February 19,
2010 to do so is unfortunate since the application is clearly statute‑barred.
Conclusion
[10]
For these reasons, the
application is dismissed.
Signed at Ottawa, Canada, this 23rd day of September 2010.
"Robert J. Hogan"
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