Docket: 2008-486(IT)I
BETWEEN:
NAN LIN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motion
heard on common evidence with the motion in Yunhong Ding,
2008-487(IT)I, on September 5, 2008 at Toronto,
Ontario
By: The Honourable
Justice C.H. McArthur
Appearances:
|
Agent for the Appellant:
|
Yunhong
Ding
|
|
Counsel for the Respondent:
|
Laurent Bartleman
|
___________________________________________________________________
ORDER
UPON motion by
the Respondent for an Order quashing the purported appeal from a reassessment made
under the Income Tax Act for the 2005 taxation year;
AND
UPON reading the materials filed;
AND UPON hearing the agent for the Appellant and
counsel for the Respondent;
IT
IS ORDERED THAT the motion is granted, and the purported appeal from the reassessment
made under the Act for the 2005 taxation year is quashed.
Signed at Ottawa, Canada, this 21st day of October, 2008.
“C.H. McArthur”
Docket: 2008-487(IT)I
BETWEEN:
YUNHONG DING,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Motion heard on common evidence with the
motion in Nan Lin,
2008-486(IT)I, on September 5, 2008 at Toronto,
Ontario
By: The Honourable Justice C.H. McArthur
Appearances:
|
For the
Appellant:
|
The Appellant himself
|
|
Counsel for the
Respondent:
|
Laurent Bartleman
|
___________________________________________________________________
ORDER
UPON motion by
the Respondent for an Order quashing the purported appeal from a reassessment
made under the Income Tax Act for the 2005 taxation year;
AND
UPON reading the materials filed;
AND UPON hearing the Appellant and counsel for the
Respondent;
IT
IS ORDERED THAT the motion is granted, and the purported appeal from the
reassessment made under the Act for the 2005 taxation year is quashed.
Signed at Ottawa, Canada, this 21st day of October, 2008.
“C.H. McArthur”
Citation: 2008 TCC 577
Date: 20081021
Docket: 2008-486(IT)I
2008-487(IT)I
BETWEEN:
NAN
LIN and YUNHONG DING,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR ORDER
McArthur J.
[1]
The Respondent brought
a motion in each of these appeals for Orders quashing the purported appeals from
reassessments made under the Income Tax Act for the 2005 taxation year, on
the grounds that they were in respect of nil reassessments of federal tax in
both appeals, but for provincial tax owing in the amount of approximately
$3,000 by Nan Lin. It is common ground that no federal tax is in dispute, but
that Ms. Lin has received a reassessment for an additional $3,000 in tax owing
to the Province of Ontario.
[2]
The Appellants are
husband and wife and Mr. Yunhong Ding represented both himself and his spouse
at the hearing. They are residents of Ontario, but both
work in the United States. In 2005, Ms. Lin earned approximately
$100,000 and Mr. Ding earned approximately $36,000.
[3]
As a result of
determinations by the Minister of National Revenue in the computation of credits
for the foreign tax paid by the Appellants, Ms. Lin ended up with additional provincial
tax payable. Counsel for the Respondent states that the Ontario Superior Court
is the proper forum for dealing with provincial tax assessments, and not the
Tax Court of Canada. After receiving the U.S.
tax credits, no federal income tax was payable by either party, but as stated,
Ms. Lin had additional provincial tax payable. This led to the Appellants
appealing the manner in which the Respondent calculated the foreign tax credit,
pursuant to subsection 126(1) of the Income Tax Act.
[4]
The Appellants pooled
their income in 2005, and completed a joint filing of an income tax return in
the United States. The Respondent allocated 73% of the
jointly paid U.S. tax to Ms. Lin, resulting in less foreign tax deemed to have
been paid by Ms. Lin, and therefore, increasing her provincial tax. The
Appellants question the Respondent’s policy and manner in which the joint
foreign tax credit is treated. They state in their submissions:
8. The current appeal raises a [sic] issue about how
to distribute foreign tax credit in appellant’s family member, who claimed
jointed [sic] tax return in US. This distribution calculation of foreign
tax credit is located on 431 item in T2209, Federal Foreign Tax Credits. So
this calculation is Federal tax agency’s duty, not Provincial Tax Agency’s
duty.
[5]
Counsel for the
Respondent stated that this Court has no jurisdiction to consider the appeals (i)
because the appeals deal with an assessment of provincial (Ontario) income tax; and (ii) because there was no federal
tax payable (nil reassessments).
[6]
Perhaps the best decision
on the subject of a provincial tax assessment is that of Justice Mogan in Stiege
v. M.N.R.
where he carefully reviewed the law with respect to this question and stated as
follows:
The Appellant purports to appeal from an assessment made by the
Minister of National Revenue with respect to Ontario property tax credits permitted as deductions under subsection 7(2)
of the Ontario Act. The authority granted to the Minister of National Revenue
to administer the Ontario Act does not bestow upon this Court the jurisdiction
to hear an appeal from assessment concerning only the Ontario Act.
With some regret, I will grant the Respondent’s application and
issue the requested order quashing the purported appeal herein. My regret is
based on an assumption that most individuals residing in Ontario would not know that there was an
Ontario Income Tax Act and a separate appeal to the Supreme Court of Ontario
for disputes relating to matters arising under that Act. Such individuals have
contact with only the federal Department of National Revenue concerning income
tax matters: filing the tax return; subsequent inquiries; receiving a notice of
assessment; serving an objection; receiving a reassessment or confirmation. At
that point, most individuals would expect (as the purported Appellant herein)
to follow the well-worn path of appeals under the federal Income Tax Act. It is
regrettable that the Appellant must learn at this late stage in the proceedings
that she has appealed to the wrong court.
The above quote applies equally to the present case.
Nil Assessment
[7]
I agree with counsel
for the Respondent to the effect that the Tax Court of Canada does not have
jurisdiction with respect to provincial tax. Also, in Baluyot v. The Queen, Justice V.
Miller dealt primarily with the question of whether the Tax Court of
Canada has jurisdiction to decide nil assessment appeals. She quoted, with
approval, the Federal Court of Appeal decision in Interior Savings Credit
Union v. Canada,
wherein the Court found that a nil assessment cannot be appealed.
[8]
There may be authority
in the decision of Bowman J. in Aallcann Wood Suppliers Inc. v.
Her Majesty the Queen
for the proposition that it is open to a taxpayer to challenge the Minister of
National Revenue’s calculation of a loss for a particular year in another year
in which the loss impacts on the taxes assessed. However, that is not the
situation before me where the Appellants are challenging the Minister’s
calculation of a foreign tax credit, which created an increased provincial tax
owing by Ms. Lin. Since the Appellants do not take issue with the federal tax
assessed for 2005 which is nil, there is nothing to appeal. This is a rather
unfortunate situation, in that as a direct result of the Minister’s
calculations, Ms. Lin was assessed $3,000 in provincial tax. Possibly, she can
appeal the assessment with respect to provincial tax to the Superior Court of
Ontario provided she is within time limits and other possible criteria.
[9]
I believe that recently
the Minister of National Revenue now, at long last, informs the taxpayer, with
the initial assessment, of the situation with respect to provincial tax and how
an appeal may be instituted. While applause is in order for those responsible
for instituting the new format, one wonders why it took over 20 years.
[10]
The motions are
granted, and the appeals are quashed.
Signed at Ottawa,
Canada, this 21st day of October 2008.
“C.H. McArthur”
CITATION: 2008 TCC 577
COURT FILE NO.: 2008-486(IT)I and 2008-487(IT)I
STYLE OF CAUSE: NAN LIN and YUNHONG DING
and
HER MAJESTY THE QUEEN
PLACE OF HEARING: Toronto,
Ontario
DATE OF HEARING: September 5, 2008
REASONS FOR ORDERS
BY: The Honourable Justice C.H. McArthur
DATE OF ORDERS: October 21, 2008
APPEARANCES:
|
Agent for the
Appellants:
|
Yunhong Ding
|
|
Counsel for the
Respondent:
|
Laurent Bartleman
|
COUNSEL OF RECORD:
For the Appellants:
Name: N/A
Firm: N/A
For the
Respondent: John H. Sims, Q.C.
Deputy
Attorney General of Canada
Ottawa,
Canada
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