Fisher v. The Queen, 2003 TCC 42 (Informal Procedure)

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Appeal heard on November 29, 2002, at Prince George, British Columbia,

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JUDGMENT

          The appeal from the assessment of tax made under the Income Tax Act for the 2000 taxation year is dismissed.

Signed at Ottawa, Canada, this 14th day of February, 2003,

J.T.C.C.

REASONS FOR JUDGMENT

McArthur J.

[1]      The issue in this appeal is whether Canada Customs and Revenue Agency is bound by an error in an assessment or, better stated, its computer system's error. The Appellant submits that a taxpayer must be able to rely on CCRA's advice and computer system. It is common ground in this appeal that in error, CCRA allowed the Appellant a tuition fee and education tax credit to which he was not entitled.

[2]      The Appellant is a helicopter pilot. He claimed tuition fees and an education tax credit in the 1996 taxation year which claims were allowed. There was no amount of tuition fee or education tax credits available to the Appellant within the meaning of subsections 118.61(1) and (2) of the Income Tax Act to carry forward to the 2000 taxation year. The Appellant does not deny this. He was represented by an agent, Mrs. Pat Morton of H & R Block, Quesnel, BC. The Appellant and Kevin Christieson, the manager of H & R Block, gave evidence.

[3]      For the 2000 taxation year CCRA, in error indicated that the Appellant had a carry forward for tuition fees of $18,645. The Appellant and his agents knew this was incorrect. The Appellant's agents called CCRA on three occasions and spoke to at least five different CCRA employees. All verified the accuracy of the carry forward. The Appellant accepted this advice until he was reassessed by notice dated January 3, 2002 at which time the carry forward was disallowed.

[4]      The Appellant's position is that the error was caused by CCRA officers and its computer system and that the tuition fee deduction, as stated by CCRA, should be allowed.

[5]      The Reply to the Notice of Appeal ignores the issue raised by the Appellant's Notice of Appeal. The Respondent's position is that the Appellant incurred and claimed the tuition fees and education tax credit in the 1996 taxation year and that there was no amount of tuition fees or education tax credits available within the meaning of subsections 118.61(1) and (2) of the Act to carry forward to the 2000 taxation year.

[6]      The Appellant agrees with the following assumptions of fact of the Minister of National Revenue included in paragraph 5 of the Reply to the Notice of Appeal:

(a)         the Appellant incurred a tuition fee expense of $18,245 (the "Tuition Fee") in the 1996 taxation year to earn his commercial pilot licence;

(b)         the Appellant was eligible for an education tax credit of $400.00 (the "Education Credit") in the 1996 taxation year;

(c)         the Appellant claimed the Tuition Fee and the Education Credit when he filed his income tax return for the 1996 taxation year;

(d)         the Appellant's 1996 taxation year was assessed as filed by Notice dated April 24, 1997;

(e)         ...

[7]      The Respondent submits that section 118.61 of the Act allows unused tuition and education tax credits to be carried forward but, that section did not come into effect until 1997. The Appellant incurred tuition fees in 1996 when there was no carry forward provision available to him.

[8]      I agree with counsel for the Respondent. There was no tuition fee or education tax credit available to the Appellant within the meaning of subsections 118.61(1) and (2) to carry forward to the 2000 taxation year. I do not believe the Appellant takes issue with this conclusion. It appears that what he is saying is that the Minister, for his or her actions, is estopped from denying him the tax credit originally allowed to him for the 2000 taxation year. The Appellant was adamant that CCRA must live with its mistake.

[9]      As stated by counsel for the Respondent, estoppel cannot override the law. Section 118.61 did not exist in 1996. The Appellant is saying, in effect, that he knew there was no tuition carry forward provision but in error, the Minister gave it to him and cannot take it back. The Minister wants the money back. Estoppel does not assist the Appellant.

[10]     This Court is not bound by CCRA's error with respect to the law. CCRA officials and their computers do not make the law. The issue must be decided in accordance with the provisions of the Income Tax Act. The best response I can offer the Appellant is to quote Judge Bowman in Goldstein v. The Queen, [1995] 2 C.T.C. 2036, which he reiterated in Moulton v. The Queen, [2002] 2 C.T.C. 2395. He set out the following principles that are relevant to the facts in this appeal. At page 2402 of Moulton, quoting from his own decision in Goldstein, he stated:

It is sometimes said that estoppel does not lie against the Crown. The statement is not accurate and seems to stem from a misapplication of the term estoppel. The principle of estoppel binds the Crown, as do other principles of law. Estoppel in pais, as it applies to the Crown, involves representations of fact made by officials of the Crown and relied and acted on by the subject to his or her detriment [4]. The doctrine has no application where a particular interpretation of a statute has been communicated to a subject by an official of the government, relied upon by that subject to his or her detriment and then withdrawn or changed by the government. In such a case a taxpayer sometimes seeks to invoke the doctrine of estoppel. It is inappropriate to do so not because such representations give rise to an estoppel that does not bind the Crown, but rather, because no estoppel can arise where such representations are not in accordance with the law. Although estoppel is now a principle of substantive law it had its origins in the law of evidence and as such relates to representations of fact. It has no role to play where questions of interpretation of the law are involved because estoppels cannot override the law.

[11]     For the reasons set out above in Judge Bowman's decision, there is no estoppel against the Minister in the present case because the issue has to be decided in accordance with the Income Tax Act. There was no provision for tuition carry forward in 1996. Section 118.61 had not been enacted. It would appear that the tuition claimed by the Appellant in 1996 was $18,245. His tuition in 1996 was in fact $35,000. There was no provision in the Act to permit a carry forward of the $17,000 difference in 1996.

[12]     The appeal is dismissed.

Signed at Ottawa, Canada, this 14th day of February, 2003.

J.T.C.C.