Brunette v. The Queen, docket 98-2080-IT-I (Informal Procedure)

Date: 19991230

Dockets: 98-2080-IT-I; 98-2251-IT-I

BETWEEN:

YVON BRUNETTE, JULIA BRUNETTE,

Appellants,

and

HER MAJESTY THE QUEEN,

Respondent,

Appellant,

Reasons for Judgment

Lamarre, J.T.C.C.

[1] These two appeals, which were heard on common evidence under the informal procedure, are against assessments made by the Minister of National Revenue (the "Minister") pursuant to the Income Tax Act (the "Act") for the 1994 taxation year.

[2] The facts are admitted by the parties and may be summarized as follows. By notices of assessment dated March 16, 1995, the Minister made original assessments with respect to the appellants' income tax returns for the 1994 taxation year. Later, on March 16, 1998, the Minister made reassessments with respect to the appellants' income tax returns for the 1994 taxation year.

[3] The only point at issue is whether the reassessments made by the Minister on March 16, 1998 were made within the time prescribed by the Act.

[4] Subsection 152(4) of the Act gives the Minister the power to assess in the following terms:

4152(4)3

(4) Assessment and reassessment. The Minister may at any time make an assessment, reassessment of additional assessment of tax for a taxation year, interest or penalties, if any, payable under this Part by a taxpayer or notify in writing any person by whom a return of income for a taxation year has been filed that no tax is payable for the year, except that an assessment, reassessment or additional assessment may be made after the taxpayer's normal reassessment period in respect of the year only if . . . [These cases do not apply to the case at bar.]

[5] "Normal reassessment period" is defined in subsection 152(3.1) of the Act as follows:

4152(3.1)3

(3.1) Definition of "normal reassessment period". For the purposes of subsections (4), (4.01), (4.2), (4.3) and (5), the normal reassessment period for a taxpayer in respect of a taxation year is

(a) where at the end of the year the taxpayer is a mutual fund trust or a corporation other than a Canadian-controlled private corporation, the period that ends 4 years after the earlier of the day of mailing of a notice of an original assessment under this Part in respect of the taxpayer for the year and the day of mailing of an original notification that no tax is payable by the taxpayer for the year; and

(b) in any other case, the period that ends 3 years after the earlier of the day of mailing of a notice of an original assessment under this Part in respect of the taxpayer for the year and the day of mailing of an original notification that no tax is payable by the taxpayer for the year. [Emphasis added.]

History: S.152(3.1) was amended by S.C. 1998, c. 19, s. 181(3) applicable after April 27, 1989. S. 152(3.1) formerly read:

"(3.1) For the purposes of subsections (4), (4.2), (4.3) and (5), the normal reassessment period for a taxpayer in respect of a taxation year is

(a) where at the end of the year the taxpayer is a mutual fund trust or a corporation other than a Canadian-controlled private corporation, the period that ends 4 years after the day of mailing of a notice of an original assessment under this Part in respect of the taxpayer for the year or the day of mailing of a notification that no tax is payable by the taxpayer for the year; and

(b) in any other case, the period that ends 3 years after the day of mailing of a notice of an original assessment under this Part in respect of the taxpayer for the year or the day of mailing of a notification that no tax is payable by the taxpayer for the year." [Emphasis added.]

[6] As can be seen, subsection 152(3.1) was amended in 1998, retroactive to April 28, 1989, so as to specify that the period of 3 or 4 years, as the case may be, was calculated from the earlier of the day of mailing of a notice of an original assessment and the day of mailing of an original notification that no tax is payable. The Technical Note of December 1997 accompanying the amendments to subsection 152(3.1) reads as follows:

Technical Note: . . . The time within which the Minister of National Revenue may generally reassess is known as the "normal reassessment period", as defined by subsection 152(3.1) of the Act. More specifically, the normal reassessment period is the 3 or 4-year period beginning after the day of mailing of a notice of an original assessment for a taxation year or the day of mailing of a notification that no tax is payable for the year. Subsection 152(3.1) is amended so that the definition of normal reassessment period applies for the purpose of new subsection 152(4.01). That provision limits the matters in respect of which the Minister can reassess, where a reassessment to which paragraph 152(4)(a) or (b) applies is made beyond the normal reassessment period for a taxpayer in respect of a taxation year. A similar limitation was previously found in subsections 152(4) and (5). Subsection 152(3.1) is also amended to clarify that the normal reassessment period begins to run from the time that is the earlier of the day of mailing of an original assessment and the day of mailing of a notification that no tax is payable. Subsection 152(3.1) applies after April 27, 1989. [Emphasis added.]

[7] The appellant Yvon Brunette submits that, according to this amendment, the time within which a reassessment can be made begins to run on the day the original notice of assessment was issued, that is, March 16, 1995, in this case. He also submits that the time expires on the last day of the 3-year period following the starting date of the period, namely March 15, 1998.

[8] I do not concur with this argument. The provisions in the Interpretation Act, R.S., c. I-23, s. 27, relating to the computation of time, read as follows:

27. (1) Where there is a reference to a number of clear days or "at least" a number of days between two events, in calculating that number of days the days on which the events happen are excluded.

(2) Where there is a reference to a number of days, not expressed to be clear days, between two events, in calculating that number of days the day on which the first event happens is excluded and the day on which the second event happens is included.

(3) Where a time is expressed to begin or end at, on or with a specified day, or to continue to or until a specified day, the time includes that day.

(4) Where a time is expressed to begin after or to be from a specified day, the time does not include that day.

(5) Where anything is to be done within a time after, from, of or before a specified day, the time does not include that day.

[9] The appellant Yvon Brunette relies on subsection 27(3) in arguing that the time begins to run on the day that the notice of assessment was issued. However, on reading subsection 152(3.1) of the Act and the Technical Note, I am of the view that it is subsections 27(4) and (5) of the Interpretation Act that should apply, with the result that the day on which the notice of assessment was issued should not count in calculating the time. Indeed, it is clear from reading the Technical Note that the normal reassessment period begins after the day of mailing of a notice of an original assessment or the day of mailing of a notification that no tax is payable for the year. The last sentence of the Technical Note, on which the appellants rely, which says that "subsection 152(3.1) is also amended to clarify that the normal reassessment period begins to run from the time that is the earlier of the day of mailing of an original assessment and the day of mailing of a notification that no tax is payable", serves in my opinion to clarify which day (as between the day of mailing of an original notice of assessment and the day of mailing of a notification that no tax is payable) should serve as the actual starting point. But once this starting point is clarified, the statute and the Technical Note clearly state that the normal reassessment period begins after this starting date. While such Technical Notes are not binding on the Court, they may constitute an important factor in the interpretation of statutes (see Canada v. Ast Estate, [1997] 3 F.C. 86).

[10] Accordingly, I am of the view that the reassessment period should be calculated from the day following the original assessment (which was March 16, 1995), that is, March 17, 1995. According to subsection 27(3) of the Interpretation Act, this period should expire on March 16, 1998, at midnight, since the last day of the period should be counted.

[11] Thus, the reassessments made on March 16, 1998, are valid since they were made within the reassessment period provided for in subsection 152(3.1) of the Act.

[12] For these reasons, the appeals are dismissed.

Signed at Ottawa, Canada, this 30th day of December 1999.

"Lucie Lamarre"

J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]

Translation certified true on this 27th day of October 2000.

Erich Klein, Revisor