Hamelin v. The Queen, docket 96-4232-IT-I (Informal Procedure)

Date: 19971125

Docket: 96-4232-IT-I

BETWEEN:

HENRY HAMELIN,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Bonner, J.T.C.C.

[1] In this case the taxpayer appeals from a reassessment of tax in an amount which he does not contest. The taxpayer’s complaint is that the Minister of National Revenue refuses him credit for the full amount of tax which had been paid by him on account. The problem is that an earlier assessment of tax in an amount which both the Minister and the Appellant agreed was too low resulted in a refund which was seized under the Family Orders and Agreements Enforcement Assistance Act (“FOAEA”).[1] The Appellant says that the assessment which gave rise to the refund should not have been made for it was based on an error which the Appellant drew to the attention of the Minister of National Revenue before the assessment was issued.

[2] The Appellant retained A to Z Accounting Services of Cornwall, Ontario to prepare his 1995 return of income. A return dated March 3, 1996 was prepared indicating that the total tax payable exceeded credits by $1,374.90. The Appellant was out of the province by the time the return was completed and the accounting service sent the return to Revenue Canada. A copy was sent to the Appellant. On examining the copy the Appellant noticed an error in the return the consequence of which was a claim for a refund. On March 21st, the Appellant contacted Revenue Canada by phone and advised them of the error. He testified that he was informed that the return had not yet been processed and that the cheque would be held. On March 26th, the Appellant sent a revised 1995 return of income to Revenue Canada by fax.

[3] The person at Revenue Canada who was contacted by the Appellant was William Gonzalez. He confirmed that after he received the March 21st phone call from the Appellant he determined from the computer that no assessment had yet been issued. He contacted Revenue Canada taxation centre and advised someone there that the Appellant wanted to amend his return. The person at the taxation centre indicated that an attempt would be made to find the Appellant’s return and to terminate the processing. On the 27th of March the taxation centre informed Mr. Gonzalez that it was too late in the processing cycle to stop the refund. On March 28th the initial assessment for the Appellant’s 1995 taxation year was issued and $1,374.90 was transferred to the Minister of Justice on the theory that it was a refund authorized to be paid to the Appellant and constituted “garnishable moneys” within the meaning of section 23 of the FOAEA. The Appellant objected to the assessment and in response the Minister of National Revenue reassessed under subsection 165(3) of the Income Tax Act on July 31, 1996. The notice of reassessment increases the tax for the year by $2,145.29. That notice does not purport to be an assessment under subsection 160.1(3) of an amount payable by the Appellant under subsection 160.1(1).

[4] The Appellant takes the position that because he advised Revenue Canada of the error in his return before processing of the return had been completed his account should not be debited with payment to the Minister of Justice pursuant to the garnishment provisions of the FOAEA.

[5] The Appellant has not indicated what relief he seeks in this appeal or the legal basis for granting any relief which might be of use to him. He emphasizes that the original return of income does not bear his signature. Even if for that reason the original return might be regarded as unauthorized and as a document which does not constitute his return of income for the year, the validity of the assessment is unimpaired. In this regard I refer to subsection 152(7) of the Act. It provides:

152: (7) The Minister is not bound by a return or information supplied by or on behalf of a taxpayer and, in making an assessment, may, notwithstanding a return or information so supplied or if no return has been filed, assess the tax payable under this Part.

[6] The definition of the term “garnishable moneys” in section 23 of the FOAEA is as follows:

“garnishable moneys” means moneys authorized to be paid by Her Majesty by or under such Acts of Parliament or provisions thereof or programs thereunder as are designated by the regulations;

The authority of the Minister of National Revenue to refund overpayments is found in subparagraph 164(1)(a)(ii) of the Act which reads:

164: (1) If the return of a taxpayer’s income for a taxation year has been made within 3 years from the end of the year, the Minister

(a) may,

...

(ii) on or after mailing the notice of assessment for the year, refund without application therefor, any overpayment for the year, to the extent that the overpayment was not refunded pursuant to subparagraph (i); and ...

It is clear that until the assessment of March 28th was superseded and replaced by the reassessment of July 31st the Minister was entitled to pay moneys by way of refund which moneys were garnishable under the FOAEA.

[7] For the foregoing reasons the appeal will be dismissed.

"M.J. Bonner"

J.T.C.C.