Date:
20090624
Docket:
A-401-08
Citation:
2009 FCA 217
CORAM: NADON
J.A.
SHARLOW
J.A.
RYER
J.A.
BETWEEN:
FMC
TECHNOLOGIES COMPANY
Appellant
and
HER MAJESTY
THE QUEEN
Respondent
REASONS FOR JUDGMENT OF THE
COURT
(Delivered
from the Bench at Ottawa, Ontario, on June 24,
2009)
RYER J.A.
[1]
FMC
Technologies Company, a successor to FMC Offshore Canada Company, (the
“appellant”), made a request, pursuant to paragraph 164(1)(b) of the Income
Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (the “ITA”), for a refund
of overpayments of tax in respect of its 1999 to 2002 taxation years. The
appellant claims that the overpayments arose out of payments made by
Petro-Canada in 2004 as a result of assessments (the “Petro-Canada
assessments”) made against it.
[2]
The
Petro-Canada assessments were issued pursuant to subsection 227(10) of the ITA.
These assessments were based on the Minister’s allegation that Petro-Canada was
obligated, pursuant to subsection 105(1) of the Income Tax Regulations,
C.R.C., c. 945 (the “ITR”), to withhold and remit 15% of the amount that it
paid to FMC International A.G. (“FMCI”), a non-resident of Canada that was
related to the appellant, in respect of services that FMCI provided to
Petro-Canada in Canada.
[3]
Petro-Canada
initially challenged these assessments but when they were confirmed by the
Minister, Petro-Canada did not appeal to the Tax Court of Canada. The appellant
filed a notice of appeal with respect to the Petro-Canada assessments. The Tax
Court of Canada quashed this appeal on the basis that the appellant had no
standing to challenge Petro-Canada’s assessments.
[4]
By
correspondence dated January 8, 2007, the Minister denied the appellant’s
request for a refund on the basis that the appellant had no overpayments of tax
in the years under consideration. In that correspondence, the Minister stated
that the amounts paid by Petro-Canada pursuant to the Petro-Canada assessments
were credited to the account of FMCI and not to the appellant.
[5]
The appellant
applied for judicial review of the Minister’s decision on the basis that the
Minister should have credited the tax that was paid pursuant to the Petro-Canada
assessments to the appellant’s account, rather than FMCI’s account, and if that
had been done, there would have been overpayments of tax in the appellant’s
account.
[6]
Justice
Mactavish of the Federal Court dismissed the application for judicial review on
the basis that it was beyond the jurisdiction of that Court. She found that the
application was, in substance, a challenge to the Petro-Canada assessments,
which was a matter that fell within the exclusive jurisdiction of the Tax Court
of Canada.
[7]
The
application judge then went on to consider the argument that the Minister
should have credited the tax payments to the tax account of the appellant,
rather than FMCI. After analysing the legal relationships between the appellant,
FMCI and Petro-Canada, the application judge concluded that the Minister had
correctly interpreted those relationships and that the tax payments made by
Petro-Canada had been correctly credited by the Minister to FMCI’s account. As
a result, she concluded that the appellant had no overpayments for the taxation
years in issue.
[8]
In this
appeal, the appellant argues that the application judge erred in concluding
that the Federal Court had no jurisdiction to entertain the application for
judicial review and in concluding that the appellant had no overpayments of tax
in the years under consideration.
[9]
In our
view, the Minister’s decision to reject the application for a refund was
correct. Accordingly, we do not consider it necessary, in this case, to address
the issues of jurisdiction and standard of review.
[10]
To succeed
in its request for a refund pursuant to paragraph 164(1)(b) of the ITA,
the appellant must establish that it has an “overpayment”, within the meaning
of paragraph 164(7)(b) of the ITA, which reads as follows:
|
164.(7) In this section, "overpayment" of a
taxpayer for a taxation year means
. . .
(b) where the taxpayer is
a corporation, the total of all amounts paid on account of the corporation’s
liability under this Part or Parts I.3, VI or VI.1 for the year minus all
amounts payable in respect thereof.
|
164.(7) Au présent article, un paiement en trop fait par un
contribuable pour une année d’imposition est égal au montant suivant :
[…]
b) si le contribuable est une société, le total des
sommes versées sur les montants dont la société est redevable en vertu de la
présente partie ou des parties I.3, VI ou VI.1 pour l’année, moins ces mêmes
montants.
|
Thus, for each year in issue, the appellant must establish
that the total of all amounts paid on account of its tax liability for the year
exceeds the amounts assessed against it for that year.
[11]
The appellant
asserts that the amounts paid pursuant to the Petro-Canada assessments are
amounts paid on account of its tax liability for the years in question.
However, there is no factual support for this assertion. Indeed, the record
establishes that those amounts were, in fact, credited to the tax account of
FMCI. Accordingly, the appellant has failed to establish that the requirements
of the definition of overpayment in paragraph 164(7)(b) of the ITA have
been met. It follows that the Minister was correct in concluding that the
appellant had no overpayments of tax for its 1999 to 2002 taxation years.
[12]
The appellant
was left to assert, as it did before the application judge, that the amounts
paid pursuant to the Petro-Canada assessments ought to have been credited to its
tax account because those amounts were based on contractual payments that, as a
matter of law, were not payable to FMCI, but only to the appellant, by virtue
of an equitable assignment. In our view, even if as between the appellant, FMCI
and Petro-Canada, the assignment had the legal effect that the appellant
alleges, it would still be the case that the appellant does not have an
overpayment, within the meaning of paragraph 164(7)(b) of the ITA. That
definition does not ask how the amounts in question ought to have been
credited, rather it asks how they were, in fact, credited.
[13]
For the
foregoing reasons, the appeal will be dismissed with costs.
“C.
Michael Ryer”
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