Date: 20101117
Docket: A-326-09
Citation: 2010 FCA 310
CORAM: NADON
J.A.
SHARLOW
J.A.
STRATAS
J.A.
BETWEEN:
BENJAMIN R. HOFFMAN
Appellant
and
ATTORNEY GENERAL OF CANADA
Respondent
REASONS FOR JUDGMENT
SHARLOW J.A.
[1]
Dr.
Benjamin R. Hoffman is appealing the judgment of the Federal Court (2009 FC
832) dismissing his application for judicial review of a decision of the
Minister denying Dr. Hoffman’s request for administrative relief.
[2]
Dr.
Hoffman’s request was based primarily on subsection 152(4.2) of the Income
Tax Act, R.S.C. 1985, c. 1 (5th Supp.), one of the “fairness
provisions”. Subsection 152(4.2) permits the Minister to reassess an income tax
return for a particular year after the normal limitation period if the taxpayer
requests the reassessment and the reassessment would result in a refund or a reduction
in tax payable for the year.
[3]
In
the same application for judicial review, Dr. Hoffman also challenged the
correctness of the Minister’s determination of accrued interest. That is not a
request for discretionary relief, but a request for a correction to the
determination of the amount of Dr. Hoffman’s debt to the Crown.
[4]
According
to his memorandum of fact and law, Dr. Hoffman is now seeking the following
relief from the Minister:
(a)
a
recalculation of accrued interest relating to his tax liability for the 1998
taxation year, on the basis that a $35,000 tax instalment payment made in December,
1998 was treated as though it had been made in July, 1999, resulting in an initial
overcharge of interest and related penalties for a six month period as well as
continuing overcharges of compound interest on the overcharged amount;
(b)
an
increase of approximately $78,000 to either his capital loss or his allowable
business investment loss (ABIL), representing the adjusted cost base of the
shares of a certain failed corporation; and
(c)
a
deduction of approximately $20,000 for legal and accounting expenses.
[5]
The
task of this Court is to determine whether the Federal Court judge correctly
determined the standard of review and applied it properly: Canada Revenue
Agency v. Telfer, 2009 FCA 23. It is undisputed that reasonableness is the
standard of review of a decision of the Minister to grant or deny relief under
one of the fairness provisions: Lanno v. Canada (Customs and
Revenue Agency, 2005 FCA 153. Thus, the reasonableness standard of review
applies to Dr. Hoffman’s request for changes to his capital loss or ABIL, and
to his request for additional legal and accounting expense deductions. Justice
Evans, writing for the Court in Telfer, explained the reasonableness
standard of review as follows at paragraph 25:
|
When reviewing for unreasonableness, a
court must examine the decision-making process (including the reasons given
for the decision), in order to ensure that it contains a rational "justification"
for the decision, and is transparent and intelligible. In addition, a
reviewing court must determine whether the decision itself falls "within
a range of possible, acceptable outcomes which are defensible in respect of
the facts and the law" [Dunsmuir
v. New Brunswick, [2008] 1 S.C.R. 190, 2008
SCC 9] at para. 47.
|
[6]
The
Federal Court judge concluded that the decision of the Minister was reasonable
in so far as it denied Dr. Hoffman any further deductions. Having carefully
considered the record and the submissions of Dr. Hoffman at the hearing, I have
not been persuaded to the contrary. The record discloses that the Minister
thoroughly reviewed and considered the information submitted by Dr. Hoffman in
relation to the requests made at the outset and in the course of subsequent
correspondence. I agree with the Federal Court judge that, given the
information available to the Minister, his decision was reasonable.
[7]
Dr.
Hoffman complains that the Minister’s continual requests for further information
were unreasonable and arbitrary. He points out that he actually incurred
significantly more losses than he claimed, and that his current requests for
adjustment were intended to achieve no more than a fair and equitable overall
result. It is not for this Court to assess the overall fairness of Dr.
Hoffman’s tax indebtedness. Given the adjustments sought by Dr. Hoffman, the nature
and quality of the documentary evidence he was able to provide, and the
sometimes confusing manner in which Dr. Hoffman attempted to explain his
claims, it was not unreasonable for the Minister to conclude that his claims
were not proved well enough to justify a further reassessment.
[8]
Dr.
Hoffman’s request to the Minister in relation to the determination of his
interest obligation stands on a slightly different footing. He is not seeking a
discretionary waiver of interest under subsection 220(3.1) of the Income Tax
Act, which is the most frequent request by taxpayers in relation to
interest. Rather, he is requesting that his interest obligation be determined
correctly.
[9]
The
provisions of the Income Tax Act that contain the rules for determining
interest are intended to provide only a single correct determination of
interest payable at a particular point in time. Where it is established that
the Minister is claiming from a taxpayer interest that is not correctly
calculated because, for example, it is based on an incorrect determination of
the date on which an instalment payment was made, it is appropriate to require
a correction to the account.
[10]
Dr.
Hoffman, in his communications with the Minister, alleged that the interest
charged appeared to be excessive. It is not clear from the record when or
whether Dr. Hoffman informed the Minister that Dr. Hoffman was asserting that
the Minister’s interest calculation was wrong because a $35,000 payment made in
December, 1998 was treated as having been made on July 26, 1999.
[11]
In
any event, there is evidence in the record indicating that the $35,000 payment
in issue was credited to Dr. Hoffman’s instalment account on December 7, 1998.
The instalment interest and related charges for 1998 were calculated on the
basis of the payment having been received on December 7, 1998. The $35,000 instalment
was applied to Dr. Hoffman’s 1998 tax liability when his 1998 income tax return
was assessed in July, 1999.
[12]
The
record also discloses that a tax official undertook a detailed review of the
interest calculation for 1998, which took into account the $35,000 payment as having
been made in December, 1998. The official found the calculation, as reflected
in Dr. Hoffman’s statements of account, to be correct. The record contains no
evidence to the contrary. The only reasonable conclusion on the record is that the
Minister determined Dr. Hoffman’s interest obligation correctly.
[13]
For
these reasons, I would dismiss the appeal with costs.
“K.
Sharlow”
“I
agree
M. Nadon”
“I
agree
David Stratas”
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