Fradette v. R., [1998] 2 C.T.C. 2420

Tardif T.C.J.:

1 This is an appeal concerning the 1994 taxation year. At the start of the hearing the respondent filed a motion supported by an affidavit, which had been duly served on the appellant.

2 The motion alleged that the Tax Court of Canada does not have jurisdiction to hear the appellant's appeal, since the notice of assessment challenged by the appellant is a notice of assessment that no federal tax is payable.

Facts

3 During the years 1986 to 1990 inclusive the Régie des rentes du Québec paid the appellant a total amount of $26,266.22 by mistake. After discovering the mistake, the Crown corporation of course reclaimed the overpayments. The appellant had to repay the amounts received by mistake. Revenu Québec agreed to repay the tax paid on income paid by mistake.

4 By his appeal the appellant wishes to obtain the same result, namely repayment of tax paid to Revenue Canada on income received by mistake which he had to repay.

5 The amounts paid by mistake and added to his income were as follows:

6 When the mistake was discovered the Régie des rentes du Québec claimed all the overpayments from the appellant.

7 He repaid the said amount of $26,266.22:

8 As Revenu Québec repaid the appellant the amounts of taxes overpaid by mistake, he naturally wished to recover the federal tax he had to pay on the same amounts: hence the instant case.

9 In view of the nature of the motion made by the respondent the Court must first rule on the merits of the said motion.

10 On this question of jurisdiction raised by the respondent, the judgment of my colleague Pierre Dussault in Consoltex Inc. v. R. (1991), 92 D.T.C. 1567 (T.C.C.), is an inescapable reference, especially as that judgment reviews the case law available on this point of law.

11 I think it is relevant to reproduce the following passages from the decision of Judge Dussault:

...On that point, I need only refer to Mr. Justice Hugessen's comments in The Consumers' Gas Company Ltd., case [87 DTC 5008] where he said at p. 5012:

What is put in issue on appeal to the courts under the Income Tax Act is the Minister's assessment. While the word “assessment” can bear two constructions, as being either the process by which tax is assessed or the product of that assessment, it seems to me clear, from a reading of sections 152 to 177 of the Income Tax Act, that the word is there employed in the second sense only. This conclusion flows in particular from subsection 165(1) and from the well established principle that a taxpayer can neither object to nor appeal from a nil assessment.

Consequently, I am of the opinion that there is compelling authority that there is no relief to which the Appellant is entitled or which this Court can properly grant.

Since no tax, interest nor penalty was assessed and since the Court cannot increase the amount assessed by the Minister of National Revenue, one can readily understand the logic of the principle that a taxpayer cannot appeal from a nil assessment.

As stated by the Supreme Court of Canada in the Okalta case (supra) at 1177, the “right of appeal is a right of exception which exists only when given by statute”. I am of the opinion that this proposition still holds true today. The Tax Court of Canada cannot expand that right and is bound by its own decisions and decisions of higher Courts that have restricted its application. I might add that even if this Court could grant a declaratory judgment, there would still be no tax payable for 1980 and 1981. The right course of action for the taxpayer would have been to have the matter decided on an appeal from an assessment for a future year where it might have proven pertinent to determine its tax liability for that year.

12 This is a very special case which causes one to have great sympathy for the appellant, who must bear unaided the consequences of a mistake in which he had no part. Unfortunately, I have no jurisdiction to correct this injustice except that I would like to think that Parliament had such a situation in mind when it adopted An Act to provide for the financial administration of the Government of Canada, the establishment and maintenance of the accounts of Canada and the control of Crown corporations[ Financial Administration Act], R.S.C. 1985, c. F-11, which reads as follows in ss. 23(2) and (4):

23. (2) The Governor in Council may, on the recommendation of the appropriate Minister, remit any tax or penalty, including any interest paid or payable thereon, where the Governor in Council considers that the collection of the tax or the enforcement of the penalty is unreasonable or unjust or that it is otherwise in the public interest to remit the tax or penalty.

(4) A remission pursuant to this section may be granted

• (a) by forbearing to institute a suit or proceeding for the recovery of the tax, penalty or other debt in respect of which the remission is granted;

• (b) by delaying, staying or discontinuing any suit or proceeding already instituted;

• (c) by forbearing to enforce, staying or abandoning execution or process on any judgment;

• (d) by the entry of satisfaction on any judgment; or

• (e) by repaying any sum of money paid to or recovered by the Receiver General for the tax, penalty or other debt.

13 On the merits of the point at issue, this Court has no jurisdiction to hear an appeal from an assessment where the tax is nil. Consequently, I must vacate the appeal for lack of jurisdiction of this Court.