Section 299

Subsection 299(1)


Iris Technologies Inc. v. Canada (National Revenue), 2020 FCA 117

s. 299(1) consistent with auditing before paying net refund required to be made "with all due dispatch"

During an audit of the appellant (Iris), CRA refused Iris’ requests for immediate payment of its refund claims, suspecting that Iris was participating in a “carousel” scheme (i.e., under which GST/HST is never remitted at the other end of the chain). Iris considered that the requirement in ETA s. 229(1) that net refund claims be paid “with all due dispatch” meant that it should be paid right away rather than awaiting the conclusion of the audit, and appealed the dismissal of its motion in the Federal Court, for an interim mandatory injunction to compel the payment of $62.3 million in GST/HST refunds, to the Court of Appeal.

Rennie JA endorsed the findings in Express Gold that “the obligation to pay a refund with all due dispatch did not displace the Minister’s obligation to verify that the refund is in fact payable under the ETA” (para.41) and that “’a reasonable interpretation of subsection 299(1) is that the Minister may choose to audit a claim for a net tax refund, in order to determine whether the amount is properly claimed’” (para. 42).

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 229 - Subsection 229(1) "with all due dispatch" entailed awaiting completion of 10-month audit 480
Tax Topics - Other Legislation/Constitution - Federal - Federal Courts Act - Section 18.1 - Subsection 18.1(2) CRA’s assessing does not oust Federal Court jurisdiction to review exercises of CRA discretion 301

Subsection 299(2)


Dimension J.M.M. Inc. v. Canada, 2005 FCA 168

assessment of partnership before assessment of partner not required

A partnership of which the appellant was a member was liable for unremitted GST given its improper reliance on the trade-in rule in s. 153(4). In finding that a direct assessment of the appellant as a partner of the partnership under the joint and several liability rule in s. 272.1(5) was valid, and (at para. 11) that it was "unnecessary to assess the partnership in order to assess a member of the partnership," Létourneau JA stated (at paras. 12-13)

…The tax debt arises not from the assessment but from the Act: see, by analogy under the Income Tax Act, Canada v. Riendeau, [1991] F.C.J. No. 559; The Queen v. Simard-Beaudry Inc. et al., 71 DTC 5511 (F.C.T.D.).

Furthermore, subsection 299(2) states that "liability under this Part to pay or remit any tax, penalty, interest or other amount is not affected by . . . the fact that no assessment has been made":

before going on to find that an assessment under s. 272.1(5) was directly authorized by s. 296(1)(e).

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 153 - Subsection 153(4) not available where only a credit note issued 136
Tax Topics - Excise Tax Act - Section 272 - Subsection 272.1(5) direct assessment of partner was valid 216

Coopers & Lybrand Ltd. v. Bank of Montreal, [1993] GSTC 36 (Nfld. S.C.T.D.)

assessment not a proceeding

In its 3 June 1992 order appointing Coopers & Lybrand as the receiver-manager of an insolvent company (“Lundrigans”), the Newfoundland Supreme Court order “that no action, application or other proceedings…shall be taken against the Debtor…without the prior consent of the Receiver and Manager.” In finding that an assessment of Lundrigans a month later by the CRA for $1.3 million of GST did not violate this order, Osborn J stated (at p. 36-16):

The assessment, which is not to be confused with the demands, is issued by the… Minister…pursuant to subsec. 296(1)… . It represents a formal notification to the tax debtor of the amount asserted to be owing and breaks that amount down into taxes, interest, penalties and other specified categories. The assessment, of itself, does nothing other than provide information to the debtor. If nothing follows the assessment, it is of no legal consequence. …

In my view, the issuance of an assessment for GST is not an "action, application or other proceeding" within the contemplation of paragraph 8 of the Order.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 317 - Subsection 317(3) 109

Administrative Policy

9 June 2003 Interpretation 43523

assessment does not establish debt

In finding that the CRA can assess a person under protection of a CCAA Plan of Arrangement, it stated:

Section 11 of the CCAA, does not prevent an assessment from being raised as the raising of assessments is an administrative function and is not the commencement of a proceeding or legal action. In absence of any enforcement steps under Subdivision e of Division VIII of Part IX of the ETA, an assessment is merely a statement of an amount owing. This is reinforced in Coopers & Lybrand Ltd. v Bank of Montreal [1993] G.S.T.C. 36…at paragraph 38:

…The assessment itself, does nothing other than provide information to the debtor.

Subsection 299(3)


Métaux Kitco Inc. v. ARQ and AG, 2016 QCCS 444

no presumption of validity in CCAA proceedings

After finding that CRA and ARQ could not use their statutory set-off rights to set off input tax credit and input tax refund claims generated by an insolvent company after it went into protection under the CCAA against (disputed) assessments made by them in which they denied ITCs and ITRs of $313 million that the company had claimed before the CCAA proceedings, Paquette J went on to state (at para. 122) that “the presumptions of validity and exigibility arising under tax statutes in favour of the Agencies are not applicable in the context of insolvency proceedings under the CCAA,” as such presumptions go against the principle of equality among creditors and the Crown's status as an unsecured creditor under the CCAA.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Companies' Creditors Arrangement Act - Section 21 CRA precluded from setting off assessed amount for pre-CCAA filing periods against post CCAA ITC claims of taxpayer 306
Tax Topics - Excise Tax Act - Section 318 no set-off of assessment of pre-CCAA filing periods against post CCAA ITC claims 115
Tax Topics - Income Tax Act - Section 152 - Subsection 152(8) no presumed validity in CCAA proceedings 89

Subsection 299(3.1)

See Also

Janelle v. The Queen, [2003] GSTC 146 (Informal Procedure)

partnership need not be assessed before partner is assessed

Tardiff TCJ found that the Minister could assess partners directly for their joint and several liability under s. 272.1(5) rather than first assessing the partnership, stating (at paras. 15, 18-19):

I do not believe that paragraph 299(3.1)(b) requires that the partnership be assessed before liability is imposed on one of its partners.

The obligation to pay exists before an assessment is even made. Subsection 299(3.1) is essentially complementary to paragraph 296(1)(e).

Under paragraph 296(1)(e) and subsection 272.1(5), a partnership need not be assessed before a partner is assessed. The partner may be assessed to the extent of that which is provided for under subparagraph 272.1(5)(a)(i).