Section 165

Subsection 165(1) - Objections to assessment

Cases

ConocoPhillips Canada Resources Corp. v. Canada (National Revenue), 2016 DTC 5016 [at 6588], 2016 FC 98, 2017 FCA 243 rev'd

Minister can consider reassessment without Notice of Objection

Boswell J has found that s. 220(2.1) accords the Minister the discretion to waive the requirement to file a Notice of Objection, so that it was improper for CRA to peremptorily reject (on the grounds that it had no power to do so) a ConocoPhillips request that CRA waive a requirement for it to object to a reassessment which ConocoPhillips found out about well after the deadline for getting an extension to object to it. Respecting an argument of the Minister (at paras. 57-58) that “subsection 165(3) explicitly requires a notice of objection before there can be a reassessment” and that “the discretion to waive a notice of objection under subsection 220(2.1) would be nonsensical due to lack of a remedy,” he stated (at paras. 58-59):

Subsection 165(3) does not state that without a notice of objection, the Minister shall not or cannot reconsider an assessment, and there are situations under the ITA where the Minister is explicitly given the power to reassess without a notice of objection. …

Moreover, subsection 220(2.1) specifically enables the Minister to request a document that has been waived. If the Minister does waive the requirement for a notice of objection, a notice of objection could subsequently be requested by the Minister and a reassessment could occur.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 220 - Subsection 220(2.1) discretion under s. 220(2.1) to waive filing a Notice of Objection 454
Tax Topics - Statutory Interpretation - French and English Version ambiguity in French version resolved through English version 212

Jones v. Canada (Minister of National Revenue), 2004 DTC 6185, 2004 FC 382

In finding that s. 165(1) required receipt by the Minister of the taxpayer's Notice of Objection on a timely basis, Snider J. stated (at p. 6187) that:

"I accept that the word 'serve' includes the receipt of a document, or at the very least, awareness of the existence of a document."

Snider J. also indicated that s. 165(1) required that a Notice of Objection be served by registered mail. Here, the taxpayer alleged that he had mailed his Notice of Objection within the 90-day period, but such mailing was never received by the Minister. Accordingly, no valid Notice of Objection had been made.

Words and Phrases
serve

Boucher v. Canada, 2004 DTC 6085, 2004 FCA 47

The Tax Court lacked jurisdiction to consider the allegation of the taxpayer that an amount received by her from her employer was net of employee source deductions, so that she had already paid the tax in question. Such an allegation could be asserted by her in the Federal Court when the Minister attempted to recover the sums he considered to be payable.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 222 62

870 Holdings Ltd. v. Canada, 2004 DTC 6001, 2003 FCA 460

A letter requesting more time to provide requested information did not qualify as a notice of objection.

Canada v. Carlson, 2002 DTC 6893, 2002 FCA 145

deadline is strict

The Deputy Judge had incorrectly taken the position that the 90-day period in s. 165(1) and the one-year extension period in ss.166.1(7)(a) and 166.2(5)(a) only began to run at the time that the taxpayer understood the meaning and significance of a notice of assessment that had been received by him many years previously. Nadon J.A. stated (at p. 6895):

"As this Court has held on numerous occasions, when a taxpayer is unable to meet the deadline prescribed by the Act, even by reason of a failure with the postal system, neither the Minister nor the TCC can come to his help ... . Hence, if a postal failure cannot save a taxpayer, he will not be saved by his failure to grasp the significance of a notice of assessment served on him."

Since the taxpayer had been neither diligent nor reasonable in the way he conducted himself following the service of the notice of assessment, it was not necessary to consider the doubtful proposition that the taxpayer could rely on the discoverability rule, i.e., the rule, which was developed entirely in the field of torts, that time will not start to run until a person has fully and clearly appreciated his or her legal rights.

Chevron Canada Resources Ltd. v. MNR, 99 DTC 5648 (FCTD)

The taxpayer filed waivers with respect to its 1985 and 1986 taxation years, was reassessed by the Minister beyond the waiver period in respect of the matters referred to in the waivers, and was further reassessed by the Minister, following an appeal by the taxpayer, pursuant to a judgment of the Tax Court issued pursuant to a consent to judgment. In responding to an argument that the Minister was still able to reassess the taxpayer for those taxation years in respect of the same matter in light of a subsequent development (the decision in The Queen v. Gulf Canada Resources Ltd., 92 DTC 6123 (FCA) and a resulting memorandum of understanding between an industry association and the Minister), Teitelbaum J. stated (at pp. 5654-5):

"While I am in agreement with the submission of the applicant that the waivers are unlimited and enabled the Minister to reassess as often as required, he is not obliged by the waivers to reassess. Therefore, although he has the authority to act on the waiver, he is under no duty, particularly after several reassessments have already been issued."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 165 - Subsection 165(1.1) 175

Liampat Holdings Ltd. v. The Queen, 96 DTC 6020 (FCTD)

At the conclusion of the taxpayer's submissions before Cullen J. it came to the attention of counsel for the Crown for the first time that the taxpayer's assessment for one of the two taxation years in question showed zero tax owing. Cullen J. found that the failure of the Crown to raise this jurisdictional issue in the pleading could not give the Court jurisdiction to consider that taxation year.

Cullen J. also indicated that he took the decision in Aallcan Wood Suppliers Inc. v. The Queen, 94 DTC 1475 (TCC) "to mean that this Court has jurisdiction to consider a nil assessment year where the computations from the nil assessment year have an actual impact on another taxation year; it does not give the Court jurisdiction to consider a nil assessment directly". (p. 6022)

Water's Edge Village Estates (Phase II) Ltd. v. The Queen, 94 DTC 6284 (FCTD)

Because the Act provides a complete code prescribing the procedures to be followed in appealing a reassessment or note of confirmation, and assessment cannot be challenged by way of application for judicial review under s. 18.1 of the Federal Court Act.

Mackenzie v. The Queen, 93 DTC 5291 (FCTD)

Because the assessments of the taxpayer's 1982 and 1983 taxation years were "nil assessments", his appeals for those years were dismissed.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 31 - Subsection 31(1) 86

495187 Ontario Ltd. v. The Queen, 92 DTC 6311 (FCTD), aff'd sub nomine The Queen v. Sarraf, 93 DTC (FCA)

Because the only director and shareholder of a corporation that had been dissolved under the Business Corporations Act, 1982 (Ontario) would have an obligation to pay the tax assessed against that corporation, the correct plaintiff in an action challenging such reassessment was that individual. Reed J. issued an order amending the style of cause accordingly.

City Centre Properties Inc. v. The Queen, 91 DTC 5083 (FCA)

In reversing a finding that the taxpayer was precluded from seeking a declaratory order that it did not owe taxes which have been reassessed by the Minister, that it should not have been so assessed, or that in any event the taxes had been paid or the government was estopped from collecting those taxes from the taxpayer, Mahoney J.A. stated:

"We are all of the view that the learned trial judge erred in characterizing this action for declaratory relief as an appeal against the assessment in issue. Rather, many of the declarations sought are to the effect that, in law, the debt confirmed by the assessment has been extinguished."

Re Norris, 89 DTC 5493 (Ont CA)

In response to the disallowance by the trustee in bankruptcy of an assessment, Zuber J.A. stated:

"When the trustee in bankruptcy wishes to question the validity of an assessment against a bankrupt he, like anyone else, must seek his remedy within the Income Tax Act. ... To hold that the trustee in bankruptcy can disallow an assessment made pursuant to the Income Tax Act would be tantamount to clothing the trustee with the powers of the Tax Court. No interpretation of the Bankruptcy Act, R.S.C. 1985, c. B-3, can support such a conclusion."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(8) 25

Starlite Bottlers Ltd. v. The Queen, 88 DTC 6272, [1988] 2 CTC 60 (FCTD)

Since a reassessment purported to fix the taxpayer's total liability for a taxation year, the previous assessment became void. Since no notice of objection was filed on a timely basis to the latest reassessment the court had no jurisdiction to consider the appeal.

Irving Oil Ltd. v. The Queen, 88 DTC 6138, [1988] 1 CTC 263 (FCTD), aff'd 91 DTC 5106 (FCA)

There is no right of appeal from a nil assessment. "[T]here is nothing to appeal from the Minister's recorded thought of no tax owing."

The Queen v. B. & J. Music Ltd., 80 DTC 6219, [1980] CTC 287 (FCTD)

see also The Queen v. B. & J. Music Ltd., 83 DTC 5074, [1983] CTC 50 (FCA))

A taxpayer was not entitled to appeal from a determination of its cumulative deduction account where the amount of tax for the year was not affected.

Smerchanski v. Minister of National Revenue, 76 DTC 6247, [1976] CTC 488, [1977] 2 S.C.R. 23

A taxpayer may validly waive his rights of appeal against reassessment by executing a compromise agreement with Revenue Canada. The enforceability of such an agreement is not vitiated by the threat of prosecution at the time of its execution, provided that the authorities have a substantial case against the taxpayer, and have no collateral purpose, such as a private grudge.

See Also

Ihama-Anthony v. The Queen, 2018 TCC 262

objection can be made after the proposal letter and before the notice of reassessment – but must state “I object”

On May 11, 2015, the taxpayer was sent a letter by Mr. Payne of CRA informing him that he would be reassessed to disallow approximately $49,000 in business expenses. The taxpayer immediately contacted Mr. Payne to explain that he had already sent the requested documents twice to CRA, and would now promptly refax them to Mr. Payne, which he did. On May 19, 2015 the CRA issued the notices of reassessment. After a phone call from a CRA Collections Officer in early 2018, the taxpayer prepared and sent notices of objection the two year in issue, which were rejected as having been received more than one year and 90 days after the date of the notices of reassessment.

In finding that the taxpayer’s fax to Mr. Payne did not qualify as a notice of objection, and that the taxpayer was out of time for an extension under s. 166.2(5)(a), Sommerfeldt J stated (at paras 17, 18):

…[T]o be a notice of objection, a document “must include an actual objection to an assessment,” or at least some indication that the particular taxpayer is objecting to an assessment.

… [The taxpayer's] letter of April 27, 2015 … does not contain any statement taking issue with the CRA’s categorization of those expenses. … Unfortunately, I have been unable to find anything in the letter to indicate that [the taxpayer] ... was objecting to a reassessment.

Sommerfeldt J further stated (at paras 23-24) that in light of McClelland, 2004 FCA 315 (“a Notice of Objection must be sent to the Chief of Appeals”), “the fax sent by [the taxpayer] ... to Mr. Payne in May 2015 was not validly served.”

However, he went on to note (at para 34):

Like Justice Woods in Persaud, I am of the view that a notice of objection prepared in response to a proposal letter, which informs a taxpayer that a reassessment is about to be issued, may, if validly served on a Chief of Appeals, constitute a valid notice of objection in respect of the reassessment when it is subsequently issued.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 166.2 - Subsection 166.2(5) - Paragraph 166.2(5)(a) taxpayer’s pre-reassessment fax to CRA could have qualified as an objection with words of objection and proper addressee, but he was now too late 168

Estate of Winifred Straessle v. The Queen, 2018 TCC 144

heir could appeal reassessment of wound-up estate

A notice of reassessment of the Quebec estate of Winifred Straessle for its 1992 to 1996 taxation years was sent to the (age 82) daughter (Mrs. Hansen) of Winifred Straessle as the “liquidator of the Estate”. In her objection and subsequent appeal, Mrs. Hansen stated that the estate had been wound-up and that she had never been, an executor, liquidator, trustee or administrator of the Estate. In response, the Crown sought to quash her appeal under Rules 53(3)(b) and (c) on the basis that that the person who filed the Notice of Appeal (Mrs. Hansen) lacked the legal capacity to commence proceeding of the estate.

In finding that Mrs. Hansen could object to and appeal the reassessment in her capacity of heir, notwithstanding that she had not been an executor or other legal representative, Lafleur J stated (at paras 38-40, 43-44):

[T]he word “heir” found in the definition of “person”, the meaning of which is determined in accordance with the applicable private law, does not necessarily have the same meaning as the word “heir” found in the definition of “legal representative of a taxpayer” as defined under subsection 248(1): in order for an “heir” to be a “legal representative of a taxpayer” under that latter definition, the heir must administer, wind-up, control or deal in a representative or fiduciary capacity with the property of the Estate.

Furthermore, if we were to refer to the definition of “legal representative of a taxpayer” found in subsection 248(1) to interpret the word “heir” in the definition of “person”, there would be no need to make reference to “heir” in that latter definition since the definition of “legal representative of a taxpayer” already makes reference to an “heir”. …

[T]he definition of “legal representative of a taxpayer” found in subsection 248(1) does not apply to determine who is a “person” under the Act. …

…Mrs. Hansen qualifies as an heir of the Estate and she is, therefore, a “person” and a “taxpayer” as defined under subsection 248(1). Accordingly, Mrs. Hansen can object to the Reassessments under section 165 and initiate an appeal to this Court under section 169.

I would add that Parliament cannot have intended that an assessment be immune to a judicial challenge.

Words and Phrases
heir
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Person person includes an heir of the person irrespective of also being a legal representative 218

Shreedhar v. The Queen, 2016 TCC 254 (Informal Procedure)

assessment of nil tax and $2 of interest could be objected to

The taxpayer was reassessed to include in his income‎ a Registered Education Savings Plan benefit but with the CRA deducting a corresponding amount of unclaimed education‑related deductions. This resulted in a nil assessment for income tax, but $2.10 of interest was included on the assessment notice. On the taxpayer’s appeal, the Minister raised a preliminary objection that the taxpayer was contesting a nil assessment.

Boyle J dismissed the Minister’s objection, finding (at para 5):

On its face, the reassessment of the Appellant was not a nil assessment. An amount of interest was assessed by the CRA in its reassessment of him. Assessed interest, as opposed to post-assessment accrued interest, forms part of the assessment. As it is not a nil assessment, an appeal can proceed.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 169 - Subsection 169(1) assessment with interest is not a nil assessment 33

Persaud v. The Queen, 2014 DTC 1031 [at 2682], 2013 TCC 405

objection can precede assessment

CRA sent the taxpayer a letter on 15 September 2010 indicating that they had completed an audit and that no amount would be allowed for his claim of a charitable gift. He mailed a notice of objection on 30 September 2010, but was not actually sent a notice of reassessment until 24 January 2011.

Woods J found that the 30 September 2010 letter constituted an objection to the 24 January 2011 assessment, as s. 165(1) does not require that the notice of assessment precede the notice of objection. However, she did not have jurisdiction to grant declaratory relief, and therefore could not declare that a notice of objection had been filed.

Newfoundland Transshipment Limited v. The Queen, 2013 DTC 1111, 2013 TCC 259

no obligation to reassess amended return

After the normal reassessment period for assessing its 2002 to 2005 taxation years had passed, the taxpayer requested the Minister to reassess those years to allow capital cost allowance for its pipelines on the basis they were Class 6 rather than Class 1 assets. In denying the taxpayer's application for an extension of the time to file notices of objection for those years, D'Auray J stated (at para. 21):

[T]he Minister does not have to accept or act upon an amended return and reassess a taxpayer.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 166.1 no obligation to reassess amended return 82

Anonby v. The Queen, 2013 DTC 1154 [at 859], 2013 TCC 184 (Informal Procedure)

no declaration as to source deductions, or vacating of reassessment that would increase substantive liability

The taxpayer reported $42,000 of employment income on his return, and received a refund of approximately $4,000 based on $13,000 of source deductions (including $11,000 of income tax) having been withheld. CRA later concluded that no deductions had been made - therefore, the taxpayer was reassessed on the basis that his income was the $29,000 he actually received, so that the amount of tax shown on the reassessment was less than that in the original assessment. However, as his account was no longer credited for source deductions, his refund was denied an a balance of taxes owing was shown.

The taxpayer sought an order vacating the reassessment and leaving the original assessment (on $42,000) in place on the basis that the employer had deducted but failed to remit $11,000 of deductions.

C Miller J found that the Tax Court lacked the authority to make such an order. Firstly, whether deductions have in fact been collected is a matter for the Federal Court, not the Tax Court. However, C Miler J found that there was nothing to preclude him from making a finding of fact confirming that the taxpayer received net pay (para. 26).

Secondly, C Miller J found that "it is well-settled that the Court cannot increase the assessment under appeal" (para. 30). This follows from the principles that the Minister may not appeal an assessment, and that allowing an increase to such an assessment would constitute an "indirect" appeal (paras. 28-29).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 171 - Subsection 171(1) no declaration as to source deductions, or vacating of reassessment that would increase substantive liability 233

Lai Colbert v. The Queen, 2005 DTC 1449, 2005 TCC 636 (Informal Procedure)

Although the taxpayer did not receive the notice of assessment in question, the 90 day period nonetheless began to run from the day of mailing of the notice of assessment.

Windsor Management Ltd. v. The Queen, 2001 DTC 749 (TCC)

A letter completed on letterhead of the taxpayer requesting that the Deputy Minister of Finance intervene to have the matter settled without a "formal legal appeal" was not a valid notice of objection.

510492 BC Ltd. v. The Queen, 2001 DTC 124 (TCC)

A British Columbia company that had been dissolved and which had not been restored had its appeal dismissed on the ground that it did not exist. The Queen v. Sarraf, 94 DTC 6229 (FCA) was distinguished on the ground that the dissolved corporation in that case benefited from s. 241(1) of the Business Corporations Act (Ontario) and on the ground that Rule 58(3)(c) of the Tax Court of Canada rules had not been referred to.

Sinnott v. The Queen, 2000 DTC 2459 (TCC)

Bowman T.C.J. noted that the invalidity of a purported assessment could quite properly be raised in a notice of objection (contrary to an allegation of the Agency). Furthermore, because it was found in Marzetti v. Marzetti, [1994] 2 S.C.R. 765 that a refund of tax in most circumstances belongs to the bankrupt, a right to object to or appeal from an assessment with a view to obtaining such a refund was not properly divisible among the bankrupt's creditors and a bankrupt could pursue such an objection or appeal in his or her own name.

Paris v. The Queen, 98 DTC 6072 (FCTD)

The plaintiffs, who were members of a public interest group coalition, had no standing to challenge an advance tax ruling issued by Revenue Canada. Third-party challenges to assessments are not permitted, and this principle should be extended to an advance tax ruling.

Consoltex Inc. v. The Queen, 97 DTC 724 (TCC)

The taxpayer was not bound by an alleged agreement it made with a Minister as to the portion of expenditures made by it that would qualify as SR&ED. The jurisprudence established that the Minister was free to repudiate such agreements, and it would be indefensible if the taxpayer were unilaterally bound by such agreements. Furthermore, the lack of capacity of the Minister to make such settlements implied that they were non-binding agreements.

Dudar v. The Queen, 96 DTC 1828 (TCC)

On the evidence, McArthur TCJ. accepted that the taxpayer did not receive a reassessment. Consequently, the burden of proof shifted to the Crown to satisfy the Court that the reassessment had been mailed to the taxpayer, which it failed to do.

The Queen v. B.M. Enterprises Ltd., 92 DTC 6463 (FCTD)

An assessment which a junior collections official had typed up and sent to the taxpayer was found to have been made by the Minister given that the Deputy Minister was an official authorized under Regulation 900, and the assessment was done in accordance with procedures controlled by the Deputy Minister and by officials acting according to his directions. In any event, there was implied authority accorded to the Deputy Minister to subdelegate to the collections official.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 227 - Subsection 227(10) 75

460354 Ontario Inc. v. MNR, 88 DTC 1679 (TCC)

The Minister assessed the taxpayer well after it had been dissolved by articles of dissolution. Bonner J. dismissed an application by the taxpayer for an order allowing its appeal on the ground that the reassessments were nullities. "No corporation that has been dissolved exists for the purpose of the conduct of litigation unless the proceeding falls within the ambit of provisions similar to paragraph 24(1)(a) or (b) of the Business Corporations Act" (which did not apply because the appeal was brought by, rather than against, the taxpayer.

Le Sous-Ministre du Revenu de la Province de Quebec v. Brossard, [1984] C.A. 528

(Comment: Canada Tax Letter, No. 354.)

The respondent acquired shares after the death of his fellow shareholder pursuant to a shareholders' agreement which gave him the right to purchase shares from the estate at a price of $600 per share, subject to adjustment if the taxing authorities should determine that the shares had a higher value. When he acquired the shares, it was further agreed that he would have the right to "intervene" with the appropriate authorities. It was held that when the respondent later intervened, he was an agent of the estate and could therefore represent it in the filing of a notice of objection and an appeal.

Administrative Policy

8 March 2018 CBA Commodity Tax Roundtable, Q.6

single objection form can cover multiple GST assessments

Where CRA issues multiple GST/HST assessments they can be objected to on a single Notice of Objection. The required particulars can be provided in attachments thereto.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 301 - Subsection 301(1.1) a single Notice of Objection can cover multiple disputed assessments 172

May 2017 Alberta CPA Roundtable. Q.1 (plenary)

a taxpayer can appeal to a CRA employee’s supervisor and that Appeals should refer new information first requested by Audit back to Audit

Rights of escalation

The CRA has a formal escalation process that is detailed in guide RC17, Taxpayer Bill of Rights Guide: Understanding Your Rights as a Taxpayer, and in guide RC4540, Complaints and Disputes. These guides both contain the following statement:

“If you still disagree with the way your concerns were addressed, you can ask to discuss the matter with the employee’s supervisor.”

The right of a taxpayer or their representative to escalate to a supervisor is also mentioned on the CRA website at https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints-disputes/make-a-service-complaint.html.

Referrals back to auditors

A protocol was initiated at the end of 2015 between the Audit and Appeals branches. A relevant part of the protocol was to bring a case back to audit if the taxpayer had submitted information to Appeals that had been requested by Audit and not provided by the taxpayer.

9 October 2015 APFF Roundtable Q. 22, 2015-0598301C6 F - Extension of time to file

extension of individuals' return deadline also extends objection deadline

When CRA announces an administrative extension of the filing date for returns, e.g., the extension for individual filings to May 5, 2015, would this also extend the one year period for an individual to file a notice of objection? CRA responded (TaxInterpretations translation):

Subsection 220(3) accords the Minister the discretion to extend the period provided for making a declaration under the Income Tax Act. When the Minister exercises such discretion respecting the period for filing an income tax return of a taxpayer, the “filing due date” for such return is altered. In such situations, the day provided in subparagraph 165(1)(a)(i) will fall one year after the filing deadline as so established.

S4-F7-C1 - Amalgamations of Canadian Corporations

Amalco can continue objection and receive refunds

1.64 If an assessment (or reassessment) of a predecessor corporation is made after amalgamation, it will usually be issued to the new corporation which will have the same rights as the predecessor corporation to file a notice of objection and to appeal the assessment (or reassessment). However, where the governing corporate law considers the new corporation formed on an amalgamation to be a continuation of the predecessor corporations, an assessment or reassessment issued in the name of the predecessor corporation is valid and enforceable against the new corporation (see R. v. Guaranty Properties Ltd. et al , 90 DTC 6363 (FCA)) as well as the predecessor corporation.

1.65 Refunds of tax paid by a predecessor corporation made after the amalgamation will usually be issued to the new corporation. Tax debts of a predecessor corporation can be collected by the CRA from the amalgamated corporation as well as the predecessor corporation

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 100 - Subsection 100(2.1) s. 100(2.1) applies to non-qualifying amalgamation 58
Tax Topics - Income Tax Act - Section 111 - Subsection 111(12) application following amalgamation 103
Tax Topics - Income Tax Act - Section 116 - Subsection 116(1) deemed tcp following amalgamation 155
Tax Topics - Income Tax Act - Section 13 - Subsection 13(5.1) continuity of s. 13(5.1) on amalgamation 126
Tax Topics - Income Tax Act - Section 169 Amalco can continue objection 97
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(n) reserve after amalgamation 50
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Shareholder shareholder need not hold shares 82
Tax Topics - Income Tax Act - Section 251 - Subsection 251(3.1) deemed non-arm's length relationship on amalgamation 164
Tax Topics - Income Tax Act - Section 256 - Subsection 256(7) - Paragraph 256(7)(b) realted party, majority and 50% group exceptions 448
Tax Topics - Income Tax Act - Section 40 - Subsection 40(1) - Paragraph 40(1)(a) - Subparagraph 40(1)(a)(iii) reserve after amalgamation 50
Tax Topics - Income Tax Act - Section 66.7 - Subsection 66.7(7) successoring where non-wholly owned amalgamation 85
Tax Topics - Income Tax Act - Section 69 - Subsection 69(13) no disposition of predecessor property on general principles 103
Tax Topics - Income Tax Act - Section 7 - Subsection 7(1.4) s. 87(5) not applicable 104
Tax Topics - Income Tax Act - Section 80.01 - Subsection 80.01(3) non-87 amalgamation/no FX gain 159
Tax Topics - Income Tax Act - Section 84 - Subsection 84(3) no deemed dividend to dissenter on amalgamation 81
Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) election filing by Amalco 103
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1.1) s. 87(1.1) qualifies for all s. 87 purposes 60
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1.2) successoring where non-wholly owned amalgamation 85
Tax Topics - Income Tax Act - Section 87 - Subsection 87(10) deemed listing of temporary Amalco shares 114
Tax Topics - Income Tax Act - Section 87 - Subsection 87(11) gain if high PUC is sub shares 47
Tax Topics - Income Tax Act - Section 87 - Subsection 87(1) presumptive satisfaction of s. 87(1)(a)/dissent and squeeze-outs onside 260
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(a) new corp/deemed year end coinciding or not with acquisition of control 0
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(b) Amalco must follow predecessor's valuation method subject to truer picture doctrine 58
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(c) reserve after amalgamation 103
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(d) cost amount carryover 135
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(e.1) s. 100(2.1) applies to non-qualifying amalgamation 58
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(o) no continuity rule for non-security options 133
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2) - Paragraph 87(2)(q) pre-amalgamation services 96
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2.11) loss-carry back to parent 159
Tax Topics - Income Tax Act - Section 87 - Subsection 87(2.1) dovetailing with s. 88(1.1) 38
Tax Topics - Income Tax Act - Section 87 - Subsection 87(3.1) 328
Tax Topics - Income Tax Act - Section 87 - Subsection 87(3) PUC shifts 181
Tax Topics - Income Tax Act - Section 87 - Subsection 87(4) fractional share cash/ACB or value shift/implied non-recognition for predecessor shares 247
Tax Topics - Income Tax Act - Section 87 - Subsection 87(7) dovetailing with s. 78 and 112(12) 171
Tax Topics - Income Tax Act - Section 87 - Subsection 87(9) allocation of s. 87(9)(c)(ii) excess as parent chooses 218
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d) late designation 106
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1.1) dovetailing with s. 87(2.1) 56
Tax Topics - Income Tax Act - Section 98 - Subsection 98(5) partnership dissolution on amalgamation 123
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2.2) deemed non-arm's length relationship on amalgamation 415
Tax Topics - Income Tax Regulations - Regulation 1100 - Subsection 1100(2) deemed non-arm's length relationship on amalgamation 323
Tax Topics - Income Tax Regulations - Regulation 1102 - Subsection 1102(14) class continuity on non-arm's length amalgamation 311
Tax Topics - Income Tax Regulations - Regulation 8503 - Subsection 8503(3) - Paragraph 8503(3)(b) pre-amalgamation services 96

27 August 2012 Internal T.I. 2012-0435571I7 F - Opposition à une cotisation

Act does not limit the reasons for an objection (taxpayer can change mind up to objection time)

After the corporate taxpayer accepted an initial reassessment (the “2nd Assessment”), was it precluded from objecting to a subsequent reassessment (the “3rd Assessment”) respecting the treatment therein of items in its income computation that were the same as what it had accepted when reassessed under the 2nd Assessment? In finding that the taxpayer was free to do so, the Directorate referred to the proposition in Imperial Oil that a taxpayer can object to an assessment that accepts all claims made in the taxpayer’s income tax return, and then stated:

[I]n objecting to the 3rd Assessment, the Corporation objected to tax fixed by the Minister for the given taxation year. We are of the view that the Act does not limit the reasons for an objection. These can relate to different elements than the adjustments made to income in making the 3rd Assessment. …

Our comments would be the same … if the Corporation had been a large corporation.

6 March 2012 External T.I. 2011-0420751E5 - Ability to Object to a Denial of a Dividend Refund

S. 152(1.2) permits the filing of a notice of objection to the determination of a dividend refund under s. 129 even if the amount of such determination is nil.

December 1992 B.C. Tax Executives Institute Round Table, Q.12 (October 1993 Access Letter, p. 481)

Where RC has issued a reassessment under s. 152(4) following an objection by the taxpayer under s. 165(1) to a previous reassessment, the taxpayer may file a notice of objection to the second reassessment, and is not obligated to appeal under s. 165(7).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 165 - Subsection 165(3) 37

88 CPTJ - Q.25

A notice of objection filed in accordance with s. 165 is not restricted to items that were reassessed, and the taxpayer can object to any item relating to that return.

79 C.R. - Q.11

In most instances RCT will accept amended returns from a taxpayer in spite of the expiration of the period referred to in s. 165(1).

Articles

Joel A. Nitikman, "Nil Assessments: The View From New Zealand", Canadian Current Tax, February 1993, p. T1

Forms

Subsection 165(1.1) - Limitation of right to object to assessments or determinations

Cases

Sherway Centre Ltd. v. Canada, 2003 DTC 5082, 2003 FCA 26

The taxpayer successfully appealed from reassessments denying the deduction of interest by it on a participating bond for its 1987 and 1988 taxation years, but did not file objections or waivers with respect to reassessments denying the deduction of interest on the bond for its 1989-1991 taxation years.

After finding that s. 152(4.3) did not permit the Minister, in giving effect to the successful appeal of the taxpayer for the 1987 and 1988 taxation years, to allow the deduction of participating interest for the 1989 to 1991 taxation years, Evans J.A. rejected a submission that s. 165(1.1) permitted the taxpayer to object to the Minister's reassessments for the 1989 to 1991 taxation years (in which the deduction of additional non-capital losses was allowed) on the basis that such reassessments had not also allowed the deduction of participating interest for the 1989 to 1991 taxation years. Evans J.A. stated (at p. 5089) that

"The right to object under subsection 165(1.1) does not extend to an objection to a reassessment under subsection 152(4.3) when the reason for the objection could not have been the subject of a reassessment under subsection 152(4.3) ... [T]hat there is no sufficiently close relationship ... between the change in Sherway's balance in 1987-88 and the deductibility of participating interest in 1989-91."

Chevron Canada Resources Ltd. v. MNR, 99 DTC 5648 (FCTD)

The taxpayer filed waivers with respect to its 1985 and 1986 taxation years, was reassessed by the Minister beyond the waiver period in respect of the matters referred to in the waivers, and was further reassessed by the Minister, following an appeal by the taxpayer, pursuant to a judgment of the Tax Court issued pursuant to a consent to judgment. In finding that the taxpayer was not entitled to an order of mandamus requiring the Minister to further reassess the taxpayer in respect of essentially the same matters in light of a subsequent development (the decision in The Queen v. Gulf Canada Resources Ltd., 92 DTC 6123 (FCA) and a resulting memorandum of understanding between an industry association and the Minister) Teitelbaum J. stated (at p. 5655):

"I am satisfied that subsection 165(1.1) of the Act was enacted with the intention of limiting the right of reassessment of matters forming the subject of a judgment by the Court. In effect, it serves as a reinforcement on the rule of res judicata in the context of appeals against an amount of assessment."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 165 - Subsection 165(1) 179

Articles

J.W. Galway, D.E. Spiro, "Post-Consent Reassessments - Can One Object the Second Time Around?", Tax Litigation, Vol. VI, No. 4, 1998, p. 398.

Subsection 165(1.2) - Limitation on objections

Cases

Pearce v. The Queen, 2005 DTC 199, 2005 TCC 38

A waiver signed by the taxpayer was binding on him notwithstanding a criminal caution given to him by a Revenue Canada employee before the taxpayer signed the waiver.

See Also

Kubbernus v. The Queen, 2009 DTC 1153, 2009 TCC 311

S.165(1.2) precluded the taxpayer from objecting to an assessment made beyond the normal reassessment period pursuant to s. 152(4.2). Angers, J. stated (at para. 16) that: "the reasoning behind [this prohibition] is that a reassessment under subsection 152(4.2) is made at the Minister's discretion."

Subsection 165(1.11) - Objections by large corporations

Cases

Devon Canada Corporation v. Canada, 2015 FCA 214

large corporations can appeal new issues which were rejected by CRA Appeals, and perhaps may raise new issues within 1 year of Objection

Webb JA found that where an appeals officer considers and communicates rejection of subsequently-raised issues, this has the effect of amending the Notice, so that the new issues can also be raised in a Notice of Appeal. He also stated:

[S]ince the Minister accepted these submissions, it is a moot point whether the Minister could have refused to accept them on the basis that they were made well after the time permitted…for seeking an extension of time to file a notice of objection, had expired.

See summary under s. 169(2.1).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 169 - Subsection 169(2.1) large corporations can appeal new issues which were rejected by CRA Appeals, and perhaps may raise new issues within 1 year of Objection 322

Bakorp Management Ltd. v. Canada, 2014 DTC 5063 [at 6870], 2014 FCA 104

new timing argument raised on appeal

In 1992 the taxpayer, a large corporation under the Act, redeemed shares of a corporation not connected to the taxpayer for $338,213,849, resulting in a deemed dividend under s. 84(3), before s. 55(2) applied to convert a portion thereof into proceeds of disposition. Some of the redemption proceeds were not immediately payable. The taxpayer included $52,912,264 of the proceeds in its income in its 1995 return and paid Part IV tax thereon. The Minister reassessed the taxpayer to reduce the the 1995 deemed dividend which was subject to Part IV tax by $25,332,237.

The taxpayer's Notice of Objection indicated that this decrease to the 1995 deemed dividend should be reversed, without further discussion. The taxpayer's Notice of Appeal stated instead that no amount of deemed dividend should be included in "taxable [sic] income" in 1995. The Minister moved to have the taxpayer's appeal dismissed on the ground that it did not comply with s. 169(2.1).

After referring (at para. 34) to "the purpose of allowing the Minister to know the nature and quantum of tax litigation at the earliest possible date," Webb JA found that the issue raised in the Notice of Objection (where the taxpayer "was taking the position that it had filed its Part IV return correctly" for 1995 (para. 35)), did not match the position taken by the taxapyer on appeal (that the taxpayer received deemed dividends only in 1993 when the shares were redeemed), although the Notice of Appeal itself did not identify this issue (para. 39). Accordingly, the taxpayer had not complied with the requirement in s. 165(1.11) to raise this timing issue at the Objection stage.

The relief sought also did not match. Webb JA stated (at para. 47):

Asking for a full refund of all Part IV tax paid in relation to 1995, cannot be said to be the relief identified in the notice of objection, in which Bakorp was not asking for a full refund of all Part IV tax paid in 1995 but rather was asking to pay more Part IV tax than had been reassessed.

See also cases under s. 169(2.1).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 169 - Subsection 169(2.1) new timing argument raised on appeal 325

See Also

Loblaw Financial Holdings Inc. v. The Queen, 2018 TCC 182

requirement met where Crown knew the nature and quantum of the dispute

The Minster assessed taxpayer on the basis that its Barbados subsidiary (GBL) had realized $473 million of foreign accrual property income (FAPI) between 2001 and 2010. In its notice of objection, the taxpayer stated in its reasons that the business of GBL was not an investment business given that it was a foreign bank as described in s. 2 of the Bank Act (with the wording used adverting to the foreign bank reference in s. 2(a) of that definition rather than the reference in s. 2(c) to an entity named a “bank” and providing financial services) and that it satisfied the regulated foreign bank exception in the investment business definition in that it employed “more than five full-time employees” in that regulated business.

In rejecting a Crown submission that the taxpayer was precluded from submitting that it was a s. 2(c) bank or used the equivalent of more than five full time employees, C Miller J stated (at para. 184) that the purpose of the s. 165(1.11) rule is that “the Minister knows the nature of the dispute and the quantum of tax at issue” (para. 184), that the Crown was requiring him to “look into the minutia of what is meant by a reasonable description of an issue” (para. 187), that the Crown “knew full well that there would be considerable evidence as to what GBL did … which encompasses activities that might constitute the provision of financial services (part of the Bank Act, subsection (2(c)) definition” (para. 190) and that “whether there was the equivalent of five full-time employees is subsumed into the employee issue generally” (para. 190).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Foreign Bank CFA qualified as a foreign bank since it was licensed under Barbados law as an international bank 117
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Investment Business - Paragraph (a) Barbados-licensed international bank, which used Loblaw funding to invest responsively to Loblaw considerations, conducted an offside non-arm’s length business 425
Tax Topics - Income Tax Act - Section 95 - Subsection 95(1) - Investment Business - Paragraph (c) employee equivalents was reduced by employee time described in s. 95(2)(b) 284
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Foreign Exchange short-term debt securities were inventory because they were the raw material for generating swap income 124
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4.01) - Paragraph 152(4.01)(a) - Subparagraph 152(4.01)(a)(ii) GAAR is generally a separate matter rather than being subsumed in the allegedly-misused substantive provision 194
Tax Topics - Income Tax Act - Section 245 - Subsection 245(3) application of GAAR required the occurrence of an avoidance transaction (or series) in non-statute-barred years and the relevant previous year’s avoidance transaction did not occur as part of the series 496
Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) hiring of employees 15-years previously to engage foreign bank exception to investment business definition was not part of same series as renewal of foreign bank licence 216
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) use of Barbados sub to engage in proprietary trading for Canadian parent misused the foreign bank exemption, whose purpose was promoting international competitiveness 322
Tax Topics - Income Tax Act - Section 95 - Subsection 95(2) - Paragraph 95(2)(l) purpose of s. 95(2)(l) exception was to permit non-resident subsidiaries of Canadian banks and dealers to compete internationally 184

Subsection 165(2) - Service

See Also

Jones v. The Queen, 2001 DTC 411 (TCC)

The taxpayer was found not to have served a notice of objection given that he had sent it by ordinary mail rather than registered mail and had addressed it to the "Taxation Centre Surrey" rather than to the Minister of National Revenue for Taxation in Ottawa.

Wichartz v. The Queen, 94 DTC 1703 (TCC)

A letter that the taxpayer sent to Revenue Canada to the attention of a member of Public Affairs Department, rather than to the Chief of Appeals, nonetheless was found to be a notice of objection for purposes of s. 165, having in mind the thrust of the Fairness Package.

Subsection 165(3) - Duties of Minister

Cases

Opportunities for the Disabled Foundation v. Canada (National Revenue), 2016 FCA 94

timeliness issues addressed by appeal right

The Appellant filed a notice of objection to a CRA proposal to revoke its charitable registration under s. 168(4). When the Minister published the Revocation Proposal in the Canada Gazette, thereby revoking the registration of the Appellant as a charitable organization, the Appellant filed a notice of appeal in respect of the Revocation Proposal under approximately one month after the expiration of the 90-day period in s. 172(3)(a.1). Before noting that this prompt appeal precluded arguments that CRA had not considered the notice of objection with all due dispatch, Ryer JA stated (at para. 28):

The phrase “with all due dispatch” in subsection 165(3) has been interpreted to mean within a reasonable period of time (see Hillier v. Canada (Attorney General), 2001 FCA 197, 273 N.R. 245). Additionally, this Court found that where subsection 165(3) is in play, potential concerns with respect to the timeliness of the Minister’s consideration of a notice of objection can be addressed by the exercise of the appeal right that is available to the taxpayer on the 91st day after the filing of the notice of objection. (see Bolton v. R. [1996] 3 C.T.C. 3, 200 N.R. 303... .

Words and Phrases
due dispatch
Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 149.1 - Subsection 149.1(1) - Charitable Organization expending 70% of revenues on fund-raising and undue benefits inconsistent with wholly-devoted test 236
Tax Topics - Income Tax Act - Section 168 - Subsection 168(1) - Paragraph 168(1)(e) registration can be revoked for inadequate records 182

Ford v. Canada, 2015 DTC 5009 [at 5525], 2014 FCA 257

reassessments not vacated for lack of due dispatch or where this would increase tax liability

The taxpayers, after donating art pieces and claiming charitable donations based on higher values than their purchase prices, were reassessed in 2002 and 2003 on the basis that the gift amounts were their cost, and for gross negligence penalties. They filed notices of objection, which the Minister held in abeyance pending the outcome of similar cases.

In 2012, the Minister reassessed them to vacate the penalties and the taxable capital gains that the taxpayers reported on the art pieces. The taxpayers argued that the 2012 reassessments should be vacated because the Minister had failed to act with due dispatch.

Webb JA dismissed the taxpayer's appeal. The Minister's obligation under s. 165(3) to consider a notice of objection "with all due dispatch" is not a basis for vacating the underlying assessment (Bolton). After noting that vacating the 2012 assessments would have the effect of reinstating the 2002 and 2003 assessments, which were for much higher amounts, he further noted (para. 17):

If, however, the result of vacating a reassessment would be that a person's tax liability would be increased (because the previous assessment was for a greater amount), the Tax Court of Canada could not grant that remedy in any event (Anonby v. The Queen, 2013 TCC 184; 2013 DTC 1154).

Danada Enterprises Ltd. v. Canada (Attorney General), 2012 DTC 5083 [at 6986], 2012 FC 403

amended notice of confirmation

The taxpayer appealed an assessment which entailed gross negligence penalties under s. 163(2). CRA sent the taxpayer a notice of confirmation which neglected to address the taxpayer's complaint about the s. 163(2) penalties. After some further correspondence, CRA indicated that its confirmation applied to the s. 163(2) penalties, and sent the taxpayer a revised notice, back-dated to match the original noticee, which clarified this point.

Blanchard J. found that the amended, back-dated notice only served to clarify the original notice of confirmation (para. 21), and did not replace it. He stated (at para. 19):

In my view, once the Minister decides to confirm an assessment or reassessment and notifies the taxpayer in writing of his decision pursuant to subsection 165(3) of the ITA, his duties under the ITA in relation to reconsideration of assessments are completed. ... The [original notice of confirmation] is the only effective notice of the Minister's action in the circumstances. Any revised notice or amended notice that does not change the Minister's decision cannot be considered a substitute for the Notice of Confirmation.

Godsell v. The Queen, 2001 DTC 5384, 2001 FCA 196

14 months to consider objection was appropriate

The expiration of approximately 14 months between the filing of a notice of objection by the taxpayer and a reassessment by the Minister did not represent a failure to act with all due dispatch given that the issues involved were complex, and it was difficult to obtain information from the taxpayer.

James v. Canada, 2001 DTC 5075 (FCA)

vacating not a remedy for lack of due dispatch

In confirming the dismissal at trial of a motion to vacate reassessments that the Minister had made more than 10 years following the filing by the taxpayer of notices of objection, the Court found that vacating reassessments is not an appropriate remedy for undue delay in dealing with an objection and notes (at p. 5078) that "the taxpayer may appeal to the Tax Court under paragraph 169(1)(b), or commence proceedings in the Federal Court to compel the Minister to consider the objection and deal with it".

Locations of other summaries Wordcount
Tax Topics - General Concepts - Audit Procedure 99
Tax Topics - General Concepts - Evidence 50
Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) no s. 56(2) inclusion to taxpayer if recipient of the transferred property had earned it rather than the taxpayer 314

Bolton v. The Queen, 96 DTC 6413 (FCA)

Minister's failure to act with all due dispatch is not a basis for vacating an assessment

The taxpayer argued that his assessment should be vacated because the Minister failed to act with all due dispatch to reconsider his assessment. Hugessen JA dismissed the taxpayer's appeal. Ginsberg, decided a week before, establishes that this is not a basis to vacate an assessment. Moreover, the taxpayer's right to appeal under s. 169(b) (i.e. where the Minister has taken 90 days or more to respond to a notice of objection) would be nonsensical if the effect of the Minister's failure were already to vacate the assessment.

Locations of other summaries Wordcount
Tax Topics - Statutory Interpretation - Redundancy/reading in words right to appeal assessment because of Minister's delay would be redundant if assessment were automatically vacated 87

Ginsberg v. Canada, 96 DTC 6372, [1996] 3 CTC 63 (FCA)

Minister's failure to act with all due dispatch is not a basis for vacating an assessment

The taxpayer, an accountant, argued that his assessment should be vacated because the Minister failed to process his returns with all due dispatch. Desjardins JA accepted the trial judge's finding that the Minister had not done so, but disagreed that the assessment should be vacated. The scheme of the Act does not support such a result - for example, s. 152(3) (liability is not affected by "the fact that no assessment has been made"), s. 152(8) (assessments are deemed "valid and binding notwithstanding any ... defect or omission"), and s. 166 ("an assessment shall not be vacated ... by reason only of any ... omission").

A more appropriate remedy for an inconvenienced Taxpayer would be a Mandamus application.

The Queen v. McBurney, 85 DTC 5433, [1985] 2 CTC 214 (FCA)

By indicating that he wished to appeal immediately to the Federal Court, the respondent precluded himself from later complaining that the failure of the Minister to give the respondent an opportunity to be heard before the reassessments were finalized by Notice of Confirmation amounted to a denial of natural justice.

Tucker v. The Queen, 78 DTC 6492, [1978] CTC 700 (FCTD)

The indication that the taxpayer wishes to appeal directly to the Federal Court should be set out in the Notice of Objection rather than in the covering letter.

It was noted that where the s. 165(3)(b) route is chosen, then the content of the "Statement of Facts and Reasons" in the Notice of Objection "should, for all practical purposes, be the same in both form and substance as if that portion of the notice of objection were a statement of claim."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 175 - Subsection 175(3) 11

See Also

Air Canada v. ARQ, 2016 QCCA 710

ARQ obligated to copy a lawyer, who was its contact on a tax dispute, with its further reassessment

In response to an objection filed in 2006 by the taxpayer (“Air Canada”), with a lawyer having consistently been the contact person with ARQ, ARQ informed Air Canada (with a copy to the lawyer) on October 10, 2013 that it would be reassessing Air Canada at a somewhat lower level than previously. That reassessment was sent on October 30, 3013 to the (usual) Air Canada head office address in Montreal, but without any copy being sent to the lawyer. The Montreal office sent the notice of reassessment to the Air Canada Winnipeg office, which dealt with tax matters, but which did not deal with the notice. It was not until May 14, 2014 that the lawyer communicated with the ARQ, and was informed of the October 30 reassessment, after which Air Canada launched an appeal pursuant to s. 93.1.13 of the Tax Administration Act (Quebec), which provided for an extension of the 90-day appeal period from a decision under s. 93.1.6. S. 93.1.13 provided that “the application shall be granted if the person demonstrates that it was impossible in fact for that person to act and that the application was filed as soon as circumstances permitted.”

The Court stated (at paras. 16, 17, TI translation):

Given the nature of the dispute…(the contesting of a notice of objection)and the process under the terms of which the respondent arrived at its decision in response to the objection of the taxpayer pursuant to a notice of objection…, the process implies exchanges with the taxpayer or, as the case may be, its designated representative, given the importance of the decision for the taxpayer and the procedure chosen by the respondent, who itself recognized the right of the taxpayer to be represented, one can conclude that equitable procedures require the respondent to communicate its decision not only to the taxpayer, but also to its representative for dispute purposes, or , at the least, to warn the latter of the decision rendered. This , among other things, conforms the legitimate expectations of one who has elected to be represented by another, and furthermore to be represented by counsel. …

Thus, when section 93.1.6 of the T.A.A. provides that, in the case of an objection to an assessment, “the Minister shall (…) reconsider the assessment and (…) make a reassessment, and send the Minister's decision to the person by mail,” one should instead read “to the person and to its designated representative, if any”… .

Notwithstanding that ARQ thus had made a procedural error, the Court nonetheless declined to grant an extension of the 90-day appeal period under the more stringent Quebec equivalent of s. 166.2, which required that the taxpayer demonstrate that “it was impossible in fact” for the it to appeal promptly. Air Canada, in the absence of any evidence as to why nothing had happened after the reassessment was forwarded to Winnipeg, had not established due diligence.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 166.2 - Subsection 166.2(5) failure to establish due diligence 349

Godsell v. The Queen, 96 DTC 1292 (TCC)

The passage of approximately one year from the time the taxpayer filed his notice of objection to the issuance by the Minister of a notice of confirmation was consistent with the Minister reconsidering the reassessment with due dispatch given the difficulties encountered in obtaining the required information from the taxpayer (who wanted everything to be put in writing).

Schultz v. The Queen, 95 DTC 5657 (FCA)

After noting that if the Minister had failed to act with all due dispatch in confirming the taxpayers' reassessments they would have become void, Stone J.A. noted (at p. 5665) that "the appellants can scarcely be heard to complaint of undue delays on the part of the Minister when, had they wished to do so, they could have attacked his reassessments in the Tax Court of Canada notwithstanding that they had not yet received his confirmations".

Yorkton Restaurant Venture Capital Corp. v. Saskatchewan (1994), 118 DLR (4th) 735 (Sask QB)

S.23(7) of the Venture Capital Tax Credit Act (Saskatchewan) provided:

"On receipt of the Notice of Objection, the Minister shall with all due dispatch: (a) reconsider the proposal objected to and confirm, vary or abandon the proposal ..."

It was found that the Minister had not complied with this requirement when in excess of one year was taken to respond to the taxpayer's Notice of Objection to a notice purporting to revoke its registration as a venture capital corporation given that the Government presented no evidence to explain or justify this delay. Gunn J. further found that the requirement in s. 23(7) was mandatory, and that the notice of revocation was void due to the Minister's failure to deal with it with due dispatch.

Schultz v. The Queen, 93 DTC 953 (TCC)

Beaubier, J. followed the decision in Apfelbaum v. MNR, 91 DTC 800 in finding that the right to appeal pursuant to s. 169(1) was the taxpayer's remedy for any alleged delay by the Crown. In any event, the actions of Revenue Canada were conducted with due dispatch given the multitude of similar cases that were involved, and the complexity of those cases.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Agency - Agency 52

Greco v. MNR, 91 DTC 1090 (TCC)

The only remedy of the taxpayer for a failure of the Minister to consider his objection with all due dispatch was to appeal under paragraph 169(a). In any event, the 28-month delay of the Minister in this case was reasonable in light of the high degree of complexity and significant amounts associated with the transactions in question, as was apparent from a reading of the pleadings.

Administrative Policy

27 November 2018 CTF Roundtable Q. 6, 2018-0779901C6 - Appeal Process Update

service standard for resolving objections

April 1, 2018 introduced a service standard of resolve medium-complexity tax objections within 365 calendar days, 80% of the time; for low-complexity tax objections the standard (effective April 1, 2017) was 180 calendar days, 80% of the time.

December 1992 B.C. Tax Executives Institute Round Table, Q.12 (October 1993 Access Letter, p. 481)

A reassessment issued under s. 165(3) can be distinguished from one issued under s. 152(4) by an explanation at the bottom of the form T7WC stating "the above explains the Minister's response to your Notice of Objection dated ...".

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 165 - Subsection 165(1) 40

1 December 1992 Memorandum (Tax Window, No. 27, p. 8, ¶2353)

A reassessment issued pursuant to s. 165(3) nullifies a reassessment made under s. 152(4). The taxpayer may file a new notice of objection with respect to the reassessment under s. 165(3).

1992 A.P.F.F. Annual Conference, Q. 14 (January - February 1993 Access Letter, p. 55)

It is RCT's policy not to make reassessments which seek to increase the tax payable unless the taxation year is not otherwise statute-barred, there is a valid waiver, or there was a misrepresentation of the facts or fraud.

90 C.R. - Q61

The decision with respect to the disposition of a notice of objection is the responsibility of the District Office Appeals Division.

11 June 1990 Memorandum (September 1990 Access Letter, ¶1432)

Where the disposal of a notice of objection involves a taxation year which is otherwise statute-barred, no reassessment may be issued under s. 165(3) which increases the tax assessed for the year. For example, if excess CCA has been claimed in a taxation year that is otherwise statute-barred, the excess can be disallowed only to the extent of other adjustments in the taxpayer's favour.

Subsection 165(5) - Validity of reassessment

Cases

Canada v. Anchor Pointe Energy Ltd., 2003 DTC 5512, 2003 FCA 294

After the Minister had assessed the predecessors of taxpayer on the basis that amounts paid by them to purchase seismic data exceeded the fair market value of the data, so that the full purchase price did not qualify as CEE, the taxpayer filed Notices of Objection. The Minister then issued Notifications of Confirmation which, based on the subsequently-decided decision in Global Communications, found that none of the purchase qualified for treatment as CEE (although the Minister did not purport to increase the tax payable by the taxpayer).

Rothstein J.A. stated (at para. 33) that he was "unable to agree" with the analysis of Rip J. in the Tax Court that the expiry of the normal reassessment period was stayed or extended until the Minister took action under s. 165(5) as "the implication of such an interpretation is that because a taxpayer files a Notice of Objection, the Minister has an unlimited time to reassess the taxpayer to increase tax payable after the normal reassessment period." Although s. 165(5) allowed the Minister to reassess after the expiry of the normal reassessment period where a Notice of Objection had been filed, in light of s. 152(5) the Minister could not so reassess as to include in the taxpayer's income amounts that were not included in an assessment or reassessment made within the normal reassessment period. Here, however, the effect of the Minister's Notice of Confirmation was not to include additional amounts in the taxpayer's income.

See Also

Viterra Inc v. The Queen, 2018 TCC 29

consequential reassessment must not take different transactions into account

CRA reassessed a company well beyond the normal reassessment period in order to allow input tax credits, which it previously had denied within the normal reassessment period (being GST on fees charged by the investment manager for employee pension plans), but made an offsetting addition of GST to the reassessment on the basis that the company was resupplying the investment management services to the pension plans and had failed to charge GST on the fees therefor imputed by CRA.

CRA argued unsuccessfully that ETA s. 298(3) was less limiting than ITA s. 165(5), so that CRA was “not precluded from reassessing on the basis of different transactions or even from increasing net tax.” D'Arcy J instead found that s. 298(3) was quite similar to s. 165(5), stating that CRA could not use it “to increase the net tax of the GST registrant or to take into account different transactions that the ones that formed the basis of the reassessment that was made within the statutory reassessment period.”

However, here it was unclear that the reassessment of the resupply did not relate to the same transaction as the previous assessment of the third-party manager supplies, so that he left it to the trial judge to sort this out (this being a Rule 58 application that was devoid of evidence).

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 298 - Subsection 298(3) consequential ETA reassessments were subject to essentially the same limitations as under the ITA 352

Klemen v. The Queen, 2014 DTC 1170 [at 3613], 2014 TCC 244

s. 165(5) cannot be used to increase an assessment

The Minister assessed the taxpayer for his 2004 taxation year within the normal reassessment period on the basis that the taxpayer had realized a gain on income rather than capital account on selling equipment to his corporation and that the cost of the transferred equipment was lower than reported. After the taxpayer objected, the Minister made an additional reassessment beyond the normal reassessment period to include additional income in the taxpayer's hands on the basis that the transferred equipment had a higher fair market value than the sale price.

The Minister argued that s. 165(5) validated the second reassessment as the taxpayer had previously filed a notice of objection. Hogan J found that Anchor Point establishes that s. 165(5) cannot be used to add income in a reassessment made beyond the normal reassessment period. As the Crown also did not advance any evidence of "neglect" etc. by the taxpayer, the second reassessment was statute-barred.

Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Commercial Activity equipment licensed at no charge was held in commercial activity 84
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) s. 165(5) cannot be used to increase an assessment 151
Tax Topics - Income Tax Act - Section 9 - Capital Gain vs. Profit - Machinery and Equipment licensed equipment internally transferred in one-off transaction 176

943372 Ontario Inc. v. The Queen, 2007 DTC 1051, 2007 TCC 294

In dealing with proposed assessments of the taxpayers beyond the normal reassessment period, Bowman C.J. stated (at para. 7):

"If the otherwise statute-barred 2001 reassessments cannot be justified under subsections 152(4) and (4.01), the 2003 reassessments in response to the Notices of Objection must also fall. The reason is self-evident: assume a statute-barred assessment is issued and the taxpayer objects on the basis that the assessment is out of time. Could the Minister of National Revenue cure the defect by issuing a reassessment in response to the objection under subsection 165(3) and rely on subsection 165(5)? The question answers itself."

Subsection 165(6) - Validity of notice of objection

Cases

Jones v. Canada (Minister of National Revenue), 2004 DTC 6185, 2004 FC 382

S.165(6) did not empower the Minister to accept a Notice of Objection that had not been served on a timely basis as required by s. 165(1).

Subsection 165(7) - Notice of objection not required

Cases

Transcanada Pipelines Ltd. v. The Queen, 2001 DTC 5626, 2001 FCA 314

Following the serving of notices of objection by the taxpayer to 1995 reassessment and a settlement of the issues raised in notices of objection with the Minister following the filing of appeals to the Tax Court, in 1999 the Minister issued new reassessments of the relevant taxation years pursuant to s. 169(3). The taxpayer then served notices of objection against the new reassessments raising issues that had not been included in his prior appeals but were set out in the original notices of objection.

In finding that s. 165(7) did not validate the appeal of the taxpayer, Rothstein J.A. stated (at p. 5630):

"Subsection 165(7) does not apply to permit a subsequent appeal from a reassessment issued under subsection 169(3) that disposes of a prior appeal. Paragraph 165(7)(a), in its context, is concerned with a taxpayer's receiving a second reassessment in the period prior to the taxpayer filing a notice of appeal. Paragraph 165(7)(b) is concerned with the period after the taxpayer files a notice of appeal but before the appeal is dealt with ... . It does not apply after appeal proceedings have been disposed of and, in particular, after they have been disposed of under subsection 169(3)."

O'Sullivan v. The Queen, 90 DTC 6278 (FCTD)

After filing 1984 Notices of Objection to 1984 reassessments, on January 13, 1986 the taxpayer filed a Notice of Appeal to the Tax Court from December 16, 1985 reassessments. The position of the Crown was that although the taxpayer could have filed a Notice of Objection to the December 16, 1985 reassessment, because the taxpayer instead appealed directly to the Tax Court he did not meet the requirement, in order for s. 225.1(3) to be available, that he had "objected" after 1984. In rejecting this submission, Collier J. stated (p. 6281):

"The legislation clearly enables the taxpayer to object either by way of notice of objection or by way of an appeal to this Court or the Tax Court of Canada. The election of proceeding by way of appeal does not, in my opinion, mean the taxpayer has not objected."

Bowater Mersey Paper Co. Ltd. v. The Queen, 86 DTC 6293, [1986] 1 CTC 240 (FCTD), rev'd 87 DTC 5382, [1987] 2 CTC 159 (FCA)

rev'd on other grounds 87 DTC 5382, [1987] 2 CTC 159 (FCA)

S.165(7) had no application where notice of objection to the first reassessment was filed after the second reassessment was made. It was noted that theAbrahams (66 DTC 5451) and Walkem (71 DTC 5288) cases would have been differently decided if s. 165(7) had then been in place.

Stephens v. The Queen, 77 DTC 5418, [1977] CTC 590 (FCTD)

S.165(7) does not permit the making of an appeal against a reassessment which was made by the Minister following a decision of the Tax Review Board.

The Queen v. Lambert, 74 DTC 6368, [1974] CTC 611 (FCTD), aff'd supra.

Following the issuance of notices of reassessment dated October 30, 1973 the Minister obtained a certificate for unpaid taxes and provisional court orders based on the certificate. On May 7, 1974 further notices of reassessment were issued.

Since the May 7, 1974 notices of reassessment gave credit for the amounts of the October 30, 1973 notices of reassessment they represented additional assessments, rather than replacements of the October 30, 1973 assessments, and the procedures taken pursuant to the October 30, 1973 reassessments accordingly were valid. In addition, even if the May 7, 1974 notices had been reassessments properly speaking, the seizure and execution procedures would have been valid by virtue of s. 165(7).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 223 - Subsection 223(2) 58

See Also

Bennett v. The Queen, 96 DTC 1630 (TCC)

Unbeknownst to counsel for the Crown, the reassessment which was the subject of the appeal had been replaced by a more recent one. Lamarre Proulx TCJ allowed an amendment to the pleadings so that the appeal was from the most recent reassessment.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 162 - Subsection 162(2) 51