Section 166.2

In rejecting the taxpayer's position that she had not received a notice of reassessment, V.A. Miller stated (at para. 11):

CRA cannot change a taxpyer's address because her spouse has changed his addresss. It was the Appellant's responsibility to keep the CRA informed of her mailing address: Denetson v R [1998] FCJ 1450 (FCA).

In finding that the word "shall" in s. 166.1(2) was directory rather than mandatory (so that a letter to the Tax Services Office that did not specify reasons for the failure to file a notice of objection within the 90-day period was treated as an application for an extension), Bell T.C.J. stated (at p. 2576):

Section 166.1 obviously is designed to afford relief to a taxpayer who disagrees with an assessment. Although it sets out specific requirements it should not, in these circumstances, be interpreted to foreclose the possibility of an earnest taxpayer, unsophisticated in tax matters, being able to proceed with an appeal. That is simply unjust.

The taxpayer, who was poorly educated, received a transfer of registered title (but not beneficial ownership) of property from an individual with an unpaid income tax liability. He received an assessment under s. 160 with no accompanying letter of explanation, spoke to a Revenue Canada official who told him that he would look into the matter and then did not hear anything more on the matter for five years.

Before going on to apply the discoverability rule that had been developed by the Supreme Court of Canada to find that a notice of objection that the taxpayer filed within 90 days of the time over five years later when Revenue Canada finally made a demand, was a valid notice of objection, Porter D.J. stated (at p. 2562):

The Supreme Court appreciated and dealt with the need to bring some finality to legal situations. Nonetheless, where there was legitimate reason for the non-appreciation of their rights to institute some legal action, the Court clearly provided that time should only start running under limitation periods in the statutes in question (albeit statutes of limitation) once the incapacity to appreciate the situation had reasonably come to an end.

The lawyer acting for Air Canada in a tax dispute with ARQ was copied on a letter to Air Canada indicating that ARQ would be reassessing in a smaller amount than the original reassessment under dispute. This occurred several weeks later, but without the lawyer being copied. The Montreal head office of Air Canada forwarded the reassessment to its Winnipeg office (which dealt with tax matters), where something went awry, so that no action was taken. The lawyer did not find out about this until the 90-day objection period had expired.

The Court found that, in light of considerations of procedural fairness, the Quebec equivalent of ITA s. 165(3) should be read as if it contained the additional bolded words noted below (para. 17):

[T]he Minister shall … reconsider the assessment and … make a reassessment, and send the Minister's decision to the person by mail 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 s. 93.1.13 of the Tax Administration Act (Quebec), which 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 para. 22):

[T]here is no impossibility of acting if it is lacking in diligence or it could remedy the effect of such a lack (of its lawyer, for example), but it chose or neglected to do so. One can thus state that diligence is a condition sine qua non for there to be impossibility to act.

The Court made extensive findings that such diligence was not established, including responding to a submission (at para. 32) that “having conferred a mandate on a lawyer to represent it attested sufficiently to its diligence,” by stating (at para. 33):

[T]his does not relieve its obligation to forward the documents received by it relating to the mandate of representation which it conferred on him or, at least, to diligently alert him when it received such documents.

Woods J found that the taxpayer's family circumstances were not enough to grant an extension to file a notice of objection relating to the denial of charitable credits. The statutory deadline cannot bend on sympathetic grounds.

While the taxpayer's file for 2007 was on hold, pending the determination of a question in common with other taxpayers, the taxpayer submitted a T1 Adjustment Request to allow carrying charges. The Minister allowed the Request and issued a further reassessment. The taxpayer neglected to file a new notice of objection, and he took more than a year and 90 days to file his application to extend the time to file a notice of objection.

Woods J dismissed the taxpayer's application to allow the extension application. There is no basis on which to extend the s. 166.2(5)(a) deadline (para. 18).

(The decision ultimately favoured the taxpayer, as Woods J also found that the latest reassessment was barred - see summary under s. 152(4.2).)

Woods J confirmed that the taxpayer's failure to apply in time for an extension to file a Notice of Objection meant that her appeal must fail. The taxpayer's explanations about the complexity of her tax affairs were ultimately irrelevant, as s. 166.2(5)(a) does not allow relief on the basis of fairness alone (para. 9).

The taxpayer, who did not have any intention to object to his reassessment until, following the expiration of the 90-day period, he learned of the decision of the Federal Court of Appeal in the Tonn case, did not satisfy the requirement of s. 166.2(5)(b)(i).

Shortly after the expiry of the deadline for objecting to a reassessment that included alimony in her income, the taxpayer learned of the decision of the Federal Court of Appeal in the Thibaudeau case, and made an application for an extension under s. 166.2. In denying the application, Christie TCJ. noted that prior to that decision, there would have been no desire on her part to serve the notice described in s. 166.2(5)(b). Respecting clause (A):

"The existence of inability to act or to instruct another to act with reference to serving a notice of objection presupposes the presence, prior to the time limit imposed by the Act, of a desire on the part of a taxpayer to effect such service."