Section 171

Subsection 171(1) - Disposal of Appeal

Cases

Canada v. Oxford Properties Group Inc., 2018 FCA 30

GAAR question as to determining a provision’s object was subject to correctness standard

Before overturning the findings below that the transactions in question had not abused ss. 97(2) and 100(1), so that s. 245 applied, Noël CJ stated (at para. 39):

The inquiry as to whether there has been an abuse gives rise to a question of mixed fact and law and is therefore subject to the standard of palpable and overriding error … . However, the abuse analysis proceeds in two stages. The first stage requires the determination of the object, spirit and purpose of the provisions giving rise to the tax benefit while the second turns on whether the provisions, so construed, were frustrated by the tax benefit achieved (Trustco at para. 44). The object, spirit and purpose of a provision is discerned by way of statutory interpretation (Copthorne at para. 70). This gives rise to a question of law and is an extricable part of the analysis. It is therefore subject to the standard of correctness (Trustco at para. 44; Housen at paras. 8, 37).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) using the s. 88(1)(d) bump on newly-formed rental property LPs to avoid indirect recapture income under s. 100(1) was abusive 925
Tax Topics - Income Tax Act - Section 88 - Subsection 88(1) - Paragraph 88(1)(d) s. 88(1)(d) bump is intended to permit the transfer of ACB that otherwise would be lost to another property that is taxed in the same way 349
Tax Topics - Income Tax Act - Section 98 - Subsection 98(3) - Paragraph 98(3)(c) s. 98(3)(c) bump is intended to avoid gain realization where there has been no economic gain 259
Tax Topics - Income Tax Act - Section 69 - Subsection 69(11) 3-year time limitation in s. 69(11) did not establish safe harbor for avoidance of recapture on sale after that period 366
Tax Topics - Income Tax Act - Section 100 - Subsection 100(1) purpose is to ensure that latent recapture will be recognized on sale to tax exempt 244
Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) object includes ultimate taxation of the deferred gain 224
Tax Topics - Statutory Interpretation - Hansard, explanatory notes, etc. statement that amendment was for “clarification” was self-serving 199
Tax Topics - Statutory Interpretation - Interpretation Act - Subsection 45(2) determination of whether amendment merely clarified requires review of pre-amendment state of law 135
Tax Topics - Income Tax Act - Section 245 - Subsection 245(2) consequential s. 245(2) adjustment must be scaled to the abuse 381

Kruger Incorporated v. Canada, 2016 FCA 186

Minister implicitly directed to reduce taxpayer's income below that originally filed

A reassessment added back $72M to the taxpayer’s income for 1998, being the difference between its claimed mark-to-market loss on its options of $91M, and the 1998 amortization as to $19M of net option premiums. Noël CJ considered that premium amortization did not accord with mark-to-market accounting, and directed the Minister to reassess on the basis that the taxpayer was entitled to use the mark-to-market accounting, but without deferring or amortizing any portion of the premiums paid or received during 1998. This might effectively have been a direction to reduce the taxpayer's taxable income to below that originally reported.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 9 - Timing non-statutory mark-to-market accounting was permissible under s. 9 432
Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Inventory derivatives not held for resale are not inventory 155

Imperial Oil Resources Limited v. Canada (Attorney General), 2016 FCA 139

Tax Court has no jurisdiction to hear an appeal on the computation of refund interest

The second taxpayer (“IOVRL”), like the first, took the position that remission payments should be treated in the same manner for purposes of entitling the taxpayer to refund interest under s. 164(3) as instalment payments. The Minister first communicated her decision that there was no entitlement to refund interest through a notice of reassessment issued June 10, 2003 with respect to IORVL’s 1996 taxation year. Noël CJ noted (at para. 21) that:

IORVL’s objection did not extend the time for making an application for judicial review as the objection provisions under the ITA do not allow for a challenge being brought against a remission granted pursuant to the FAA. The 30-day delay under subsection 18.1(2) of the Federal Courts Act…had therefore lapsed by some seven years when IORVL filed its application on December 23, 2010 [for judicial review of the Minister’s failure to grant refund interest].

In rejecting “IORVL’s contention that the Minister’s refusal to pay refund interest could only be challenged after the objection process had been exhausted” well after 2003, Noël CJ stated (at para. 61):

The objection procedure before the Minister and the subsequent right to bring an appeal before the Tax Court only applies to assessed amounts… . An assessment determines or confirms the liability of a taxpayer to pay specified amounts. Pursuant to subsection 152(1) of the ITA, the only amounts that can be assessed are taxes, interest and penalties. To be clear, assessed interest is interest claimed by the Minister pursuant to the ITA (see for example section 161), and interest payable by the Minister pursuant to section 164 does not come within that description. As explained by Rip J….in McMillen, the amount of a refund resulting from an overpayment, although often set out on the notice of assessment, is not an assessed amount (McMillen, para. 47). The objection procedure does not apply to a contested refund and the Tax Court is therefore without jurisdiction to hear an appeal pertaining to its computation… .

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 164 - Subsection 164(7) remission payment did not generate interest entitlement 287

Jaft Corporation v. Canada (AG), 2014 DTC 5080 [at 7056], 2014 MBQB 59

superior court declined jurisdiction to consider equitable remedy that bore heavily on parallel tax court proceedings

CRA had found that the applicant's research into solutions for Sick Building Syndrome based on air treatment qualified for scientific research and experimental development credits. In proceeding to develop related products, the applicant employed several individuals on terms that their compensation be based "solely on the work done that meets the requirements of SR&ED." The applicant applied the presumed SR&ED credits towards payroll remittances. CRA found that the work did not qualify, and the taxpayer applied to have the employment contracts rescinded or declared void ab initio.

McKelvey J dismissed the application on jurisdictional grounds. "[R]escission, if granted, would serve to alter the essence of the litigation before the TCC" (para. 26). She did not address the applicant's argument that the application was essentially for equitable relief (the equitable doctrine of rescission being broader than the common law doctrine of void ab initio), which the Tax Court has no jurisdiction to grant - although she went on to find, in the alternative, that such relief should not be granted in any event (see summary under General Concepts - Rescission).

Locations of other summaries Wordcount
Tax Topics - General Concepts - Rectification & Rescission attempt to rescind employment contracts, on the basis that employees had not satisfied scientific research & experimental development requirements, was retroactive tax-planning 174

SRI Homes Inc. v. Canada, 2012 DTC 5135 [at 7284], 2012 FCA 208, allowing appeal from 2011 TCC 386

inadequate reasons

The trial judge's reasons essentially paraphrased: an agreed statement of facts, the Minister's assertions, a copy of the Minister's framing of the issues, and (very briefly) the taxpayer's and (somewhat more extensively) the Minister's arguments. The two closing paragraphs stated "I agree with the reasoning outlined by [Minister's counsel] in his argument" and "the appeals are dismissed, with costs."

The Court found that the trial judge's reasons were inadequate, failed to satisfy the taxpayer's right to procedural fairness and remitted the matter back to the Tax Court for redetermination by a different judge. The Court applied the "functional approach" set out in R. v. R.E.M., 2008 SCC 51, which provides (at R.E.M. para. 25):

[The functional approach requires] reasons sufficient to perform the functions reasons serve - to inform the parties of the basis of the verdict, to provide public accountability and permit meaningful appeal. The functional approach does not require more than will accomplish these objectives.

In the present circumstances the trial judge's reasons did not serve their proper function:

  • The reasons failed to account for the competing theories put before the court. The judge accepted, without explanation, the Minister's framing of issues and ignored the taxpayer's.
  • The Minister's reasons that the trial judge "agreed" with were internally inconsistent. They relied on different characterizations of events, and it was unclear which the trial judge had chosen (or that he had chosen any at all).
  • The judge failed to reference any of the viva voce evidence adduced by the taxpayer in a three day trial, so that there was no basis for an appellate court to know which evidence had been rejected by him.
  • The trial judge rejected a supposed taxpayer argument that the taxpayer had not made, suggesting that the judge had not understood the issues before him.

Canada v. Nunn, 2007 DTC 5111, 2006 FCA 403

sham finding not argued

The trial Judge on her own initiative, without this issue being raised in the pleadings or argued, had found that an investment by the taxpayer was a sham. Malone J.A. found that this amounted to a violation of a principle of natural justice and set aside the judgment.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Sham misrepresentation element of sham 78
Tax Topics - General Concepts - Tax Avoidance misrepresentation element of sham 78

Rezek v. Canada, 2005 DTC 5373, 2005 FCA 227

impermissible new theory

Absent the finding of the Tax Court judge that a convertible hedge is a separate property, the appeals of the taxpayer would have been allowed. Therefore, this finding constitute an impermissible new basis of assessment after the limitation period for assessing had expired.

Pedwell v. The Queen, 2000 DTC 6405 (FCA)

The Tax Court Judge had erred in finding the taxpayer liable on a basis different from that in the Minister's notice of reassessment which was at issue in the tax appeal. The reassessment was quashed.

La Compagnie Price Limitée v. The Queen, 95 DTC 428 (TCC)

The Minister reassessed the taxpayer in accordance with a Federal Court judgment issued pursuant to a consent to judgment (as subsequently varied). The taxpayer objected to the reassessment on the basis that it did not properly compute its logging tax credit. In dismissing the taxpayer's appeal, Garon TCJ. noted that the reassessment accorded in every respect with the consent judgment and (at p. 433):

"If this Court were permitted to consider and decide a question that has not been examined and the decision rendered following a consent to judgment by the parties, it would follow that this Court would have the power vary its own judgment. We know that it is clearly recognized that a court of justice may vary one of its judgments only in certain quite specific circumstances that are described in ... Gunnar Mining ..."

Locations of other summaries Wordcount
Tax Topics - General Concepts - Stare Decisis 135

The Queen v. Optical Recording Laboratories Inc., 90 DTC 6647 (FCA)

A reassessment, which was in the same amount as a previous assessment except that it assessed accrued interest, was therefore a reassessment rather than an additional assessment within the meaning of the Abrahams case, and thereby rendered the first assessment void. However, the voiding of the first assessment did not affect the validity of collection proceedings which had been undertaken pursuant to that unpaid assessment.

Sharip v. The Queen, 87 DTC 5206 (FCTD), aff'd 88 DTC 6484, [1988] 2 CTC 344 (FCA)

Until such time as a formal decision pursuant to s. 171(4) has been made, the judge has the power to reconsider his decision as to the disposition of the case. After the making of a formal decision, he can amend it to correct an error (in this case, allowing the appeal when it was apparent from the judge's amended reasons for judgment that he intended to dismiss the appeal).

McCambridge v. The Queen, 79 DTC 5412, [1979] CTC 473 (FCA)

"If Parliament had intended to provide that one means of disposing of an appeal could be by way of filing a notice of discontinuance, it would have been an easy matter to so provide in the statute." The taxpayer, after advising the Tax Review Board in writing that his appeal was withdrawn, was entitled to have his appeal heard by the Board, because the Board had not responded to the letter of withdrawal by issuing a judgment.

Vineland Quarries and Crushed Stone Ltd. v. MNR, 70 DTC 6043 (Ex Ct)

permissible alternative basis

The taxpayer filed a notice of appeal to an assessment by the Minister which reflected a disallowance of a portion of the taxpayer's capital cost allowance claims on the basis that the taxpayer's business was principally mining, so that the taxpayer was not eligible to treat the depreciable assets in question as being Class 19 assets. After filing his Reply, the Minister later sought to amend the Reply by seeking, in the alternative, the denial of capital cost allowance claims made by the taxpayer on another class of assets ("Schedule E assets") on the basis that if (contrary to the Minister's submission) the taxpayer's business was not principally that of mining, those assets were not eligible (Schedule E) assets.

In allowing this amendment, Cattanach J. indicated that the Minister, through this amendment, was not seeking to increase the amount of his assessment, but merely reducing the amount of the downward adjustment in the Minister's assessment if it were found that the basis of the Minister's assessment was wrong.

See Also

Sterritt v. The Queen, 2018 TCC 117 (Informal Procedure)

the Ontario Superior Court of Justice or the Federal Court, not TCC, had the jurisdiction to order a refund

The taxpayer stopped filing his tax returns beginning with the 2003 taxation year. Following a request by CRA, in February 2014 the taxpayer filed his late returns for 2003 and subsequent years and claimed a refund for overpayment of taxes for his 2003 year, which the Minister denied on the basis of the claim not having been filed within 10 calendar years of the end of the 2003 taxation year.

Russell J dismissed the taxpayer’s application for an order to the Minister to pay him a refund, stating (at para. 8):

…[S]eeking that the Minister be ordered to issue the refund is not an aspect of deciding if an assessment or reassessment or a notice of loss determination is right or wrong. Thus it is not within the jurisdiction of this Court. It likely is within the jurisdiction of Ontario’s Superior Court of Justice as the Appellant resides in Ontario and as well within the jurisdiction of the Federal Court.

Isah v. The Queen, 2018 TCC 28 (Informal Procedure)

TCC has jurisdiction to address incorrectly computed assessment interest

The taxpayer, through the services of a now elusive “Mr. K,” had claimed charitable donations totalling approximately $18,000 for his 2009 to 2011 taxation years, which were fictitious except as to one $45 donation. After confirming the Minister’s reassessments including for gross negligence penalties, Russell J stated (at para 17):

…I note that the Appellant is unhappy that he was assessed interest in the appealed reassessments. I believe at the hearing I advised that interest relief was not a matter over which this Court has jurisdiction (unless the wrong interest rate was used or otherwise a wrong calculation of the interest was made, thereby affecting the balance of the appealed (re)assessment). Rather, it is the Minister per subsection 220(3.1) of the Act who has discretionary jurisdiction to waive or cancel interest (and penalties), with right of judicial review of these discretionary decisions to the Federal Court per section 18.1 of the Federal Courts Act.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 161 - Subsection 161(1) TCC has jurisdiction to correct incorrectly computed assessment interest 99

R & S Industries Inc. v. The Queen, 2017 TCC 75

Tax Court had jurisdiction to consider change to description of consideration in s. 97(2) election form

R & S Industries was unsuccessful in a motion to have the Federal Court direct CRA to reconsider its decision to not permit R & S Industries to file an amended s. 97(2) election form so as to change the agreed amounts. R & S then appealed to the Tax Court with a view to convincing the Court that the allocation of consideration between partnership-interest and non-partnership interest consideration set out on the (T2059) election form did not reflect the actual agreed allocation. CRA viewed this as an attempted end run around R & S’s inability to amend its election, and sought to have the appeal dismissed on jurisdictional grounds.

Graham J considered that there was a crucial distinction between the T2059’s agreed amounts, which could not be altered by the Minister, and the allocation of the consideration, which was a purely factual matter which was merely recorded on the T2059, and which either CRA or the taxpayer were free to challenge in the Tax Court as not according with the actual facts. Accordingly, the Crown’s jurisdictional challenge was dismissed.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 97 - Subsection 97(2) taxpayer is not bound by the statement of boot set out in its s. 97(2) election form 347

Deluca v Canada, 2016 ONSC 3865

no tort damages against CRA for tort damages based on its denial of deductions

The taxpayer used proceeds of a loan from “Barter World Canada Inc.” to acquire “TradeBux” from another Barter World entity (as well as to make a cash prepayment of the loan interest), donated the TradeBux to a registered charity (“LWIF”) and received a receipt equal to their alleged value. He could earn TradeBux through referrals and completing surveys online so as to repay the loan. In addition to appealing CRA’s disallowance of his charitable credits to the Tax Court of Canada, he brought this claim in Superior Court alleging principally that CRA’s negligence in failing to revoke LWIF’s charitable registration until a subsequent year caused him to make the charitable donations in question, thereby resulting in damages.

In considering whether this claim came within the exclusive jurisdiction of the Tax Court, and before striking the statement of claim in its entirety, Dunphy J stated (para 24) that the taxpayer could not “plead by way of tort damages as against the Crown in right of Canada the value of the very benefit he is ineligible to receive from the same Crown in right of Canada by the terms of a statute of Parliament (in this case, the ITA).” However, on the basis that the taxpayer pleaded some damages that were independent of the failure to qualify for the benefit of the tax deduction, Dunphy J found that he could not strike the entire claim, but instead struck so much of the damages claim as is measured by reference to the plaintiff’s inability to receive the claimed tax benefit (para 25).

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Subsection 15(1) tax shelter participants are not an analogous class 89
Tax Topics - General Concepts - Negligence and Fiduciary Duty CRA has no duty to protect taxpayers from participating in tax shelters 344

Delle Donne v. The Queen, 2015 TCC 150

reserve could be claimed on appeal

Respecting an argument that the taxpayer was required by s. 20(1)(l) or (p) to have "included" the interest in income before being entitled to the reserve – whereas, in fact, neither income nor deduction appeared in the return (although an explanatory letter was attached) - Owen J stated "in any event…it is well established that it is open to a taxpayer to amend his return through the appeal process [citing Imperial Oil, 2003 FCA 289, at para. 10]" (para. 91). See summary under s. 20(1)(p)(i).

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 12 - Subsection 12(11) - Investment Contract "debt" exists irrespective of demand 87
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(l) doubtful debt reserve claimed implicitly as at the year end in light of subsequently revealed information 477
Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(p) - Subparagraph 20(1)(p)(i) bad debt deduction taken as at Dec. 31 in light of information available at April 30, and could be claimed implicitly or on appeal 452

Descarries v. The Queen, 2014 DTC 1143 [at 3412], 2014 TCC 75 (Informal Procedure)

free to raise an interpretation not advanced by either party

Hogan J found that the transactions at issue abused the object of s. 84.1, a general anti-avoidance rule analysis which the Crown had not suggested, and had raised this fresh point with counsel who then argued it before him (see summary under s. 245(4)). He stated (at para. 45):

…I do not believe that I am bound when deciding on a question of law to agree to an interpretation on which the parties agree.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 245 - Subsection 245(4) use of outside basis to step up PUC abused s. 84.1 495
Tax Topics - Income Tax Act - Section 84 - Subsection 84(2) holdco distribution made out of loan from still-operating sub - s. 84(2) did not apply 478

Fio Corporation v. The Queen, 2014 TCC 58

inherent jurisdiction to void reassessments which breach undertaking

The taxpayer was reassessed for its 2007 and 2008 taxation years, appealed to the Tax Court and then was further reassessed based on documents which it had provided on discovery. The further reassessments had breached the rule in Juman v. Soucette, 2008 SCC 8, that "information obtained on discovery…is subject to the implied undertaking [that] it is not to be used by the other parties, except for the purpose of that litigation." D'Arcy J found that the Tax Court had the ability to vacate the further reassessments, stating (at para. 71), that:

[A]ny statutory limits place on the Tax Court's jurisdiction when disposing of an appeal of an assessment ... do not apply in respect of a breach of an implied undertaking.

However, rather than vacating the further reassessments, he ordered that the discovered documents could not be used in any other proceeding.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) implied undertaking of confidentiality during discovery 188
Tax Topics - Income Tax Act - Section 241 s. 241 does not override implied undertaking rule 143
Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Act - Section 17.2 time of commencement of appeal 138

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 165 - Subsection 165(1) no declaration as to source deductions, or vacating of reassessment that would increase substantive liability 233

Blackburn Radio Inc. v. The Queen, 2012 DTC 1213 [at 3580], 2012 TCC 255

no further reassessment permitted if order to vacate or vary

In 2009 the Tax Court found that a 2004 reassessment in respect of the taxpayer's 1999 taxation year had been made outside of the limitations period and vacated it. The Minister issued a reassessment in 2009 purporting to give effect to the Tax Court's decision, and purported to make consequential reassessments for 2000 and 2005 pursuant to s. 152(4.3).

Woods J. found that the consequential assessments could not be supported by s. 152(4.3) because, among other reasons, the 2009 assessment was statute-barred. The Minister argued that it was required to make the 2009 reassessment in order to comply with the Tax Court's decision. Woods J. stated (at para. 43):

I would have thought that the authority of the Tax Court of Canada to determine tax liability is clear by the precise wording in subsection 171(1) of the Act. Under this provision, if an appeal is allowed, the Court can either vacate the assessment, vary it, or refer the assessment back to the Minister for reconsideration and reassessment. If the assessment is vacated or varied, s. 171(1) does not contemplate that a further reassessment would be made.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) 109
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4.3) no further reassessment permitted if order to vacate or vary 286

SoftSim Technologies Inc. v. The Queen, 2012 DTC 1187 [at 3473], 2012 TCC 181

D'Auray J. found that the Court had jurisdiction to enforce a settlement agreement between the taxpayers and the Minister. S. 169(3) provides that the Minister may make a reassessment with the taxpayers' consent, and the Court's powers under s. 171(1)(b) are adequate to give effect to the agreed reassessment.

Du-Perré c. La Reine, 2006 DTC 2965, 2004 TCC 773

In finding that in the Minister's Reply to the Notice of Appeal of the taxpayer, the Minister was entitled to allege that a number of transfers of property at an undervalue had been made to the taxpayer between December 28, 1996 and June 6, 1997, rather than there only being one transfer on December 28, 1996 as originally had been assumed by him at the time of his reassessment, Lamarre J. stated (at p. 2967) that "the Minister is free to raise any argument in support of his assessment as long as there is no prejudice to the Appellant by the surprise effect of the Minister's new allegation (see Loewen v. R. ... 2004 FCA 146, 2004 DTC 6321)"

Sudbrack v. The Queen, 2000 DTC 2521, Docket: 98-2386-IT-G (TCC)

Bowman A.C.J. found that The Queen v.Continental Bank of Canada, 98 DTC 6501, [1998] 2 S.C.R. 358 merely applied the long-standing rule governing litigation in appellate courts that litigants were prevented from raising points on appeal which were not pleaded and argued in the trial court, and did not stop the Crown from raising, prior to trial, alternative bases for supporting an assessment which had not been considered when the assessment was made.

Curoe v. MNR, 91 DTC 782 (TCC)

The taxpayer, which did not receive notification of the Tax Court hearing, was successful in having that judgment set aside on the basis of the inherent jurisdiction of the court.

Laskaris v. MNR, 90 DTC 1364 (TCC)

The taxpayer's accountant and a Revenue Canada appeals officer send an application to the Tax Court to withdraw the taxpayer's appeal with the intention that the taxpayer would re-file his appeal following the receipt of a notice of confirmation. Upon the dismissal of the appeal in response to this application, the taxpayer was precluded from filing a fresh Notice of Appeal. In addition, Sarchuk J. noted that the Tax Court would not have had the jurisdiction to accept a "discontinuance" or "withdrawal" of an appeal, rather than taking one of the actions listed in s. 171(1).

McMillen Holdings Ltd. v. MNR, 87 DTC 585 (TCC)

no jurisdiction to order payment of refund interest

The taxpayer, which had received a dividend refund for its taxation year ended July 31, 1982, on August 22, 1983, appealed to the Tax Court requesting a variance of the reassessment (dated December 19, 1983) of its 1982 year to provide that refund interest accrued on its refund claim (net of income tax payable) from July 31, 1982 until the date of the August 22, 1983 payment thereof, i.e., that the refund amount represented an "overpayment", within the meaning of s. 164(7) for its 1982 taxation year.

After finding that a dividend refund was not an "overpayment of tax" such as would entitle a taxpayer to payment of interest, Rip T.C.J further found that the Court had no jurisdiction to order payment of interest, stating:

An assessment by its very nature is a determination of liability of a taxpayer. An amount of money owed to the taxpayer by the Crown on account of interest is not an amount which is subject to an assessment or an assessed amount of money.

Rip T.C.J. found that the Court only had jurisdiction to hear and dispose of an appeal from an assessment and such was not in issue here, stating:

This Court has jurisdiction to render a decision where the amount of tax, interest or penalty payable, as assessed pursuant to subsection 152(1) of the Act, are in issue, but has no jurisdiction where the items of assessment are not in issue: The Queen v. B. & J. Music Ltd., 80 DTC 6219 (F.C.T.D.), per Grant, D.J., at page 6223….

The due exercise of this Court's jurisdiction on matters arising under the Act is to hear and determine an appeal from a tax assessment. I cannot overemphasize that the Court's original jurisdiction is to hear and determine appeals in matters arising under the Act; an action against the Crown based on the Act, but is not an appeal from an assessment, is not an appeal arising under the Act, which is within the jurisdiction of this Court.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 164 - Subsection 164(7) dividend refund not an overpayment of tax 202

Dominion Stores Ltd. v. Dep. MNR, 82 DTC 6214, [1982] CTC 235 (FCA)

It was stated that a concession by the respondent that the processing of ground beef constituted "the manufacture or production of goods" for purposes of the Excise Tax Act did not bind the Tariff Board. As the jurisdiction of the Board was conferred upon it by statute, not the respondent, it could make a finding that ground meat processing was not "manufacture or production."

Administrative Policy

3 June 2014 Internal T.I. 2013-0489471I7 - Subsection 171(1)

no power to reassess following order to vacate or vary

Was the Minister permitted to issue a reassessment in order to give effect to a Court's order to vacate or vary an assessment under s. 171(1)? CRA stated:

In Blackburn Radio Inc. v The Queen, 2009 TCC 155…the Court correctly determined that the Minister does not have the authority to issue a reassessment to give effect to the Court's order to vacate or vary the assessment. Further, if a reassessment by the Minister is permitted or required in order to give effect to the Court's order to vacate or vary the assessment, this would render subparagraphs 171(1)(b)(i) and (ii) meaningless.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 152 - Subsection 152(4.3) no power to reassess following order to vacate or vary 99
Tax Topics - Income Tax Act - Section 169 - Subsection 169(1) appeal from varied assessment 100

Articles

Zahra Nurmohamed, "Settling Tax Disputes - An Unsettling Proposition", Tax Litigation, Vol. X, No. 3, 2002, p. 638

Discussion of the Galway Doctrine.

McGregor, "Resolving Tax Disputes: A Justice Perspective", 1994 Conference Report, c. 30

Includes a discussion of the perceived judicial constraints upon the nature of a settlement that may be reached.

Paragraph 171(1)(b)

Subparagraph 171(1)(b)(iii)

Cases

Almadhoun v. Canada, 2018 FCA 112

TCC, after finding against the taxpayer, improperly directed CRA to “seriously” consider interest relief and tax remission

The taxpayer received the Canada child tax benefit (the CCTB) for 2010, 2011, 2012 and 2013, but then was informed by CRA on April 15, 2014 that it was rescinding her eligibility for the CCTB since she did not meet the criteria laid out in s. 122.6 –“eligible individual” - (e) as the Minister concluded that she was neither a temporary resident of Canada, nor a protected person within the meaning of the Immigration and Refugee Protection Act. The Tax Court held that the taxpayer was not entitled to the CCTB during those years, but referred the matter back to the Minister so that “taxpayer relief in the form of a waiver of any applicable interest and penalties under the Act and also a remission of taxes pursuant to the Financial Administration Act” may be “seriously consider[ed].”

In striking this referral part of the judgment, De Montigny JA stated (at paras 32, 33 and 36):

… It is only when the Tax Court allows an appeal that it can refer the assessment back to the Minister for reconsideration and reassessment.

Nor is it for the Tax Court to interfere with the discretion of the Minister, if only by suggesting that the Minister “may” seriously consider taxpayer relief in the form of a waiver of any applicable interest and penalty under the Act, and a remission of taxes pursuant to the Financial Administration Act … .

… While he was entitled to express his views about the impact of the CRA’s error and the fact that relief should be considered in his reasons, he should have limited himself, in the judgment, to dismissing the appeal. …

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 122.6 - Eligible Individual - Paragraph (e) unsuccessful refugee claimant who was subsequently permitted to stay on compassionate grounds did not qualify 314
Tax Topics - Other Legislation/Constitution - Charter (Constitution Act, 1982) - Subsection 15(1) immigrant status not a protected s. 15 characteristic 255
Tax Topics - Statutory Interpretation - Ordinary Meaning supposed purpose cannot supplant clear language 67