Words and Phrases - "with all due dispatch"

The appellants engaged in transactions which were intended to result in the realization by them of substantial capital gains (resulting in additions to their capital dividend accounts (“CDAs”), that were immediately distributed by them), followed by the realization of largely offsetting capital losses later that day.

CRA issued nil assessments under Part I, beyond the normal reassessment period, that denied the capital gains and capital losses and reducing them to nil, and then issued notices of assessment pursuant to s. 185(1) on the basis that the capital dividends declared by the appellants were in fact excess dividends subject to Part III tax. In rejecting the appellants’ arguments that the Part III assessments were invalid because there was one assessment for multiple purported capital dividends and the assessments had not been issued “with all due dispatch,” Smith J stated (at paras 110, 111, 113 and 137):

I agree with the Respondent that the requirement that the Minister “examine each election” and “assess the tax, if any”, as required by subsection 185(1) must be considered in light of subsections 152(3) and 152(8) and section 166.

In particular, I find that the provision, as it pertains to the obligation to “examine each election” is directory at best (and not mandatory) and that there has been no prejudice to the Appellants: Kyte v. Canada, 1996 CanLII 3939 (FCA).

…I agree with the Respondent that the language of subsection 185(1) does preclude or exclude the possibility that the Minister may review more than one election or issue only one assessment dealing with multiple elections – particularly when those elections relate to dividends that have been declared and paid by the corporation in the same taxation year. …

I find that the Court is bound by the decisions of the Federal Court of Appeal in Carter, and Ginsberg, supra and that even if the Court was of the view that the assessment process involved an “inordinate” amount of time, as suggested by the Appellants, “there is no power in the court to vacate an assessment on the grounds that the Minister did not act with due dispatch.” Had Parliament intended to give the Court that power, it would have said so in clear terms but it has not done so.

The applicant (“Express Gold”), which made substantial zero-rated sales of refined gold but claimed input tax credits on its purchases, claimed a net refund of $9.13 million for its August 2018 reporting period and was informed by CRA on October 4, 2018 that an audit of the August return had started and that the net tax refund for that month was being withheld. The scope of the audit was later expanded to cover the period from June 1, 2016, to October 31, 2018, and CRA advised Express Gold hat it would not be receiving its August net tax refund or any refunds for subsequent months while the audit was underway.

On November 7, 2018, Express Gold’s representative wrote to demand that the net tax refund for the August 2018 return be paid, and on December 6, 2018 Express Gold launched this proceeding in the Federal Court for an order of mandamus (based on the Minister’s obligation to pay the net tax refund “with all due dispatch” as required by ETA s. 229(1)),

In dismissing Express Gold’s application, Pentney J first summarized the general principles respecting “with all due dispatch” (at paras. 55, 76):

[T]he context for the provisions makes it clear that finding that the obligation to pay the refund with all due dispatch was not intended to displace the Minister’s obligation to verify the claim is not unreasonable.

The Minister is under a statutory duty to determine the tax that is owing or a refund is due in relation to the August 2018 return of the Applicant, pursuant to section 275 … . The Minister must do this without delay. The Minister is not obliged to pay the refund simply because it was claimed in the return, nor is the Minister forbidden from conducting an assessment or audit of the return, as long as this is done in good faith for the purpose of ascertaining the taxes due or refund owing (Ficek and McNally), and as long as it is done with all due dispatch.

He went on to find that here there had not been “sufficient time to complete the audit” (para. 82) before this application had been launched (two months after receiving notice of the commencement of the audit) given inter alia “that the Applicant’s business involves a high volume of transactions with multiple third parties, which in itself can be expected to add a degree of complexity to the undertaking” (para. 83).

In his conclusions, he stated (at para. 104):

I have concluded that the Applicant brought its application before a reasonable time for the performance of the duty had elapsed, and so I am dismissing the application. In doing so, it is worth underlining that if the Applicant has or obtains evidence that the CRA is acting for an ulterior purpose, or that the audit is being continuously expanded in bad faith, or otherwise not proceeding in a reasonable time-frame, it can bring another motion.