The Tax Court, in Kubbernus v. The Queen, 2009 TCC 311, confirmed that a taxpayer cannot file an appeal to the Court for a reassessment issued at the taxpayer’s request pursuant to the taxpayer relief provisions.
Valid Appeals
The Court explained the relevant provisions as follows:
[16] Subsection 152(4.2) of the Act is part of the “Taxpayer Relief” legislation formerly known as the “fairness” legislation and introduced on May 24, 1991 as part of the “Fairness Package”. That subsection as it now reads is intended to provide relief to an individual taxpayer who becomes aware, after the normal reassessment period, that he may be entitled to a refund or a reduction of an amount payable. The application for such a determination must be made within ten calendar years after the end of the taxation year. Notwithstanding a taxpayer’s right to object to an assessment under section 165 of the Act, subsection 165(1.2) precludes a taxpayer from objecting to an assessment made under certain provisions of the Act, including subsection 152(4.2). The reasoning behind that is that a reassessment under subsection 152(4.2) is made at the Minister’s discretion.
Subsection 169(1) of the Income Tax Act, which governs the filing of income tax appeals, does not expressly prohibit an appeal from a relief reassessment, but it is a condition of filing an appeal that the taxpayer first object. In Kubbernus, the taxpayer filed an objection despite the prohibition in subsection 165(1.2), and the Minister considered it. Did that matter for the purposes of the appeal to the Tax Court? The taxpayer argued that the Minister, by considering the objection, was estopped now from taking the position that the taxpayer couldn’t appeal. The Court disagreed.
[34] In the present fact situation, I do not believe that the appellant was misled by the Minister when he decided to file a notice of objection. In fact, it was he himself who set the wheels in motion by ignoring the prohibition set out in subsection 165(1.2) of the Act and referred to in the 2006 reassessment. As noted by Judge Bowman (as he then was) in Goldstein, supra, this Court has an obligation to decide cases (or motions) in accordance with the law. I am therefore not bound by erroneous representations or interpretations of the Act by CRA officials. Accordingly, no estoppel can be said to have arisen in the instant case if the representations were not in accordance with the law. The situation in the cases cited by the appellant differs from that in the instant case as, in those cases, they were in accordance with the law.
Valid Objections
In a post on objections, I wrote
There is no prescribed form for an income tax objection. The Income Tax Act (Canada) simply requires that the objection be in writing and that it set out “the reasons for the objection and all relevant facts”. The CRA has created a form for objections (the T400A), but the taxpayer need not use it. That said, we always do, if only because it makes the CRA feel better, and using the form helps to ensure that the objection will end up in the right CRA pigeon-hole.
In fact the Tax Court is often quite lenient about what will constitute a valid objection, and this is well illustrated in Schneidmiller v. The Queen, 2009 TCC 354. In that case, the CRA reassessed the taxpayer, who called the CRA to complain that the reassessments were incorrect. The CRA sent the taxpayer T1ADJ’s, a “Request to Adjust”, which the taxpayer completed and sent to the CRA at its Surrey Tax Centre (cf my post on this point entitled “Arguing with the CRA While the Clock Ticks“). The CRA lost the forms and told the taxpayer as much 18 months later. The taxpayer resubmitted the forms. The taxpayer followed up two and a half months later, at which point the CRA told him to file an objection, which he promptly did. The CRA then informed the taxpayer that he was out of time for filing an objection! (Kafka couldn’t have made this up.)
Justice Beaubier responded as follows:
[2] The application was heard in Regina Saskatchewan on June 26, 2009. The Applicant was the only witness. He resides in Gull Lake, about 300 km west of Regina, a land of open range, where big farms meet big ranches and the deer and the antelope play and the skies are not cloudy all day.
Was it a slow day at the office?
Anyway, the Justice also wrote:
[9] An “Objection” or a “Notice of Objection” is not defined or described in either Section 165 or 248 of the Act. Nor should it be. It is a matter of substance, not form. The Shorter Oxford Dictionary, 3rd Edition, defines “Objection” as:
“The action of starting something in opposition to a person or thing… an adverse reason, argument or contention. Now often merely: An expression, or feeling, of disapproval, disagreement or dislike…”
[10] That is what the Applicant did when he sent his request respecting the 2002, 2003 and 2004 Reassessments of 27 April 2006 to CRA which they received on 12 May 2006. They constituted timely Notices of Objection.
[11] As a result, the Applicant does not need an extension of time in which to file Notices of Objection. He has done that.
[…]
[13] In these circumstances, this Application is dismissed because it is not necessary. Mr. Schneidmiller has the right to appeal these reassessments to the Tax Court of Canada now.
Uh, what about subsection 165(2), which states that “a notice of objection under this section shall be served by being addressed to the Chief of Appeals in a District Office or a Taxation Centre of the Canada Revenue Agency and delivered or mailed to that Office or Centre”? The requirement respecting service on a Chief of Appeals is mandatory. I’m guessing the taxpayer didn’t meet this condition because he didn’t send the T1ADJs to the Chief of Appeals at the Surrey Tax Centre. Why would he, when the form itself doesn’t say anything about that requirement?
Anyway, it doesn’t appear that the Crown has filed an appeal from this decision. No doubt Mr. Schneidmiller had the full sympathy of the Court for obvious reasons, but any other taxpayer should think twice before emulating his example in dealing with a reassessment.
