S 244(15) of the Income Tax Act (Canada) provides that an assessment is deemed to have been made on the date that it is sent, and the date on which an assessment is sent by first class mail “or its equivalent” is deemed to be the date on which it is received by the recipient (per s 248(7)(a)). These are deeming rules that create legal fictions that are not subject to rebuttal. For example, where the CRA can prove that it sent a notice of confirmation to the taxpayer’s correct address on a particular date, the limitation period for filing an appeal starts to run on that date, even if the taxpayer never receives the notice (because, say, the taxpayer says it was sent to the wrong address). See Charendoff v R, 2005 TCC 300, [2005] 3 CTC 2200, 59 DTC 742.
What is the date of mailing for the purposes of the foregoing rules? S 244(14) provides that an assessment or confirmation is presumed to be sent on the date shown on the notice. Where the taxpayer can provide evidence that the date on the notice was not the date of mailing, then ordinarily the CRA will be required to provide evidence to confirm the date of mailing. The CRA usually does this via an affidavit or other evidence of its mail room procedures per the so-called “mail room cases”. For an example of this mode of proof, see Barrington Lane Developments Limited v R, 2010 TCC 388, at para 8:
[8] The evidence of the Respondent, who called two Canada Revenue Agency (“CRA”) employees of the Winnipeg Manitoba Printing and Mail site to testify, was that there are only two printing and mail sites serving Canada, one of which is based in Winnipeg, Manitoba, and the other in Summerside, Prince Edward Island. The process for mailing notices was described as follows: one of the two sites is selected by CRA’s Ottawa headquarters and instructions are sent electronically to one of the sites. Once instructions are received, the notices of assessment or reassessment are printed on site and transferred to a production control desk where the notices are folded and inserted manually into a pre-printed registered mail envelope with the name and address of the taxpayer. The registered mail envelopes are then scanned to create a log of registered mail, setting out the date of shipping, tracking number, the name of the taxpayer and a cycle number referencing the batch of notices which were initially electronically downloaded as a group. Each notice page sent to a taxpayer contains a sequential number which can be cross-referenced to the cycle number as well. The envelopes are then deposited into a Canada Post container located on site and picked up by Canada Post with a statement of mailing printed by CRA showing the date of mailing and payment therefore, a copy of which is given to Canada Post.
[9] With respect to this particular notice of reassessment, the testimony of the CRA witnesses was that instructions from Ottawa to print out the batch which contained the notice of reassessment, described as cycle No. 2644, were received January 10, 2008 and the registered mail envelopes were scanned on January 14, 2008, containing as indicated the same cycle number, date of shipping, tracking number and name of the taxpayer.
I am aware of a case where the taxpayer was assessed initially for a taxation year on May 1 of the following year. Three years later, the CRA sent a reassessment dated April 28. The CRA accepted that it was only entitled to reassess the taxpayer within the normal reassessment period, which meant that, going by the date on the reassessment, the CRA had issued the reassessment in time. The envelope containing the reassessment, however, was postmarked May 2, which was one day after the expiry of the normal reassessment period.
On appeal, the taxpayer pleaded that the CRA had not reassessed in a timely manner based on the evidence provided by the envelope in which the reassessment had arrived. Justice, on behalf of the CRA, eventually conceded that it could not provide adequate mail room evidence of the date on which the reassessment was sent and agreed to allow the appeal because the envelope constituted the best evidence of the date the reassessment was sent. The reassessment that was reversed had denied a rather large deduction the taxpayer had claimed, and so the envelope effectively ended up being worth tens of thousands of dollars to the taxpayer.
Update on June 18, 2018
One of my intrepid readers asked about the application of the foregoing principles in the age of email. This point is addressed by s 244(14.1), which reads as follows:
For the purposes of this Act, if a notice or other communication in respect of a person or partnership is made available in electronic format such that it can be read or perceived by a person or a computer system or other similar device, the notice or other communication is presumed to be sent to the person or partnership and received by the person or partnership on the date that an electronic message is sent, to the electronic address most recently provided before that date by the person or partnership to the Minister for the purposes of this subsection, informing the person or partnership that a notice or other communication requiring the person or partnership’s immediate attention is available in the person or partnership’s secure electronic account. A notice or other communication is considered to be made available if it is posted by the Minister in the person or partnership’s secure electronic account and the person or partnership has authorized that notices or other communications may be made available in this manner and has not before that date revoked that authorization in a manner specified by the Minister.
This provision was added by the 2010 Budget, effective December 15, 2010.
