Paragraph 248(7)(a) of the Income Tax Act (Canada) deems a return or other document mailed by first class mail to be received by the addressee on the date it is mailed. What happens if you send a document to the CRA by mail and it says it didn’t get it? The answer seems to be that you or your accountant had better have a standard procedure for mailing documents about which you can give evidence to convince the CRA or a court on a balance of probabilities that the document was mailed even if the CRA did not get it.
In Skyway Developments Ltd v R, 2007 TCC 616, the taxpayer claimed it had filed its return for the 2000 taxation year before the six-month deadline date. The CRA had no record of having received the return, and it mattered because the return included a claim for a dividend refund.
The taxpayer had to overcome some unhelpful facts at trial. The CRA had followed-up twice about not having received a return, and the taxpayer had filed returns late twice previously. The trial judge, however, was convinced, ultimately, by the accountant’s testimony about his standard practice in preparing and filing the taxpayer’s returns:
[17] I have assessed the evidence of the Chartered Accountant of the Appellant Mr. Close, and find him to appear to be a forthright, honest and frank person and, not unlike many chartered accountants, very conservative in the way he conducts his practice. He produced records to corroborate his evidence (Time Records, letter to the client, Statement of Account). Admittedly, there is no direct evidence as to the actual mailing of the tax return in question but the return in question had been prepared, signed and confirmed by the principal of the Appellant, Mr. McGrath following the standard practice and procedure of the Appellant’s Chartered Accountant, Mr. Close, for many years. Although they were late in filing in two prior cases, one was really neither here nor there because there were no taxes owing and the other one was nine days late and there was a dispute by Mr. Close as to whether or not in fact it was late. It certainly does appear that Mr. Close had an established practice in dealing with the preparation of the financial information of the company for the purpose of preparing financial statements, the preparation of the financial statements and income tax return, the meeting with the client for the review of the financial statements and the income return and the attendance for the execution by the client of the income tax return and then the mailing of same after the meeting. This practice and procedure was confirmed by the principal of the company, Mr. McGrath, and by Mr. McGrath’s former partner in the company, Mr. Tippitt. Neither Mr. McGrath or Mr. Tippitt could testify as to when the tax returns would normally be mailed as they left that to Mr. Close; their evidence does however carry weight in appreciating the plausibility of the evidence adduced by Mr. Close.
[18] I accept Mr. Close’s version of what occurred on October 10, 2000 with respect to this return and on the balance of probabilities agree with the Appellant that the tax return was mailed within the time period prescribed by paragraph 150(1)(a) of the Act.
