I’m often forced to explain to clients that, when it comes to tax debts and assessments, the “usual” limitation periods don’t apply. Mr. Justice Juriansz, in Danso-Coffey v. Ontario, 2010 ONCA 171, wrote that “time limits and limitation periods serve a valuable function in the legal process by promoting finality.” That principle is true for you and me, but the government is special, after all, and so “finality” doesn’t really apply to tax debts and the ability of the government to issue assessments in many cases. The Ontario government, in particular, with all its money and resources, can take its time about collecting debts or issuing assessments, and often does. Browning v. The Queen, 2010 TCC 487, then, is a refreshing reminder that sometimes even the government needs to respect limitation periods.
Assessments
In Danso-Coffey v. Ontario, 2010 ONCA 171, the Ontario Court of Appeal considered whether Ontario could assess and collect tax from an individual who was supposedly a director of a corporation when, it turned out, she wasn’t. The Court concluded that Ontario could assess and collect the tax if the individual failed to follow the appropriate procedures in the Retail Sales Tax Act (the “RSTA”) for disputing the assessment.
Trust accounts
In Canada Trustco Mortgage Company v. The Queen, 2008 TCC 482, aff’d 2009 FCA 267, the Tax Court held that a financial institution must comply with a requirement to pay even where the the funds sought to be seized from the institution were held in a lawyer’s trust account.
Limitation Periods and Collections
In Markevich v. The Queen, 2003 SCC 9, the Supreme Court held that a limitation period applied to prevent the CRA from collecting an old tax debt. The CRA was no different from the rest of us, the Court said: limitation periods exist for good reasons, and the reasons apply to the government as well as those it governs.