I’ve said it before, and I’ll say it again: the procedural rules for tax disputes are strict: they do not leave room for what is “fair”. In Hess v. R, 2011 TCC 387, the taxpayer, it might have been argued, filed an objection to a notice of assessment issued in 2003. The CRA, however, reassessed the taxpayer for the same year in 2006, and the taxpayer took no action in respect of the subsequent reassessment until 2009. Justice Woods responded to the fairness argument as follows:
Justice
It’s hard educating clients about the tax system and what they’re up against when disputing assessments. Clients will often complain not just about the assessments they are fighting but the attitude of the auditor, the delays caused by the CRA and the unfairness inherent in a tax system that only a very few understand really well. The taxpayers in Lauger v. The Queen, 2007 TCC 650, brought these complaints to Tax Court with them and asked the Court to do the Right Thing. To which the Court, in dismissing the appeals, responded “I must decide whether the assessments are well-founded or not”.
Valid Appeals and Objections
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.
Objections Tips and Tricks
I’ve written a short article that provides some tips and tricks for preparing a notice of objection.
Limitation Periods
The following article appeared in the latest edition of the Hamilton Law Association Law Journal.
The Income Tax Act (Canada) (the “Act”) contains numerous limitation periods that affect when the Canada Revenue Agency (the “CRA”) can issue an assessment to a taxpayer and when a taxpayer can and cannot dispute such an assessment. Understanding these limitation periods is an important pre-requisite for advising clients about a wide variety of legal problems, including, for example, the expiry period for representations and warranties in a share purchase agreement.
Procedure
In Corsi v. The Queen, 2008 TCC 472, the CRA sent a 160 assessment to the taxpayer by registered mail in June, 2004, to her home address, which was not the address the CRA had on file for the taxpayer. For whatever reason, the taxpayer didn’t pick up the mail, and it was returned to the CRA. The CRA did nothing more with the assessment, but some time thereafter CRA Collections started calling the taxpayer. This was the first she heard about the assessment. The CRA then mailed a copy of the assessment to the taxpayer’s accountant in October, 2005, more than one year and 90 days after the first assessment was supposedly sent.
Objection Held in Abeyance
In my post for June 17, I discussed a case allowing interest relief for court-related delay for a taxpayer whose objection was held in abeyance pending the outcome of the court case. In the June 5 Tax Topics, John Yuan points out a potential trap for a taxpayer whose objection is being held in abeyance.
Nil Assessments
A taxpayer cannot object to or appeal from a nil assessment. The courts have held that a piece of paper that says you don’t owe any tax is not an assessment for the purposes of the Income Tax Act even though it might have that word printed at the top of it.
Anchor Pointe
The Supreme Court has dismissed with costs the taxpayer’s application for leave to appeal from the Federal Court of Appeal’s decision in The Queen v. Anchor Pointe Energy Ltd., 2007 FCA 188.
Anchor Pointe allowed
The Federal Court of Appeal, in The Queen v. Anchor Pointe Energy Ltd., 2007 FCA 188, has reversed Chief Justice Bowman’s decision in 2006 TCC 424. I discuss the latter decision here.