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Federal Tax - Tax Court of Canada (2). Comme Corporation v. Canada [time extension]
In Comme Corporation v. Canada (Fed CA, 2024) the Federal Court of Appeal notes the (unsurprising) requirement that a request for a time extension (here, to commence an appeal) will not be granted prior to the time period starting to run:[6] Filing a valid notice of objection is a condition precedent to commencing an appeal to the Tax Court (Beima v. Canada, 2016 FCA 205, at paragraph 14). Since the appellant did not file a valid notice of objection, the time period to commence an appeal to the Tax Court has not commenced. As noted in Beima, at paragraph 14, “[a]n extension of time is not available if the time period has not commenced”.
[7] The Act stipulates specific requirements for making an objection to the Minister and filing an appeal to the Tax Court. The appellant did not comply with these requirements. Neither the Tax Court nor this Court has the jurisdiction (either equitable or otherwise) to waive compliance with or modify these statutory requirements. . Rafique v. Canada (National Revenue)
In Rafique v. Canada (National Revenue) (Fed CA, 2024) the Federal Court of Appeal noted Tax Court of Canada (General) Rule 170.1 ['Setting Aside, Varying or Amending Interlocutory Judgments'], here as argued to vacate assessments:[5] The Tax Court judge considered whether rule 170.1 applied. As this Court explained in Georgeson Shareholder Communications Canada Inc. v. Canada, 2020 FCA 139 at para. 9, rule 170.1 allows a party to apply for judgment at any stage in a proceeding where “there is nothing in controversy, either regarding the facts or a fairly arguable legal issue.” It may apply, for example, where there has been an admission in the pleadings.
[6] The appellant had argued that the Minister’s alleged admission of failing to reconsider the appellant’s assessment “with all due dispatch” following a notice of objection (as required by subsection 165(3) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.)) warranted the assessments being vacated. The Tax Court judge disagreed, relying on applicable case law.
[7] We agree with this conclusion. As this Court has confirmed, the Minister’s failure to act “with all due dispatch” is not a basis for overturning an assessment; the taxpayer’s remedy is to appeal directly to the Tax Court under paragraph 169(1)(b) of the Income Tax Act: Ford v. Canada, 2014 FCA 257 at para. 19, citing Bolton v. The Queen, 1996 CanLII 21607 (FCA), [1996] 3 C.T.C 3, 200 N.R. 303. . Gloglo v. Canada (National Revenue)
In Gloglo v. Canada (National Revenue) (Fed CA, 2023) the Federal Court of Appeal notes the statutory status of the Tax Court:[5] The Tax Court of Canada is a statutory court. It derives its jurisdiction from statutory sources, such as the CPP. ... . Polarsat Inc. v. Canada
In Polarsat Inc. v. Canada (Fed CA, 2023) the Federal Court of Appeal considered (and dismissed) an appeal against a Tax Court's ordering of an "amended Reply to the Notice of Appeal" by the Crown respondent which introduced a new legal argument:[1] The appellant appeals from an Order of the Tax Court of Canada (the Tax Court), dated January 25, 2023 (per Favreau J.): 2023 TCC 10. The Tax Court permitted the respondent, pursuant to section 54 of the Tax Court of Canada Rules (General Procedure), SOR/90-688a, to file an amended Reply to the Notice of Appeal.
[2] The appeal before the Tax Court puts at issue the appellant’s status as a Canadian Controlled Private Corporation and its entitlement to an enhanced refundable investment tax credit pursuant to subsection 127(10.1) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (the Act) for the 2011 to 2015 taxation years. The amended Reply introduces an alternative argument based on the general anti-avoidance rule (GAAR).
[3] It is trite—and the Tax Court expressly referred to this guiding principle at paragraph 53 of its decision—that an amendment to a pleading should be allowed if it (i) assists the tribunal in determining the real questions in controversy, (ii) does not result in an injustice to the other party not compensable by costs and (iii) serves the interests of justice (El Ad Ontario Trust v. Canada, 2023 FCA 231 at para. 4 (El Ad Ontario), citing Canada v. Pomeroy Acquireco Ltd., 2021 FCA 187, 462 D.L.R. (4th) 577 at para. 4 (Pomeroy)).
[4] It is also trite that the decision to permit or not an amendment to a pleading is entirely within the discretion of the Tax Court. Decisions of this type are to be reviewed by this Court under the standard of review set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. This means that absent an error on a question of law or an extricable legal principle, such decisions are reviewable on the highly deferential standard of palpable and overriding error (El Ad Ontario at para. 8, citing Hospira Healthcare Corporation v. Kennedy Institute of Rheumatology, 2016 FCA 215, [2017] 1 F.C.R. 331 at para. 79; Canada v. South Yukon Forest Corporation, 2012 FCA 165, 431 N.R. 286 at para. 46 (South Yukon Forest).
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[7] The appellant then submits that the Tax Court erred by not requiring the respondent to justify its amendment by adducing evidence relevant to the determination of the motion and by explaining why “after having taken the institutional position that GAAR was not applicable for the last nine (9) years, [it] suddenly changed its mind.”
[8] Again, we do not see any merit to this contention. As stated above, amendments should be allowed “at any stage of an action” (Pomeroy at para. 4), provided they assist in determining the real questions in controversy between the parties, do not result in an injustice not compensable in costs and serve the interests of justice. As alluded to by the Tax Court, this test is anchored in section 152(9) of the Act, which allows the respondent, subject to certain limitations, to advance an alternative argument in support of an assessment “[a]t any time after the normal reassessment period.”
[9] The Tax Court was satisfied that the respondent’s evidence—that of a paralegal with no personal knowledge of the facts of the case—was satisfactory “in its present form because no new facts requiring personal knowledge by the deponent and not already mentioned in the pleadings [had] been advanced in the notice of motion.” In our view, this finding was open to the Tax Court based on the record before it.
[10] It was open to it as well to conclude that the respondent “should not be precluded from adding an alternative argument in a reply because some officers of the CRA, no matter how important they are, have decided not to do so in the pre-trial steps.” We agree with the respondent that concluding otherwise would impose on it an additional burden not contemplated in the test to amend. We also agree that the appellant’s reliance on this Court’s decisions in Merck & Co., Inc. v. Apotex Inc., 2003 FCA 488, [2004] 2 F.C.R. 459 (Merck) and Apotex Inc. v. Bristol-Myers Squibb Company, 2011 FCA 34, 414 N.R. 162 (Apotex) is of little, if any, assistance to it as those cases (i) deal with non-tax-related matters, (ii) in the case of Merck pertain to amendments to withdraw substantial admissions, where the burden for the party seeking the amendments is much heavier (Merck at para. 32; Apotex at para. 3), and most importantly (iii) do not support the proposition that the moving party has the burden of proving the facts justifying the amendments, as opposed to demonstrating that the test for amendment is met.
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