|
Federal Tax - Tax Court of Canada (3). Shull v. Canada [informal proceedings]
In Shull v. Canada (Fed CA, 2025) the Federal Court of Appeal considers 'informal proceedings' in the Tax Court:[36] First, Mr. Shull’s argument that the Tax Court erred by not applying section 18.28 of the Tax Court of Canada Act, and instead accepting the respondent’s submission that issue estoppel applied, is entirely without merit.
[37] Section 18.28 provides that a judgment on an appeal under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) in an informal proceeding before the Tax Court cannot be treated as a precedent for any other appeal. This rule applies to judgments in GST appeals taken in an informal proceeding: Tax Court of Canada Act, s. 18.302. However, the Tax Court did not treat the GST appeal as a precedent. Rather, it applied the principle of issue estoppel, a principle that is not displaced by section 18.28 of the Tax Court of Canada Act: 742190 Ontario Inc. (Van Del Manor Nursing Homes) v. Canada (Customs and Revenue Agency), 2010 FCA 162 at paras. 41-44; Connolly v. Canada (National Revenue), 2019 FCA 161 at para. 74. . Shull v. Canada [representation]
In Shull v. Canada (Fed CA, 2025) the Federal Court of Appeal considered representation in the Tax Court:[10] Before the Tax Court, David Lindsay represented Mr. Shull. While Mr. Lindsay is not a lawyer, an agent may represent an individual in the Tax Court in informal proceedings: Tax Court of Canada Act, R.S.C. 1985, c. T-2, s. 18.14; Tax Court of Canada Rules (Informal Procedure), S.O.R./90-688b (Informal Rules). Mr. Shull’s appeal was governed by those rules. . Vetrici v. Canada (Attorney General)
In Vetrici v. Canada (Attorney General) (Fed CA, 2025) the Federal Court of Appeal dismissed an appeal from a JR of a CRB-CERB matter.
In this context, the court considers the comparative jurisdiction of the Federal Court on a JR, and the Tax Court:[4] ... he contends that only the Tax Court of Canada could review the determination of income made by the Agency in assessing his eligibility to the CERB and the CRB. We note that this argument was not raised in the Federal Court. In any event, we are all of the view that it has no merit particularly in light of the recent Supreme Court of Canada decision in Dow Chemical Canada ULC v. Canada, 2024 SCC 23 (Dow). As the Supreme Court reminded us in Dow, the Federal Court has exclusive jurisdiction to conduct judicial review of federal administrative action. That jurisdiction can only be ousted in favour of the Tax Court of Canada where, as provided for under section 18.5 of the Federal Courts Act, R.S.C., 1985, c. F-7, Parliament has "“expressly”" provided for an appeal to that Court (Dow at paras. 12 and 101). In other words, the Federal Court "“retains jurisdiction over ministerial decisions that are not subject to an appeal to the Tax Court”" (Dow at para. 112).
[5] The Tax Court’s appeal jurisdiction is limited to reviewing, through a de novo process, the correctness of tax assessments (Dow at paras. 6 and 47). Tax assessments are determinations made by the Minister of National Revenue of a taxpayer’s tax liability for a particular taxation year (Dow at paras. 43–46). As the Supreme Court stated in Dow, the Tax Court has never been a "“single forum for all tax litigation”" and its jurisdiction cannot be "“enlarged by necessary implication”" (Dow at paras. 101,110).
[6] Here, determining eligibility to statutory benefits has nothing to do with assessing a taxpayer’s tax liability for a particular taxation year. Those are very different things. The Tax Court has express—exclusive—jurisdiction in relation to the latter, but none in relation to the CERB Act or the CRB Act. The fact that determining eligibility to the statutory benefits at issue in this case requires income determination does not confer jurisdiction on the Tax Court. The appellant’s contention, as we understand it, is that every time an income determination is to be made by a government official, even in a non-tax liability context, that determination can only be reviewed by the Tax Court. There is no support for such a broad proposition. . Sodecia Canada Investments Inc. v. Canada [time limits re notices of objection]
In Sodecia Canada Investments Inc. v. Canada (Fed CA, 2024) the Federal Court of Appeal dismissed an appeal, this from the quashing of a Tax Court (TCC) appeal ('notice of objection') of a notice of assessment [of which proof of mailing is governed under ITA s.244(10)], which here turned on the TCC 90-day appeal limitation [under ITA s.165(1)(a)(ii)]:[2] A taxpayer’s right to appeal to the TCC is predicated on the service of a valid notice of objection within the time limits outlined in section 169 of the ITA. Subparagraph 165(1)(a)(ii) of the ITA provides a taxpayer with 90 days from the date of a notice of assessment to object. The taxpayer may apply to the Minister to extend the time for service to one year after the expiry of the 90 days otherwise provided for in the ITA (paragraph 166.1(7)(a)).
[3] The appellant argued before the TCC that although the assessment bears the date of June 8, 2017, the Canada Revenue Agency (CRA) did not mail it until June 6, 2022, in which case its notice of objection, dated July 11, 2022, was timely.
[4] The Tax Court judge adopted the four-part test established in Mpamugo v. The Queen (2016 TCC 215, aff’d 2017 FCA 136 [Mpamugo]) to guide his analysis of the question of whether the Minister mailed the notice of assessment on the date indicated on the notice of assessment. The second step of Mpamugo, with which we are concerned, requires the Minister to prove on a balance of probabilities that the notice of assessment was mailed."
[5] After a review of the evidence, Smith J. was satisfied that the Minister established that the notice of assessment was mailed on June 8, 2017 (TCC Decision, at paras. 65-72, 82). It is this date that the assessment is deemed to have been made, and that the notice of assessment is deemed to have been received (subsection 244(15) and paragraph 248(7)(a) of the ITA).
[6] The Minister filed three affidavits in support of the motion. Subsection 244(10) of the ITA provides that, subject to certain preconditions, an affidavit from a CRA officer deposing that a notice of assessment was mailed on a certain day is, in the absence of proof to the contrary, evidence of the statements contained in it. The affiants were cross-examined on their affidavits, and testified before the judge, where they were again cross-examined.
....
[11] There is no requirement under subsection 244(10) for personal knowledge with respect to the preparation and mailing of a particular notice of assessment. The subsection only requires that a CRA officer attest that they have charge of the appropriate records, knowledge of CRA’s practices and procedures and that a search of the records shows that a notice of assessment was mailed. Subsection 244(10) is a reflection of the simple reality that personal knowledge of particular mailings is impossible given CRA mails over 55 million items each year and that the question whether a notice of assessment was sent arises well after the fact of mailing. Subsection 244(10) also aligns with the business records provisions of the Canada Evidence Act, R.S.C., 1985, c. C-5, section 30. . Aslam v. Canada
In Aslam v. Canada (Fed CA, 2024) the Federal Court of Appeal cites a heightened SOR for "an appeal from a case decided under the informal procedure in the Tax Court" [Federal Court Act s.27(1.3)(d)]:[3] In this Court, Mr. Aslam essentially asks us, a Court sitting in appeal of a judgment of the Tax Court, to retry the case and come to a conclusion different from the one the Tax Court reached. Unfortunately, we cannot do that. We cannot reweigh the evidence and come to a different conclusion on the facts. Instead, in usual appeals in this Court, all we can do is examine whether the Tax Court erred in law, committed an obvious error capable of changing the result of the case (i.e., "“palpable and overriding error”") (Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235), or acted in a procedurally unfair way (British Columbia v. Imperial Tobacco Canada Ltd., 2005 SCC 49, [2005] 2 S.C.R. 473 at para. 76). Even further, given that this is an appeal from a case decided under the informal procedure in the Tax Court, the judgment of the Tax Court on factual issues must have been made "“in a perverse or capricious manner or without regard for the material before it”": Federal Courts Act, R.S.C. 1985, c. F-7, s. 27(1.3)(d). Here, none of these flaws are present. Therefore, we must leave the judgment of the Tax Court in place. . Keystone RV Company v. Canada (the King)
In Keystone RV Company v. Canada (the King) (Fed CA, 2024) the Federal Court of Appeal dismissed an appeal from interlocutory decisions of the Tax Court relating to tax re-assessments under the Excise Tax Act (GST/HST).
Here the court reviewed Rule 170.1 of the Tax Court of Canada Rules (General Procedure) ['Judgments on Admissions or Certain Documentary Evidence']:[6] For the reasons that follow, I first find no error of law or palpable and overriding error in the Tax Court’s analysis and rejection of Keystone’s Rule 170.1 motion.
[7] Rule 170.1 provides in part that:170.1 A party may, at any stage of a proceeding, apply for judgment in respect of any matter
170.1 Une partie peut, à tout stade d’une procédure, et ce, sans attendre qu’il soit statué sur tout autre point litigieux entre les parties, demander :
(a) upon any admission in the pleadings or other documents filed in the Court, or in the examination of another party, or
(a) qu’il soit rendu jugement sur toute question, par suite d’un aveu fait dans les actes de procédure ou d’autres documents déposés à la Cour, ou fait au cours de l’interrogatoire d’une autre partie; [8] In the Decision, the Tax Court correctly identified the principles relevant to a Rule 170.1 motion: namely, Rule 170.1 allows a party to apply for judgment at any stage in a proceeding only if "“there is nothing in controversy, either regarding the facts or a fairly arguable legal issue”" (Georgeson Shareholder Communications Canada Inc. v. Canada, 2020 FCA 139 at para. 9 (Georgeson); see also Iris Technologies Inc. v. Canada, 2023 FCA 127 at para. 11 (Iris FCA)).
....
[14] In any event, I do not find Keystone’s argument persuasive. While Rule 170.1 provides that a party may apply for judgment in respect of any matter, Keystone points to no authority that limits the Georgeson principle requiring no remaining conflict between the parties to specific matters or, in this case, specific assumptions made in a reassessment. In addition, none of subsections 298(6.1), (6.2) and (6.3) of the Act, the legislative bases for the amended Reply, make reference to a matter. To the contrary, the subsections make clear that the Minister may advance an alternative basis or argument in support of the assessment of a taxpayer, or in support of all or any portion of the amount originally determined on assessment. . Keystone RV Company v. Canada (the King)
In Keystone RV Company v. Canada (the King) (Fed CA, 2024) the Federal Court of Appeal dismissed an appeal from interlocutory decisions of the Tax Court relating to tax re-assessments under the Excise Tax Act (GST/HST).
Here the court considered when a Crown admission which reduced the quantum of assessments, but done in the course of an appeal, amounted to a prohibited self-appeal:[17] Keystone next argues that the respondent’s Rule 54 motion was an attempt to appeal the Minister’s own assessment (Continental Bank of Canada v. Canada, [1998] 2 S.C.R. 358, 1998 CanLII 795) and was abusive.
[18] I disagree. The Tax Court made no reviewable error in exercising its discretion and granting the respondent’s Rule 54 motion in light of its rejection of Keystone’s Rule 170.1 motion. The Tax Court correctly noted the breadth of the parties’ ability to amend their pleadings (Canada v. Pomeroy Acquireco Ltd., 2021 FCA 187 (Pomeroy)) and applied subsections 298(3), (6.1), (6.2) and (6.3) of the Act. The amended Reply assists in determining the real questions in controversy between the parties, does not result in an injustice not compensable in costs and serves the interests of justice (Pomeroy at para. 4). The Tax Court did not err in finding that the respondent was permitted to reduce the amount reassessed and advance an alternative argument or basis in support of the reassessments, as it does in the amended Reply.
[19] I agree with the Tax Court that the Minister’s concession was not an appeal of the Minister’s assessment. A concession that results in the reduction of the amount assessed cannot be said to be an attempt by the Minister to appeal her assessment (Beaulieu v. The Queen, 2005 TCC 605, at paras. 43, 51–52, aff’d 2006 FCA 317). Keystone referred in oral argument to the recent decision in TPine Leasing Capital Corporation v. Canada, 2024 FCA 83 (TPine) in which this Court confirmed the principle that the Minister cannot appeal an assessment and stated that the principle must be considered in determining what alternative basis or argument the Minister may advance (TPine at paras. 84-85, 90). However, at issue in TPine was a prior version of subsection 159(2) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), a provision then materially different from subsections 298(6.1), (6.2) and (6.3) of the Act. Nevertheless, I would add that the motions judge’s reasoning is consistent with TPine. He stated that the amended Reply put the same legislation and transactions in issue; caused no prejudice to Keystone as the motion was brought before discoveries; and did not seek to increase the amount of tax assessed against Keystone, all conforming with the requirements of subsections 298(3), (6.1), (6.2) and (6.3). I find that Keystone has not established a palpable and overriding error in the motions judge’s analysis of the Rule 54 motion. . Antrobus v. Canada
In Antrobus v. Canada (Fed CA, 2024) the Federal Court of Appeal dismissed appeal of a Tax Court order that "dismissed the appellant’s applications for extensions of time to file notices of objection to two reassessments":[2] The notices of reassessment, dated July 14, 2017 and January 4, 2018, denied the appellant’s claims for a new housing rebate under Part IX of the Excise Tax Act, R.S.C. 1985, c. E‑15, in connection with properties she purchased in 2016 and 2017.
[3] Under the Excise Tax Act, a taxpayer who wishes to object to a reassessment must file a notice of objection in "“the prescribed form and manner”" within 90 days of the mailing of the notice of reassessment: Excise Tax Act, s. 301(1.1). The Minister of National Revenue may, but is not required to, accept a notice of objection not filed in prescribed manner: Excise Tax Act, s. 301(2).
[4] If the taxpayer fails to timely file a notice of objection, they may apply to the Minister for an extension of time to do so, but that application must be made within one year of the date the notice of objection was otherwise due: Excise Tax Act, s. 303(7)(a). Where the Minister refuses the application or does not respond to it within 90 days, the taxpayer may apply to the Tax Court for an extension of time to object: Excise Tax Act, s. 304(1). Thus, the Tax Court cannot grant an extension of time unless the taxpayer has first sought an extension of time from the Minister.
[5] Here the relevant 90-day periods for objecting ended on October 12, 2017 and April 4, 2018, respectively. In each case, the one-year period for applying to the Minister for an extension of time to object ran from the end of the 90-day period.
[6] Before the Tax Court, the appellant explained that over several years, both before and after receiving the reassessments, she had several telephone conversations with representatives of the Canada Revenue Agency (CRA) audit division and had submitted and resubmitted documents they requested in support of her applications for the new housing rebate.
[7] The Tax Court found that the appellant did not file a notice of objection to either reassessment within the 90-day period, nor apply to the Minister for an extension of time to do so within the relevant one-year periods. As a result, the Tax Court concluded it could not grant her an extension of time to object to the reassessments.
[8] Before us, the appellant argues that the Tax Court erred in failing to recognize that her communications with the CRA constituted a notice of objection that the Minister accepted as permitted by subsection 301(2) of the Excise Tax Act.
[9] While the Tax Court did not address this question explicitly in its reasons, on appeal we must assess whether the reasons are sufficient in the context of the case for which they were given and with the presumption that the judge knows the law that they work with daily: R. v. G.F., 2021 SCC 20 at paras. 68-69, 74. Reasons need not explain the "“what”" and the "“why”" when the answers to those questions are clear in the record: R. v. G.F. at para. 70, citing R. v. R.E.M., 2008 SCC 5 at paras. 38-40 and R. v. Sheppard, 2002 SCC 26 at paras. 46, 55. We must presume that judges based their conclusion on a review of the entirety of the evidence unless it is clear they did not: Housen v. Nikolaisen, 2002 SCC 33 at para. 72.
[10] Here the Tax Court properly described the issue before it as whether a notice of objection was filed within the relevant 90-day period or a request had been made to the Minister for an extension of time to file it within the relevant one-year period. It then said "“I find that...the answer to both those questions is the answer no.”"
[11] This is a finding of mixed fact and law. Under the appellate standard of review that applies on this appeal, we cannot interfere with a finding of mixed fact and law absent a palpable and overriding error, or an extricable error of law: Housen v Nikolaisen at para. 36. The appellant has not identified any such error.
[12] Moreover, I have carefully reviewed the transcript of the proceedings before the Tax Court and the documents in the record before it. In my view, the Tax Court’s conclusion that the appellant did not file a notice of objection to either reassessment is entirely consistent with that evidence. I see no reviewable errors.
[13] That said, like the Tax Court, I have significant sympathy for the appellant. She communicated with the CRA in an attempt to resolve her tax matters informally. She thought she was doing everything she was required to do so that a notice of objection was not necessary. As she saw it, the CRA asked for documents and she provided them, so the matter would be resolved.
[14] The appellant is not unique. Every year hundreds of applications to extend the time to file an objection or appeal come before the Tax Court: Xu v. The King, 2022 TCC 108 at para. 18. Some are successful; many are not. What is clear, however, is many taxpayers believe communicating with the CRA, and responding to its requests for information, is sufficient to amount to an objection to an assessment, only to have the Minister take the position they have missed the deadline to object: see, for example, Ihama-Anthony v. The Queen, 2018 TCC 262 at para. 37; FOOi Inc. v. The King, 2023 TCC 176; Vidal v. The Queen, 2022 TCC 54; Schneidmiller v. The Queen, 2009 TCC 354 at para. 3; Xu v. The King at paras. 25-26. Worse, in some cases the CRA misinforms taxpayers to their detriment: Adams v. The King, 2023 TCC 86 at para. 24; Campbell v. The King, 2023 TCC 170 at para. 27.
[15] The Supreme Court of Canada emphasizes the importance of removing barriers that impede access to justice: Hryniak v. Mauldin, 2014 SCC 7 at para. 1. Many taxpayers simply cannot afford to engage tax professionals to assist them in dealing with the CRA. Yet, in this case, rather than clearly informing the appellant about the critical importance of the timely filing of a notice of objection, her notices of reassessment included general statements about where to find more information about her reassessment and objecting to it, and how to contact the CRA. While I attribute no ill will to the CRA or its representatives, simply put, that does not reflect the stakes. I am certain the CRA can and should do better. . Iris Technologies Inc. v. Canada
In Iris Technologies Inc. v. Canada (SCC, 2024) the Supreme Court of Canada dismisses an appeal regarding "the shared statutory jurisdiction in tax matters of the Tax Court of Canada and the Federal Court of Canada":[2] It brings into plain focus the divide between the exclusive jurisdiction of the Tax Court to hear “appeals” relating to the correctness of tax assessments and the exclusive jurisdiction of the Federal Court to conduct judicial review in tax matters. The appeal in this case helps explain why the appeal in Dow should — as the Federal Court of Appeal held — give rise to a different outcome, based on a principled understanding of the distinct statutory foundations for the exclusive jurisdiction of these two courts established by Parliament.
[3] In the result, I agree with the conclusion of my colleague Côté J. to dismiss the taxpayer’s appeal before our Court but, with respect, my conclusion rests on different reasons.
[4] In my view, the Federal Court of Appeal’s reasoning is entirely well founded, including its statement that the Tax Court does not have jurisdiction where the true purpose of an application for judicial review is to “seek practical relief against the exercise of a discretion” by the Minister of National Revenue (2022 FCA 101, [2022] 1 F.C.R. 401, at para. 13). As Rennie J.A. observed, in the circumstance of ministerial discretion, the statutory rule ousting Federal Court jurisdiction in judicial review in favour of the Tax Court does not apply. This explains, as Rennie J.A. said for the court, why the outcome of the Federal Court of Appeal’s decision in Canada v. Dow Chemical Canada ULC, 2022 FCA 70, [2022] 5 C.T.C. 1 (“Dow FCA”), is favourable to the Federal Court’s jurisdiction where the discretionary ministerial decision under s. 247(10) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) (“ITA”), was at the centre of the jurisdictional debate.
[5] In other words, the Federal Court of Appeal in this case confirmed its decision in the partner case of Dow FCA in which it recognized the exclusive jurisdiction of the Federal Court over a ministerial discretionary decision provide for by the ITA. In this case, the Federal Court of Appeal recognized the exclusive jurisdiction of the Tax Court in appeals of the assessments where no such ministerial discretion was involved. Importantly, Rennie J.A. said, at para. 13 of his reasons, that the decisions of the Federal Court of Appeal in the two companion cases, with their apparently divergent outcomes, are entirely compatible.
[6] I agree with Rennie J.A.
[7] Significantly, the reasoning of the Federal Court of Appeal that I propose to endorse on this point explains, jurisprudentially, the proper contours of the dividing line between the exclusive jurisdiction of the Tax Court to review the correctness of a tax assessment by a de novo procedure on appeal and the jurisdiction of the Federal Court in tax matters. Notwithstanding the issuance of a tax assessment, the Federal Court has the exclusive jurisdiction to conduct judicial review over discretionary decisions delegated to the Minister by Parliament, including those that directly affect tax liability. The Minister’s assessment of net tax pursuant to the Excise Tax Act, R.S.C. 1985, c. E-15 (“ETA”), is not the exercise of a discretionary power. Instead, it is a non‑discretionary determination where the outcome, the assessment, is dictated by statute. Jurisdiction over the correctness of the assessment falls to the Tax Court under s. 302 of the ETA.
[8] Highlighting this distinction between ministerial discretionary decisions and the tax assessment itself, which is non-discretionary, is, I think, all-important in explaining the jurisdictional debate in our Court in Dow and in this appeal. It further explains why the Attorney General of Canada defended the jurisdiction of the Federal Court in Dow, notwithstanding the issuance of an assessment and, on the same day before this Court in this appeal, challenged the jurisdiction of the Federal Court as trenching on the exclusive jurisdiction of the Tax Court over the correctness of the taxpayer’s assessment.
[9] When juxtaposed against Dow, as Rennie J.A. sought to do at para. 13 of his reasons, this case presents a further opportunity to confirm the view that it is Parliament’s intention that jurisdiction in tax matters is shared between the two courts and that the Tax Court is not a one-stop judicial shop for resolving tax disputes.
[10] On the specifics of the Attorney General of Canada’s motion to strike the application for judicial review brought by the taxpayer, I agree with the Federal Court of Appeal that two of the claims raised by the appellant, Iris Technologies Inc., in its application — those alleging procedural unfairness and a lack of an evidentiary foundation — are properly within the exclusive jurisdiction of the Tax Court. They are best characterized as attacks on the correctness of the assessment which is the proper subject matter of an appeal to the Tax Court under the express authority of the ETA. Since the Tax Court has exclusive jurisdiction over challenges to the correctness of assessments, the bar in s. 18.5 of the Federal Courts Act, R.S.C. 1985, c. F-7 (“FCA”), applies to these two aspects of the application. Accordingly, the Federal Court has no jurisdiction over these aspects. This is because of an express statutory grant of jurisdiction to the Tax Court from the assessment in s. 302 of the ETA and not, as the appellant proposed in Dow, based on an extension of the Tax Court’s jurisdiction by “necessary implication”.
[11] Iris’ third claim, that the Minister acted with an improper purpose, could, in some circumstances, be the basis for an application for judicial review. But the improper purpose claim should nevertheless be struck here because Iris did not allege facts in its application that, if taken to be true, would give any support to this claim.
[12] I further agree with the Federal Court of Appeal that the declaratory remedy sought in the application would have no practical effect and the application should also be struck on this basis.
|
