Category Archives: 152(8)

Proper Court of Recourse – Non-Receipt of Notice of Assessment

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Proper Court of Recourse – Non-Receipt of Notice of Assessment

Canada (National Revenue) v ConocoPhillips Canada Resource Corp., 2014 FCA 297

The MNR claimed to have sent out a Notice of Assessment in 2008.  The Taxpayer claims not to have received  Notice of Assessment until 2010, and objected to the assessment within 90 days of the 2010 assessment.  The MNR did not consider the application on grounds that it was untimely.

The Taxpayer filed for judicial review with the Federal Court.  The FC in 2013 FC 1192, allowed the application and set aside the decision of the MNR not to consider the Notice of Objection.

The FCA, here, held that the Federal Court lacked jurisdiction to consider the application for judicial review.  The proper route was by appeal to the Tax Court of Canada under paragraph 169(1)(b) of the ITA, as it is within the TCC’s jurisdiction to determine whether the Notice of Assessment was in fact mailed and presumed to have been mailed (ITA s 244(14): See Walker v. Canada, 2005 FCA 393.  Alternatively, the taxpayer could also request that the TCC determine the question of timeliness of its objection before trial pursuant to Rule 58(1) of the Tax Court of Canada Rules (General Procedure), SOR/90-688a.

– Sas Ansari, JD LLM PhD (exp)

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Settlement Agreements with the CRA – Assumptions

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Settlement Agreements with the CRA – Assumptions

Burg Properties Ltd v Canada, 2014 FCA 154

In this short decision, the Federal Court of Appeal identified the assumptions that will apply when interpreting a settlement agreement entered into by a taxpayer with the CRA.   This case highlights the importance of exact wording and the necessity to identify amounts and items in settlement agreements.

The taxpayer has appealed from a TCC decision quashing its Notices of Appeal on the basis that the settlement agreement included a clause whereby the taxpayer waived his objection and appeal rights.

The settlement agreement did not provide final amounts but rather set out how various amounts were to be increased or decreased in the final assessment.  The Appellant argued that the basis of the reassessment was to be the original and amended return filed by it, while the CRA argued that the basis was to be its reassessment.

The FCA held that:

  • On appeal, the court is limited to searching for an error of fact, mixed fact and law, or law on the appropriate standards: Housen v. Nikolaisen, 2002 SCC 33;
  • The phrase “we are prepared to offer the following settlement offer without prejudice with respect to the reassessments “was as expressly advising that “if accepted, the adjustments would be applied to the reassessments which resulted from the audit and which were the subject of notices of objection” (paras 10-11);
  • Terms that include cancellation of gross negligence penalties (and, one would assume any penalties and interest) were seen as indicating reassessment in the settlement on the basis of the CRA’s reassessment because the “penalties were imposed in the reassessments that gave rise to the notices of objection, not in the appellant’s amended tax returns” (para 14); and
  • Given that by operation of section 152 of the ITA and 299 of the ETA the Minister is not bound by a taxpayer’s return and its assessments are valid and binding (absent being vacated or reassessed), the Court felt that there “is no reason to believe that the Minister would enter into a settlement agreement that varied a non-binding tax return when she had already made a reassessment which was valid and binding on issuance” (para 15).

These findings indicate that the FCA will operate using a rebuttable presumption that a settlement agreement is meant to reassess on the basis of the CRA’s position and not the taxpayers.

Sas Ansari, JD LLM PhD (exp)

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