Notice of Assessment Never Mailed by CRA
Mpamugo v The Queen, 2016 TCC 215
The Court had to consider the factors relevant when a taxpayer claims that the Notice of Assessment was not mailed, therefore the time limit for filing a Notice of Objection had never started to run. Particularly, the Court was concerned with when credibility should enter the analysis.
Justice Graham started by summarizing the FCA and TCC decisions tat set out the considerations where a taxpayer claims that the Notice of Assessment was never mailed (para 6):
a)Step 1: The taxpayer must assert that the Notice of Assessment was not mailed [Aztec Industries Inc. v. The Queen, (FCA) 1995 CarswellNat 278; Schafer v. The Queen, (FCA) 2000 CarswellNat 1948]. A taxpayer normally does so in one of two ways. The taxpayer may assert that he or she did not receive the Notice of Assessment and thus believes that it was not mailed. Alternatively, the taxpayer may assert that the Notice was mailed to the wrong address through no fault of the taxpayer and was thus, in effect, not mailed.
b)Step 2: If the taxpayer asserts that the Notice of Assessment was not mailed, the Minister must introduce sufficient evidence to prove, on a balance of probabilities, that the Notice of Assessment was indeed mailed or, if the taxpayer has asserted that it was mailed to the wrong address, that it was mailed to the address that the CRA properly had on file [Columbia Ltd. v. The Queen 2006 FCA 352; Bowen v. The Queen (FCA) 1991 CarswellNat 520].
c)Step 3: If the Minister is able to prove that the Notice of Assessment was indeed mailed, then the mailing is presumed to have occurred on the date set out on the Notice (subsection 244(14)). This is a rebuttable presumption[McGowan v. The Queen (FCA) 1995 CarswellNat 381]. The taxpayer may introduce evidence to prove that it was actually mailed on a different date. The deadline for filing a Notice of Objection is calculated from the mailing date established by this step (subsection 165(1)). The “normal reassessment period” for a tax year also commences from the mailing date established by this step (subsection 152(3.1)).
d)Step 4: Once the mailing date is established (either through the presumption or through proof of a different date), the assessment is deemedto have been made on that date (subsection 244(15)) and the Notice of Assessment is deemed to have been received on that date (subsection 248(7)). These deeming provisions are not rebuttable. The date on which an assessment is made is used to determine whether a reassessment was made outside of the “normal reassessment period”of a tax year (subsection 152(4)). Step 4 is not strictly relevant for the purposes of determining the deadline for filing a Notice of Objection. That determination is made in Step 3. Step 4 simply makes it clear that the fact that a taxpayer did not actually receive the Notice of Assessment is irrelevant.
Then should credibility of the taxpayer be assessed? Can it be relevant to steps 1 or 2? It is important where the CRA has no evidence of mailing but the court does not believe the taxpayer’s assertion that the NOA was not mailed. If credibility is assessed at step 1, then the Minister never has to prove the mailing, but if it is assessed at step 2, then the lack of evidence means that the taxpayer succeeds.
The Court held that credibility is assessed at Step 2 – Step 1 only requires that the taxpayer simply assert that the NOA was not mailed. Credibility only is relevant when the Court has to determine whether the Minister has proven mailing (paras 9-10). The TCC rejected the cases the Minister replied on (Nicholls v. The Queen, 2011 TCC 39; Oddi v. The Queen, 2016 TCC 102 and Menzies v. The Queen, 2016 TCC 73). It is logical to assess credibility when weighing the evidence on a balance of probabilities, not before (para 11).
There was no need to protect the Minister from unscrupulous taxpayers raising false assertions. The Minister is protected by subsection 244(10) that makes proving mailing easy – CRA officer provides an affidavit stating that the officer has charge of the appropriate records and has knowledge of the practices of the CRA, that he or she has examined those records, and that those records show that a Notice of Assessment was mailed (para 12). The affidavit will be proof of mailing, absent proof to the contrary. Where the taxpayer is not credible, the crown will succeed if it shows that it is more likely than not that the NOA was mailed by introducing some evidence that mailing occurred (para 13).
In regards to the requirements of subsection 244(10), the TCC held that just because the person whose affidavit is being considered does not have actual charge of the records (does not comply with the statutory requirements), but is relying on information obtained from others, does not mean that the court should disregard the affidavit. Where the affidavit does not comply with the statute, the Court must weigh the minister’s evidence against that of the taxpayer to determine whether it’s more likely than not that the NOA was mailed (para 23). Usually, the Minister will adduce evidence that normal procedure was followed in mailing NOAs and a reason why the court should accept that normal procedure was followed in this case (para 24). Rule 72 of the Tax Court of Canada Rules (General Procedure) permits affidavits to be based on information and belief if the source of information and the fact of the belief are stated (para 28). Any concerns about hearsay reliability go to weight.
Although, a taxpayer’s knowledge that the Minister believed to have assessed the taxpayer and knowledge of collection action (including payment on account of the amount purportedly assessed) is not evidence that a NOA was mailed (Aztec Industries v. The Queen 1 CTC 327), it does go to credibility (para 46).
The Court concluded at para 52):
Faced with weak evidence that the Notices were mailed, no credible evidence that they were not received and an extremely low probability that none of them was mailed, I find that it is more likely than not that they were indeed mailed.
Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3
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