Facts:
The Appellant had filed its 2003 and 2004 tax returns within the time specified. The assessment for 2003 was not issued until March 26, 2008 and the assessment for 2004 was not issued until May 7, 2008. The President of the Appellant stated that the appellant did not receive the notice of assessments for 2003 and 2004 until after an inquiry was made in 2009. Shortly after the Appellant received a copy of the notice of assessment for 2003 in April 2009, the Appellant filed the document which is stated to be a notice of appeal (to the Tax Court of Canada) rather than a Notice of Objection (to the Canada Revenue Agency).
Issue(s):
The CRA claimed it did not receive a notice of objection or an application for an extension of time to serve a notice of objection in relation to either assessment until May 5, 2010 – more than two years after the initial assessment.
Relevant legislation and analysis:
The procedure to follow if a taxpayer wants to object to an assessment (or a reassessment) is set out in the Act. Subsection 165 of the Act provides that:
“A taxpayer who objects to an assessment under this Part may serve on the Minister a notice of objection, in writing, setting out the reasons for the objection…. on or before the day that is 90 days after the day of mailing of the notice of assessment.”
The proper procedure to follow to request an extension of time to file a notice of objection is to make such request to the Minister, not the tax Court. If the Minister refuses the application or 90 days have elapsed without a decision from the Minister, then (and only then) the taxpayer may apply to this Court to have the application granted to extend the time within which a notice of objection may be served. In order to grant the Appellant’s application for an order to extend the time to serve a notice of objection the requirements of subsection 166.2(5) of the Act must be satisfied.
The first requirement is that the application be made within one year after the end of the time period within which a notice of objection could have been served. This condition was satisfied as the application was sent to the CRA in April 2009 and the one year time period referred to above would not have expired until June 2009 (which would be 90 days plus one year after March 26, 2008 – the date of the assessment for 2003).
Ruling & rationale:
The judge stated,
“It seems… more likely than not that the Appellant sent to the CRA in April 2009 the same document that was filed with this Court at that time. Since this document was formatted and set up as a Notice of Appeal to this Court it could easily not have been recognized by the CRA as an application to extend the time to serve a notice of objection and hence not entered into their records as such. It seems to me that it is just and equitable in the circumstances that the application be granted.”
Implications and author’s commentary:
In the author’s opinion this case illustrates;
a) the importance of understanding the proper procedures for “objections” (to the CRA) vs. “appeals” (to the Tax Court) &
b) leniency of the courts if relevant information has been filed (even if improper in format).
SPECTROL INC., v. THE QUEEN, 2010TCC390