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Duncan v. The Queen (TCC 2019-615(GST)APP)

On August 26^th, 2020, the Honorable Justice Gaston Jorré rendered the decision referenced above, granting the Applicant’s application for an order to extend the time within which to file a notice of objection.  Justice Jorré’s reasons for the order serve as a good reminder of the rules applicable when the basis of such an application is that a taxpayer never received an assessment.

Simply put, this was a case where the Taxpayer argued that he never received a notice of assessment to which he would have objected to had he received it.  Accordingly, no objection was filed within the prescribed period of time, and once the Taxpayer became aware of the existence of the notice of assessment, the Taxpayer file a notice of objection with a request to extend the time within which to file a notice of objection. The Minister contested this request and argued that same was filed beyond the statutory one-year period, as required by Section 304(5)a) of the Excise Tax Act (the “ETA”).

At paragraphs 8 and following, Justice Jorré cites the Honorable Justice Graham’s reasons in Da Silva v. The Queen setting out the four-step process to analyze such an application. It is to note that as part of this four-step process, when the Minister introduces sufficient evidence to prove, on a balance of probabilities, that the relevant notice of assessment was indeed sent, presumptions come into play, at subsections 335(11) and 334(1), that deem the assessment to have been made and received on a particular date.  These presumptions “make it clear that the fact that the Taxpayer did not actually receive the notice of assessment is irrelevant” under the ETA.

In the present case, Justice Jorré came to the conclusion that the Minister did not introduce sufficient evidence to prove, on a balance of probabilities, that the notice of assessment had been sent as argued by the Minister:

[12]  However, the factual situation here is remarkably like that in the DaSilva case insofar as Mr. Neil, because he did not have access to a particular system had to rely on certain information provided by another revenue officer, Stacy Dugay.

[13]  In DaSilva Justice Graham stated:

[…] Mr. Neill sets out in detail how the mailing system works at the CRA. Mr. Neill has personal knowledge of that system. I accept his evidence in this regard. However, Mr. Neill relied on a senior programs officer named Stacey Dougay to provide him with a key piece of information. That key piece of information is the number of the business client communications system cycle (the “BCCS cycle”) in which Ms. DaSilva’s notice of assessment was to be printed. Mr. Neill personally confirmed that the BCCS cycle whose number was provided by Ms. Dougay ran without errors. It was on that basis that he concluded that Ms. DaSilva’s notice of assessment had been mailed. The problem is that Mr. Neill did not have personal knowledge of which BCCS cycle contained Ms. DaSilva’s notice of reassessment. Subsection 335(6) requires that, if the Minister wants to rely on an affidavit to prove mailing, the affiant must have charge of the appropriate records and must have reviewed them. Mr. Neill cannot be said to have reviewed the records that were, in fact, reviewed by Ms. Dougay.

[…]

 [11] It clearly would have been preferable to have an affidavit from Ms. Dougay in respect of the BCCS cycle. This is important evidence, without which all that I have is evidence as to how the mailing system works and evidence that it worked properly on one occasion. There is nothing to link that occasion to Ms. DaSilva’s notice of assessment.

Justice Jorré reached a similar conclusion in the present case.

Please note that this was a case decided under the ETA. The rules applicable in Quebec or under the Income Tax Act are slightly different. 

Nevertheless, the key take-away of the present decision is that even if a statutory delay has lapsed, it is always worthwhile to consult with a tax professional to determine whether recourses are still available to contest an assessment. The Tax Litigation team at Spiegel Sohmer Inc. is available to discuss any issues you may have with the Canada Revenue Agency or Revenu Quebec.