Reyes v. The King

Reyes v. The King
Court (s) Database
Tax Court of Canada Judgments
Date
2023-06-26
Neutral citation
2023 TCC 31
File numbers
2021-2526(IT)G
Judges and Taxing Officers
Monica Biringer
Subjects
Income Tax Act
Decision Content
Docket: 2021-2526(IT)G
BETWEEN:
JOSE ANTONIO VIRITO REYES,
Appellant,
and
HIS MAJESTY THE KING,
Respondent.
Motion heard virtually on August 18, 2022 at Ottawa, Ontario and on November 10, 2022 at Ottawa, Ontario
Before: The Honourable Justice Monica Biringer
Appearances:
For the Appellant:
The Appellant himself
Counsel for the Respondent:
Élise Rivest
ORDER
WHEREAS the Respondent brought a motion seeking the following relief:
Seeking an order quashing the appeals of the Appellant for the 2013, 2014, 2015 and 2016 taxation years[1], under paragraph 55(3)(b) of the Tax Court of Canada Rules (General Procedure) (the “Rules”)[2] on the grounds that a condition precedent to instituting a valid appeal under subsection 169(1) of the Income Tax Act (the “ITA”)[3] for each of those taxation years has not been met;
Seeking an order striking the Appellant’s Notice of Appeal as a whole, pursuant to subsection 53(1) of the Rules, with leave granted to file an Amended Notice of Appeal within 30 days of the date of the order. In the alternative, the Respondent asks the Court to strike out sections of the Notice of Appeal identified in Appendix A to its submissions (dated September 9, 2022) and order the Appellant to follow Form 21(1)(a) of the Rules in filing an Amended Notice of Appeal, and to include the material facts relied on by the Appellant to contest the correctness of the assessments remaining in issue;
Seeking an extension of time for the Respondent to file its Reply to the Amended Notice of Appeal, to 60 days after the Amended Notice of Appeal is filed and served, or if the motion ordering the Appellant to amend the Notice of Appeal is not granted, to 30 days from the date of an order of the Court; and
Seeking costs of the motion.
AND UPON hearing from the parties;
AND UPON review of the Notice of Motion filed on January 12, 2022, the Affidavits of Sadruddin Suleman sworn on August 11, 2022 and September 9, 2022, the written submissions of the Appellant and the written submissions of the Respondent, all filed;
AND IN ACCORDANCE with the attached Reasons for Order;
IT IS ORDERED that:
1. The Respondent’s motion to quash is granted in respect of the Appellant’s 2013, 2014, 2015 and 2016 taxation years.
2. The Respondent’s motion to strike certain portions of the Appellant’s Notice of Appeal is granted, in part, as set out in more detail in Appendix A. The Appellant is granted 60 days, from the date of this decision, to file an Amended Notice of Appeal. The Respondent is granted an extension of time to file its Reply to the Amended Notice of Appeal, to 60 days after the Amended Notice of Appeal is filed and served; and
3. Costs are awarded to the Respondent, in accordance with the Tariff.
Signed at Toronto, Ontario this 26th day of June 2023.
“Monica Biringer”
Biringer J.
Citation: 2023 TCC 31
Date: 20230626
Docket: 2021-2526(IT)G
BETWEEN:
JOSE ANTONIO VIRITO REYES,
Appellant,
and
HIS MAJESTY THE KING,
Respondent.
REASONS FOR ORDER
Biringer J.
I. BACKGROUND TO THE MOTION
[1] The Appellant, Jose Antonio Virito Reyes, is a certified public accountant and lawyer, both designations in the Dominican Republic. The Appellant is self-represented. The Appellant immigrated to Canada in 2012 and is a resident of Canada for purposes of the ITA. The Appellant has a consulting business which he carries on in Canada and the Dominican Republic, providing services to clients including those in the Dominican Republic.
[2] The appeals filed in this Court are for the Appellant’s 2013, 2014, 2015, 2016, 2017 and 2018 taxation years. At issue is the deductibility of various expenses which the Appellant claims were incurred for the purposes of gaining or producing income from his consulting business. These include claims for travel, telecommunication, home office, and other expenses.
[3] The Respondent does not dispute that the appeal for the 2017 taxation year has been properly constituted; the motion is in respect of the other years.
II. THE MOTION
[4] The Respondent[4] brings a motion:
Seeking an order quashing the appeals of the Appellant for the 2013, 2014, 2015 and 2016 taxation years[5], under paragraph 55(3)(b) of the Rules on the grounds that a condition precedent to instituting a valid appeal under subsection 169(1) for each of those taxation years has not been met;
Seeking an order striking the Appellant’s Notice of Appeal as a whole, pursuant to subsection 53(1) of the Rules, with leave granted to file an Amended Notice of Appeal within 30 days of the date of the order. In the alternative, the Respondent asks the Court to strike out sections of the Notice of Appeal identified in Appendix A to its submissions (dated September 9, 2022) and order the Appellant to follow Form 21(1)(a) of the Rules in filing an Amended Notice of Appeal, and to include the material facts relied on by the Appellant to contest the correctness of the assessments remaining in issue;
Seeking an extension of time for the Respondent to file its Reply to the Amended Notice of Appeal, to 60 days after the Amended Notice of Appeal is filed and served, or if the motion ordering the Appellant to amend the Notice of Appeal is not granted, to 30 days from the date of an order of the Court; and
Seeking costs of the motion.
[5] The hearing of this motion commenced on August 18, 2022 and resumed on November 10, 2022, after further written submissions were filed with the Court. Further submissions were received on May 12, 2023.
[6] As a preliminary matter, the Respondent requested that the Court accept the supplementary affidavit of Mr. Sadruddin Suleman filed on September 9, 2022. I do not see a need for an order as the affidavit was served and filed within the time prescribed by section 67 of the Rules.
III. PRELIMINARY MATTER
[7] I find Mr. Reyes’ position on the motion to be unresponsive to the issues raised by the Respondent. On both hearing dates, I encouraged the Appellant to address the Respondent’s arguments on the alleged failure to timely file notices of objection, the restrictions on appealing certain assessments and the Respondent’s arguments in respect of the motion to strike.
[8] To put the Appellant’s arguments on the motion into context, I note that the Appellant’s position on the underlying appeals is that Canada has no right to tax the income he earns from carrying on consulting activities with clients based in the Dominican Republic. He foreshadows that he will be relying on the provisions of the Convention between Canada and the Dominican Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital (the “Canada-DR Tax Treaty”)[6] and the Vienna Convention on the Law of Treaties, Vienna Austria, 1969 (the “Vienna Convention”)[7] in support of his argument that notwithstanding that he is a Canadian resident, for purposes of the ITA, he is not liable to tax on his “worldwide income”.
[9] The Appellant’s position on the motion is similar. The Appellant submits, in reliance on the Canada-DR Tax Treaty and the Vienna Convention, that because this is an “international” tax case, he is exempt from limitation periods and procedural compliance under the provisions of the ITA. He also submits that the Canada Revenue Agency (the “CRA”) has violated the Universal Declaration of Human Rights.[8]
[10] I encouraged the Appellant not to rely on these conceptual arguments, and to directly address the various detailed arguments put forward by the Respondent. The Appellant chose not to do so in any of his written submissions[9] or in his oral argument. The Appellant acknowledges that he has not addressed the issues raised by the Respondent since he does not accept the basic premise of the Respondent’s position, or as he says, he “disagrees with the system”.
IV. ISSUES
Motion to Quash
[11] The Respondent asks this Court to quash the appeals for the Appellant’s 2013, 2014, 2015 and 2016 taxation years.[10] The Respondent’s submissions differ based on the taxation year. Accordingly, this section is in two parts: the first part addresses the 2013, 2015 and 2016 taxation years and the second part addresses the 2014 (and 2018) taxation years.
V. THE 2013, 2015 AND 2016 TAXATION YEARS
The Parties’ Positions
[12] The Respondent submits that subsection 165(1.2) precludes the Appellant from objecting or appealing the reassessments for the 2013, 2015 and 2016 taxation years, because those assessments were issued under subsection 152(4.2).[11]
[13] The Appellant did not address the Respondent’s arguments that relate to the potential impact on his appeal rights of an assessment issued under subsection 152(4.2). The Appellant takes the position that in respect of income earned by him in the Dominican Republic, he is not governed by the procedural rules of the ITA for the objection and appeals process, including subsection 152(4.2). I disagree for reasons provided further below. First, I address the Respondent’s arguments.
VI. LAW
[14] Section 152 sets time limits on the Minister of National Revenue’s (the “Minister’s”) authority to assess and reassess. Pursuant to subsection 152(4), the Minister generally has three years to assess or reassess an individual taxpayer, starting from the date of the original notice of assessment or original notification that no tax is payable (the “normal reassessment period”).[12]
[15] Subsection 152(4.2) allows the Minister to reassess an individual taxpayer after the expiration of the normal reassessment period to determine a refund or reduce an amount payable, upon application by the individual. The Minister’s ability to make a “downward adjustment” under subsection 152(4.2) provides relief to individuals who, for example, become aware after the normal reassessment period that an otherwise valid claim for a deduction or credit was inadvertently not made.
[16] Subsection 152(4.2) reads as follows:
(4.2) Notwithstanding subsections (4), (4.1) and (5), for the purpose of determining — at any time after the end of the normal reassessment period, of a taxpayer who is an individual (other than a trust) or a graduated rate estate, in respect of a taxation year — the amount of any refund to which the taxpayer is entitled at that time for the year, or a reduction of an amount payable under this Part by the taxpayer for the year, the Minister may, if the taxpayer makes an application for that determination on or before the day that is 10 calendar years after the end of that taxation year,
(a) reassess tax, interest or penalties payable under this Part by the taxpayer in respect of that year; and
…
[Emphasis added.]
[17] Subsection 152(4.2) is discretionary. The Minister “may”, but is not obliged to, issue an assessment under subsection 152(4.2) if the conditions are met.[13]
[18] An assessment under subsection 152(4.2) is similar to other “fairness” provisions of the ITA. If a taxpayer believes that the Minister did not properly exercise its discretion in considering the request for relief under subsection 152(4.2), a second review may be requested and the taxpayer has an opportunity to make additional representations.[14]
[19] If the taxpayer disagrees with the discretion exercised in the second review, the taxpayer can apply to the Federal Court for a judicial review of the CRA decision within 30 days of the date of receipt of the second review decision.[15] The Federal Court may not substitute its decision for the CRA’s decision, but may grant judicial review and send the matter back for reconsideration.[16]
[20] As with assessments issued under other “fairness” provisions of the ITA, pursuant to subsection 165(1.2), a taxpayer cannot object to an assessment made under subsection 152(4.2). Subsection 165(1.2) reads as follows:
(1.2) Notwithstanding subsections (1) and (1.1), no objection may be made by a taxpayer to an assessment made under subsection 118.1(11), 152(4.2), 169(3) or 220(3.1) nor, for greater certainty, in respect of an issue for which the right of objection has been waived in writing by the taxpayer.
[Emphasis added.]
[21] If a taxpayer cannot object to a reassessment, then the taxpayer cannot appeal to the Tax Court due to subsection 169(1), which reads as follows:
Where a taxpayer has served a notice of objection to an assessment under section 165, the taxpayer may appeal to the Tax Court of Canada to have the assessment vacated or varied after either
i)the Minister has confirmed the assessment or reassessed, or
ii)90 days have elapsed after service of the notice of objection and the Minister has not notified the taxpayer that the Minister has vacated or confirmed the assessment or reassessed,
but no appeal under this section may be instituted after the expiration of 90 days from the day the notice has been sent to the taxpayer under section 165 that the Minister has confirmed the assessment or reassessed.
[Emphasis added.]
[22] This Court has consistently held that where a reassessment is issued under subsection 152(4.2), there is no right of appeal to the Tax Court because no valid objection can be filed.[17] In Groulx, the Federal Court of Appeal confirmed the decision of this Court quashing the taxpayer’s appeal for taxation years for which assessments were issued under subsection 152(4.2) on the basis that “because no valid objections could be made against those reassessments, no appeals against them, under subsection 169(1) were permissible”.[18]
VII. ANALYSIS
(i) Reassessments Issued Under Subsection 152(4.2)
[23] The reassessments for the 2013, 2015 and 2016 taxation years were issued on October 22, 2020. It therefore becomes essential to determine whether they were issued under subsection 152(4) or 152(4.2).
[24] There are four conditions for a reassessment to be issued under subsection 152(4.2):
The reassessment is issued at any time after the end of the normal reassessment period;
The reassessment is for the purpose of determining the amount of any refund to which the taxpayer is entitled at that time for the year, or a reduction of an amount payable under Part I for the year;
The taxpayer makes an application for that determination; and
The application is made on or before the day that is 10 calendar years after the end of that taxation year.
[25] The first criterion is met. The October 22, 2020 reassessments were issued after the end of the normal reassessment period for all three years. The relevant dates are:
Taxation Year
Date of issuance for the initial notice of assessment
End of the normal reassessment period
2013
October 30, 2014
October 30, 2017
2015
April 25, 2016
April 25, 2019
2016
April 3, 2017
April 3, 2020
[26] The second criterion is met. Notices of reassessment were issued for the 2013, 2015 and 2016 taxation years on October 22, 2020.[19] The reassessments allowed the taxpayer’s deduction for certain expenses incurred for the purposes of generating income from his consulting business, and reduced taxes payable under Part I for all three taxation years:
Taxation Year
Taxes payable pursuant to the notices of assessment (A)
Taxes payable pursuant to the notice of reassessment (B)
Reduction in taxes payable (A less B)
2013
$353.01[20]
$224.45[21]
$127.56
2015
$3,830.14[22]
$3,421.62[23]
$408.52
2016
$12,572.32[24]
$11,454.54[25]
$1,117.78
[27] The third criterion is met. The Appellant submitted T1 adjustment requests[26] with the latest being November 9, 2018 (received by the CRA on November 22, 2018) in respect of expenses incurred for the purposes of generating income in the Dominican Republic in the relevant taxation years.[27]
[28] The fourth criterion is met. The Appellant applied before the day that is 10 calendar years after the end of the taxation years under appeal. The Appellant’s T1 adjustment requests (the latest of which was made in 2018) were well within 10 calendar years after the end of the Appellant’s 2013, 2015 and 2016 taxation years.
[29] Here, the Appellant was advised, in response to the T1 adjustments submitted:
That a review of the determination made in response to the request was available; and
That a second review under the “Taxpayer Relief Provisions” was available, but because the reassessments issued in response to the requests were issued under subsection 152(4.2), there was no right of objection.[28]
As further confirmed in the discussion that follows, I agree that the assessments were issued under subsection 152(4.2).
[30] While the reassessments were issued after the normal reassessment period for each of the years (satisfying the first criterion), I have also considered whether the timing of the T1 adjustment requests which led to the reassessments – submitted to the CRA before the normal reassessment period expired for the 2015 and 2016 taxation years – has any bearing on whether the reassessments were issued under subsection 152(4.2) for those years. I have determined that it does not.
[31] The language in subsection 152(4.2) is clear – the relevant event is the time of the Minister’s determination – after the normal reassessment period; the section does not take into account when the taxpayer’s application was made. I note that when a T1 adjustment request is made close in time to the end of a normal reassessment period, or the Minister takes a long time to reassess, it potentially puts within the Minister’s control whether a reassessment is issued under subsection 152(4) or 152(4.2).
[32] A timing issue in respect of whether an assessment was issued under subsection 152(4.2) arose in DouangChanh[29]. In that case, this Court ruled that the Minister did not issue a reassessment pursuant to subsection 152(4.2) when the applicant requested a further reassessment that was issued after the normal reassessment period. The applicant filed a notice of objection to his November 9, 2009 reassessment and, shortly after, submitted a T1 adjustment request, all within the normal reassessment period. The Minister issued a reassessment in response to the T1 adjustment request on October 18, 2011, after the end of the normal reassessment period. The Court concluded that it was “very unlikely that the applicant intended to request a reassessment to be made after the normal reassessment period thereby removing his appeal rights with respect to the [objection to the] charitable donation”[30], and treated the October 18, 2011 reassessment as statute barred and the November 9, 2009 reassessment as still valid. Thus, the Court was able to conclude that the applicant validly objected to the November 9, 2009 reassessment preserving his appeal rights before the Court.[31]
[33] The reasoning in DouangChanh does not affect the result here. Unlike the applicant in DouangChanh, the Appellant did not stand to lose any rights to object by submitting T1 adjustment requests as no objections had been filed at the time those adjustment requests were submitted. Notices of objection for the 2013, 2015 and 2016 taxation years were filed on November 22, 2020.[32]
(ii) Submissions on the Applicability of Subparagraph 152(4)(a)(ii)
[34] After the hearing, I requested written submissions from the parties on the following:[33]
Whether any of the T1 adjustment requests pertaining to the Appellant’s 2013, 2015 or 2016 taxation years constitutes a “waiver” under subparagraph 152(4)(a)(ii) in respect of any or all of those years; and
If yes,
Whether, as a result, any of the reassessments for the Appellant’s 2013, 2015 and 2016 taxation years is considered issued pursuant to subparagraph 152(4)(a)(ii) and not subsection 152(4.2); and
The impact on the Respondent’s motion seeking an order to quash the appeals for the Appellant’s 2013, 2015 and 2016 taxation years, and any relief requested.
[35] Subparagraph 152(4)(a)(ii) allows the Minister to reassess a taxation year beyond the normal reassessment period if the taxpayer has filed a waiver. Subparagraph 152(4)(a)(ii) provides as follows:
152 (4) The Minister may at any time make an assessment, reassessment or additional assessment of tax for a taxation year, interest or penalties, if any, payable under this Part by a taxpayer or notify in writing any person by whom a return of income for a taxation year has been filed that no tax is payable for the year, except that an assessment, reassessment or additional assessment may be made after the taxpayer’s normal reassessment period in respect of the year only if
(a) the taxpayer or person filing the return
…
(ii) has filed with the Minister a waiver in prescribed form within the normal reassessment period for the taxpayer in respect of the year;
[36] The request for submissions provided the Appellant with an additional opportunity to submit why the appeals for the 2013, 2015 and 2016 taxation years might bevalid. However, the Appellant did not address any of the substantive issues outlined in the request. Instead, the Appellant accused me of being biased in favour of the Respondent, a claim that is entirely without foundation.
[37] The Respondent submits that none of the Appellant’s T1 adjustment requests constitutes a waiver. The Respondent argues that the Appellant did not intend for any of the T1 adjustment requests to act as a waiver and the T1 adjustment requests do not contain the required information to qualify as waivers. The Respondent further submits that the Minister clearly exercised discretion in reassessing the Appellant’s 2013, 2015 and 2016 taxation years[34] under subsection 152(4.2), and that the Appellant was made aware of this. The Minister did not reassess under subparagraph 152(4)(a)(ii).
[38] This Court and the Federal Court of Appeal considered a similar issue in Kubbernus.[35] In Kubbernus the issue was whether a reassessment was issued under subsection 152(4.2) or paragraph 152(4)(b)(i). The Minister reassessed the taxpayer’s 2000 taxation year, allowing for a capital loss carryforward.[36] This reassessment was triggered by the taxpayer’s application for relief under “Taxpayer Relief” legislation, and stated that the Minister adjusted the taxpayer’s tax return under the fairness provisions of the ITA, so no notice of objection could be filed.[37] Nonetheless, the taxpayer objected to the reassessment and appealed the subsequent notice of confirmation.[38] The Respondent filed a motion to strike the taxpayer’s appeal on the basis that the appeal was not properly instituted because the reassessment was issued under subsection 152(4.2), and no objection can be made to a subsection 152(4.2) reassessment.[39]
[39] The taxpayer in Kubbernus argued that the reassessment was issued under subparagraph 152(4)(b)(i) and not subsection 152(4.2), so the taxpayer was not prohibited from objecting to the reassessment and appealing to this Court.[40] Taken together, subparagraph 152(4)(b)(i) and subsection 152(6) extend the permitted reassessment period from three to six years, allowing the Minister to carry back losses to prior taxation years. According to the taxpayer, it was not necessary for the Minister to resort to subsection 152(4.2) to issue the reassessment because the reassessment was issued within six years.[41] Angers J. disagreed with the taxpayer:
[30] In addition, the evidence does not disclose that any of the conditions set out in subsection 152(4), which are required in order for the Minister to be able to assess after the normal assessment period, have been met here. No evidence was adduced that would permit me to conclude that the October 2006 reassessment was issued pursuant to subparagraph 152(4)(b)(ii) or subsection 152(6) of the Act. The evidence, on the contrary, supports a finding that the reassessment was made under the "fairness" legislation, and the Minister reassessed for the appellant's 2000 taxation year in accordance with his request. As a consequence, no valid objection may be made; hence, no appeal can be filed before this Court.[42]
[Emphasis added.]
[40] The Federal Court of Appeal upheld the Tax Court decision.[43] Based on the evidence, the only conclusion available to the Tax Court judge was that the reassessment was issued under subsection 152(4.2).[44]
[41] A T1 adjustment request may, in certain circumstances, be considered to constitute a waiver for the purposes of subparagraph 152(4)(a)(ii). For example, this Court in Remtilla determined that the T1 adjustment requests filed by the taxpayers constituted waivers, based on a conclusion that the taxpayer intended to file waivers.[45] However, based on the evidence, that is not the case here. The correspondence from the Appellant reflects a series of T1 downward adjustment requests, initiated by the Appellant. There is no suggestion that the Appellant intended for the relevant taxation years to “remain open”, consistent with a waiver. The responses from the Minister also reflect that the reassessments were issued under subsection 152(4.2). The following is an excerpt of the letter sent by the Minister to the Appellant on October 1, 2020, responding to the Appellant’s T1 adjustment requests for his 2013, 2014, 2015, 2016 and 2017 taxation years under the Taxpayer Relief Provisions:
I am writing in response to your correspondence asking the Canada Revenue Agency (CRA) to adjust income earned in the Dominican Republic and to recognize expenses incurred in the generation of this foreign income in the tax years of 2013, 2014, 2015, 2016 and 2017. As well, we have reviewed the deductions claimed in the 2017 tax year, and verified that the correct exchange rate was used at the time of reassessment of the 2013, 2015 and 2016 tax years. As this request relates to statute-barred years, it falls under the purview of Taxpayer Relief Provisions.
As described in Circular IC07-1, the Taxpayer Relief Provisions provide for discretion to issue a refund or reduce the amount owed for any statute barred tax year that ended within ten years before the calendar year when the taxpayer filed the request. To follow the guidelines, please refer to this Information Circular on the Canada Revenue Agency web site at www.canada.ca/en/revenue-agency.[46]
[Emphasis added.]
[42] There is no evidence that a waiver was either requested by the CRA or that the Appellant intended to provide a waiver by submitting the T1 adjustment requests. Rather, the evidence supports the contrary – that the Appellant sought downward adjustments and the Minister exercised its discretion under subsection 152(4.2) when it reassessed the Appellant’s 2013, 2015 and 2016 taxation years. As such, the Appellant is prohibited from appealing the assessments for the 2013, 2015 and 2016 taxation years.
[43] For the foregoing reasons, I have concluded that the Minister issued reassessments on October 22, 2020 for the Appellant’s 2013, 2015, and 2016 taxation years under subsection 152(4.2). Pursuant to subsection 165(1.2), the Appellant is not able to object to those reassessments. As a condition precedent to instituting a valid appeal under subsection 169(1) for each of those taxation years has not been met, the Appellant is prohibited from appealing the assessments. The Respondent’s motion to quash is granted in respect of the appeals for the 2013, 2015 and 2016 taxation years.
VIII. THE 2014 (AND 2018) TAXATION YEARS
A. The Parties’ Positions
[44] The Respondent’s position is that the Appellant did not file a notice of objection or request an extension of time to file a notice of objection for the 2014 taxation year by the deadlines provided under the ITA. The Respondent submits that, for the 2018 taxation year, the Appellant did not timely file a notice of objection but did apply to the Minister for an extension of time to file an objection within the time required. The Respondent will therefore consent to an application for an extension of time to the Court for the Appellant’s 2018 taxation year.
[45] The Appellant did not address the Respondent’s arguments with respect to the alleged failure to timely file a notice of objection or request an extension of time to file a notice of objection and the potential impact on appeal rights. The Appellant takes the position that in respect of the income earned by him in the Dominican Republic, he is not governed by the rules of the ITA which prescribe limitation periods for filing a notice of objection or a request for an extension of time to file a notice of objection. I disagree for reasons provided further below. First, I address the Respondent’s arguments.
B. Law
[46] Pursuant to paragraph 165(1)(a), an individual who objects to an assessment must file a notice of objection on or before the earlier of the following:
The day that is one year after the tax-filing due date for the year: the tax-filing due date for individuals who carried on a business in the year is June 15th of the following year;[47] and
The day that is 90 days after the day the notice of assessment was sent: the definition of “assessment” in subsection 248(1) is non-exhaustive, and provides that an “assessment” include a reassessment.
[47] Where a taxpayer has not filed an objection to an assessment or reassessment within the time limits set out in subsection 165(1), the taxpayer can apply for an extension of time to file the objection under a two-step process.
[48] First, pursuant to section 166.1, a taxpayer who wishes to file a notice of objection beyond the normal time limit must apply to the Minister for an extension of time. The section 166.1 application must be made within one year of the expiration of the time limit for serving a notice of objection. Pursuant to subsection 166.1(7), an extension may only be granted where the taxpayer demonstrates:
a. That within the time otherwise limited for serving a notice, the taxpayer either was unable to act or to instruct someone to do so, or had a bona fide intention to object to the assessment;
b. That it would be just and equitable to grant the application; and
c. That the application was made as soon as circumstances permitted.
[49] Second, pursuant to section 166.2, if the CRA refuses the application under section 166.1, or if 90 days have elapsed following service of the application and the CRA has not notified the taxpayer of the decision, the taxpayer may apply to this Court for an extension of time to file a notice of objection. Paragraph 166.2(5)(a) requires that the original application under section 166.1 was made within one year after the expiration of the statutory time limit for serving a notice of objection or making a request.
C. Analysis
(1) The 2014 taxation year
[50] The Appellant was initially assessed for the 2014 taxation year on June 26, 2015. The Minister reassessed the Appellant for the 2014 taxation year by notice dated December 11, 2017. The deadline for the Appellant to serve on the Minister a notice of objection to the latter reassessment, pursuant to subparagraph 165(1)(a)(ii), was March 12, 2018 (determined as the later of the date that is one year after the Appellant’s filing due date for the 2014 taxation year – being June 15, 2016[48] – and 90 days after the day of sending the December 11, 2017 notice of reassessment – being March 12, 2018). Based on the affidavits of Sadruddin Suleman, I have determined that the Appellant did not file a notice of objection on or before March 12, 2018. The Appellant filed a notice of objection dated November 22, 2020, which was outside the limitation period.
[51] The time limit for the Appellant to serve an application with the Minister for an extension of time to object to the notice of assessment dated December 11, 2017, expired on March 12, 2019 pursuant to paragraph 166.1(7)(a). The Appellant sent a letter to the CRA dated December 6, 2020 applying for an extension of time to object to the 2014 taxation year, which was received by the CRA on December 14, 2020. The extension request was not filed within the time prescribed by paragraph 166.1(7)(a).
[52] As the Appellant has not met the criterion set out in paragraph 166.2(5)(a) – that the application for an extension of time be made within one year of the time otherwise limited by subsection 165(1) - this Court does not have jurisdiction to grant an extension of time to file a notice of objection under section 166.2.
[53] In Bormann[49], the Federal Court of Appeal confirmed this Court’s decision to quash appeals for taxation years with respect to which the appellant had not served a notice of objection or applied to the Minister to extend the time to file a notice of objection. The Court summarized the following well established principles:
[3] Section 169(1) of the Income Tax Act obliges a taxpayer to serve Notice of Objection in order to appeal an assessment. In other words, service of a Notice is a condition precedent to the institution of an appeal.
…
[5] Once it is clear that no application for an extension of time was made, the law is clear that there is no jurisdiction in the Tax Court to further extend the time for equitable reasons.[50]
[54] As a condition precedent to instituting a valid appeal under subsection 169(1) for the 2014 taxation year has not been met (a valid notice of objection has not been filed), the Respondent’s motion to quash is granted in respect of the appeal for the 2014 taxation year.
(2) The 2018 taxation year
[55] The Appellant was initially assessed for the 2018 taxation year on August 19, 2019. The Minister reassessed by notice dated September 12, 2019. The deadline for the Appellant to serve on the Minister a notice of objection pursuant to subparagraph 165(1)(a)(ii) was June 17, 2020 (being the later of one year from the filing deadline of June 17, 2019[51] and 90 days after the notice of reassessment, this latter date being December 11, 2019). Based on the affidavits of Sadruddin Suleman and the Appellant’s submissions, I have determined that the Appellant filed a notice of objection on November 22, 2020, after the June 17, 2020 deadline.[52]
[56] The time limit for the Appellant to serve an application on the Minister for an extension of time to object pursuant to paragraph 166.1(7)(a) expired on June 17, 2021. The Appellant sent a letter dated December 6, 2020 (received by the CRA on December 14, 2020) applying for an extension of time to object to the 2018 taxation year. The Minister has not yet made a decision with respect to that application.
[57] The Respondent acknowledges that the Appellant made an application to the Minister for an extension of time to object within the time limit, for his 2018 taxation year. If the Appellant makes an application to the Court for an extension of time to object, the Respondent is prepared to consent to the application on the grounds that it would meet the requirements in section 166.2.
[58] The Appellant may apply to this Court for an extension of time to object to the September 12, 2019 reassessment for the 2018 taxation year.
(3) The Appellant’s “overarching” arguments, applicable to the 2013, 2014, 2015, and 2016 taxation years
[59] As already noted, the Appellant takes the position that in respect of income earned by him from business carried on in the Dominican Republic, he is not governed by the procedural rules of the ITA for the objection and appeals process. I disagree. I have considered the Appellant’s arguments but they do not affect the outcome in this motion.
[60] The starting point, which the Appellant acknowledges, is that he is a resident of Canada for purposes of the ITA. Division I of the ITA, which deals with Returns, Assessments, Payment and Appeals (sections 150-168.1) and Division J of the ITA, which deals with Appeals to the Tax Court of Canada and the Federal Court of Appeal (sections 169-180), apply to all taxpayers under the ITA. A “taxpayer” is defined in section 248 to include “any person whether or not liable to pay tax”. Regardless of the Appellant’s arguments to be made in the underlying appeals that he is not liable to tax under the ITA on income from certain sources, he is a taxpayer for purposes of the ITA and is subject to the rules for compliance, assessments and appeals as provided in Divisions I and J of the ITA.
[61] The Appellant correctly states certain basic principles with respect to Canada’s tax treaties. Canada has concluded the Canada-DR Tax Treaty with the Dominican Republic. Canada is party to the Vienna Convention, which influences the interpretation and application of tax treaties.[53] Article 26 of the Vienna Convention provides that “Every treaty in force is binding upon the parties to it and must be performed by them in good faith”. Article 27 provides that “A party may not invoke the provisions of its internal law as justification for its failure to perform a treaty”. As a party to the Canada-DR Tax Treaty, Canada agrees to abide by the provisions and to perform its obligations thereunder in good faith.
[62] As a general rule, Canada adheres to the principle that a treaty prevails over domestic law to the extent of any inconsistency between them.[54] The Appellant argues that since neither the Canada-DR Tax Treaty nor the Vienna Convention prescribes any limitation periods or other procedural rules with respect to Canadian income tax, there is an inconsistency that must be resolved in favour of reliance on the Canada‑DR Tax Treaty and the Vienna Convention. The Appellant argues that because the underlying appeal is “international” – involving income earned in the Dominican Republic – the provisions of the ITA that address tax administration and enforcement do not apply, but the provisions of the Canada-DR Tax Treaty and the Vienna Convention do. The end result, according to the Appellant’s arguments, appears to be that there are no procedural rules or limitation periods applicable to his current dispute with the CRA.
[63] The Appellant relies on the Supreme Court of Canada’s decision in Zingre[55] for the proposition that Canada may not rely on the provisions of domestic law for “non-compliance” with the provisions of a treaty. Zingre is not relevant here. The case dealt with whether an order allowing commission evidence should be granted in connection with Swiss nationals resident in Switzerland and charged with criminal offences in Canada. The relevant treaty was an Anglo-Swiss Treaty of 1880.
[64] More fundamentally, there is no “inconsistency” between the procedural rules in the ITA on the one hand and the Canada-DR Tax Treaty and the Vienna Convention on the other hand; there is no “non-compliance” with the international agreements. There is only one set of procedural rules applicable to the administration and enforcement of Canadian federal income taxes, which is in the ITA. There are no parallel rules in the Canada-DR Tax Treaty or Vienna Convention[56]. This does not mean there is an inconsistency or non-compliance. Just the opposite; there is no possible inconsistency or non-compliance. The Canada-DR Treaty and the Vienna Convention do not function as the Appellant argues; the argument is without merit.
[65] The Appellant also argues that the CRA dealings with the Appellant constitutes an abuse of Articles 1, 2 and 7 of the Universal Declaration of Human Rights.[57] More particularly, the Appellant’s allegation appears primarily based on a concern that non-lawyers employed by the CRA came to legal conclusions on the Appellant’s tax position and on the CRA’s delay of process. As addressed below in the context of the Respondent’s motion to strike, complaints about the conduct of the CRA are not within the jurisdiction of this Court and are not relevant to the motion before me.
[66] In summary, I do not accept these “overarching” arguments made by the Appellant. Regardless of the arguments to be made as to why he is entitled to relief in the underlying appeals, the Appellant must comply with