The Federal Court of Appeal has released its decision in Canada (National Revenue) v ConocoPhillips Canada Resources Corp (2017 FCA 243).


ConocoPhillips had been issued a reassessment of its 2000 taxation year and found itself out of time to object. In addition, it was out of time to apply for an extension of time to object under Section 166.1 of the Income Tax Act. Nevertheless, in an attempt to engage the objection process ConocoPhillips applied to the minister of national revenue for a waiver of the requirement that it file a notice of objection in order for the minister to reconsider the reassessment under Section 165(3) of the act. It relied on Section 220(2.1) of the act.


The minister denied the application on the basis that Section 220(2.1) did not apply to notices of objection. ConocoPhillips sought judicial review of the decision at the Federal Court, which allowed the application for judicial review, stating that the minister's interpretation was unreasonably narrow.(1) The minister appealed this decision to the Federal Court of Appeal. The appeal was allowed.

Section 220(2.1) of the Income Tax Act reads as follows:

"Where any provision of this Act or a regulation requires a person to file a prescribed form, receipt or other document, or to provide prescribed information, the Minister may waive the requirement, but the person shall provide the document or information at the Minister's request."

The court determined that the outcome of the case fundamentally depended on the statutory interpretation of Section 220(2.1) of the act. While the Federal Court had identified the correct test, the Federal Court of Appeal held that it had erred in failing to consider the scheme of the act properly. In particular, Section 220(2.1) must be considered against the purpose of Section 166.1(7) of the act and the objections regime.

In analysing the objections regime, the court identified the clear, specific and strict time limits that were intended by Parliament. The court provided that: "The clear statutory intent of the scheme is to provide conditions on the ability of taxpayers to invoke the objection process, including strict time limits for serving objections and seeking extensions of time."(2) With this in mind, the court applied the implied exception rule of statutory interpretation. In short, the court chose an interpretation that gave effect to more specific provisions (the objections regime), rather than a general provision (Section 220(2.1)). The decision was summarised as follows:

"With respect, this argument must be rejected. Parliament did not intend that subsection 220(2.1) act as a safety valve for objections. A taxpayer is intended to be either in or out of the objections regime. ConocoPhillips suggests that it is outside the scope of objections and appeals. However, it does not want to be outside the regime – it seeks to be in it. The specific limitation periods provided for in the objections regime must be applied in this case."(3)

Thus, the minister has no discretion to admit a taxpayer into the objections regime under Section 220(2.1) of the Income Tax Act. Taxpayers must comply with the strict time limits set out in the act – there is no safety valve.

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(1) (2016 FC 98).

(2) At paragraph 46.

(3) At paragraph 52.