An appeal to the Tax Court from an assessment must be filed within specific time limits. As a general rule, the notice of appeal must be filed within 90 days of receiving the Minister’s notification confirming the assessment. Subsection 165(3) provides that the Minister is to “notify the taxpayer in writing” of his decision to confirm. The subsection does not specify that the notice be sent by registered mail. If the taxpayer misses the 90 day deadline, an application may be made to the Tax Court to extend the time, provided the application is made within one year from the expiry date of the initial deadline. Among other requirements, the application must be made “as soon as circumstances permitted.” There are many reported cases dealing with the timeliness issue. Bourdages, Tax Court file 2008-711 (IT)APP is one of these. The case was originally reported in French (in 2009), but became availble in English recently. It is an interesting example of how a fair minded Tax Court judge dealt with an improbable set of circumstances facing a taxpayer applying for leave to late file.
The Minister claimed he sent the taxpayer a notice of confirmation dated January 31, 2007, by ordinary mail. The taxpayer testified that he never received it. The Crown led evidence to show that Canada Post had not returned the notice as undeliverable and inferred from this that it must have been received. The Minister subsequently sent a notice of account to the same address, which letter was received in mid-May, 2007. There then ensued a series of telephone calls initiated by the taxpayer’s accountant (the first of which was on May 18, 2007) by which he attempted to determine the status of the Minister’s notice of confirmation. He was told on each occasion that the notice had been sent, and on one occasion the CRA representative promised to mail a copy to the taxpayer. However, nothing was received by February 22, 2008 at which time the taxpayer filed an application for leave to late file his notice of appeal. The Crown opposed the application on the basis that it had not been brought “as soon as circumstances permitted,” noting that the taxpayer had been advised orally that the Minister had confirmed as early as the telephone call on May18, 2007, but did not file his application until some 10 months later. The taxpayer testified that he waited for the notice because he wanted to see the Minister’s reasons before drafting his appeal. He decided to file in February (still without having received the notice) because he did not want to miss the one year deadline for filing.
The reasons for judgment allowing the application for leave are interesting. As a factual matter, it was certainly strange that the notice of reassessment and statements of account were received, but not the notice of confirmation. The Court acknowledged this, but said the appellant and his accountant were to be believed in testifying they did not receive the confirmation. Their evidence was supported by the fact that the accountant had contacted the CRA on at least four occasions during 2007 in an effort to get a copy of the notice. The point of this is that the appellant had a believable explanation for the delay, and the Court acted reasonably (in my view) in accepting his explanation, notwithstanding the unexplainable fact that the taxpayer did receive other mail from the Minister sent to the same address.
A second interesting point was the Court’s response to the Crown’s submission that in any event the application to late file should have been made as soon as the taxpayer found out that the assessment had been confirmed. The Court said that the taxpayer acted reasonably in waiting to see if he could get a copy of the confirmation, as that would enable him to deal directly with the basis on which the Minister confirmed the assessment. Although he finally filed without having seen the notice, he did so in desperation (my words, not the Court’s) fearing the one year time limit would expire if he waited much longer.
It’s not often that one sees a set of facts like these. The case indicates that in the right situation, testimony from a believable witness can be enough to overcome the inferences a court might otherwise draw from the objective facts. I note in passing that the judge did not mention in his reasons whether he had ever personally been promised material “in the mail” which never in fact arrived. Many of us have been, of course, and it is encouraging to read a case in which the taxpayer’s assertion to this effect was accepted.