The HST Blog : Canada Harmonized Sales Tax Lawyer Cyndee Todgham Cherniak for Assessments, PST & RST Issues in Ontario, British Columbia & Quebec

After writing my July 26, 2011 post, I decided that a chart setting out statutory limitation periods for filing notices of objection (in some provinces called a notice of appeal) and notices of appeal (to a Court) may be helpful.  A statutory limitation period is a deadline that taxpayers must meet for their objection or appeal to be considered to be filed on time and valid.  If a notice of objection or notice of appeal is not filed on or before the deadline, the lawyers for the government may not acknowledge it.

It is important to note that some of the filing deadlines require that the document be sent to a relevant governmental authority within the statutory limitation period.  This means that filing may not be sufficient to meet the deadline.  Sometimes you must file the document with the court and send it to the government body who issued the assessment (called "service") within the statutory limitation period.

Note that I have not forgotten Prince Edward Island.  Their process is different than the other provinces and there is a two step informal (not involving a court) appeal process.  The deadlines did not fit within the structure of the chart.

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The Federal Court of Appeal recently put an end to a case where the taxpayer filed a GST/HST notice of objection filed 11 years after the confirmation of the assessment.  In 2786885 Canada Inc. v. The Queen, the Federal Court of Appeal heard an appeal from a Tax Court of Canada decision dismissing an appeal on the basis that the notice of objection was not filed in time.

The Federal Court of Appeal wrote:

Pursuant to section 306 of the ETA, the appellant had a period of 90 days from the date of the confirmation (i.e. January 21, 1998) to file his notice of appeal. While the appellant could have sought an extension of time, subsection 306(5) of the ETA provides that no such order can be made unless the application is brought “within one year after the expiration of the time otherwise limited … for appealing;”. It follows that the Tax Court Judge had no authority to extend the time and that he properly dismissed the appeal.
 

[Note: I found this quote to be helpful and confusing.  Subsection 306(5) of the ETA does not exist.  The relevant provision is subsection 305(5) of the ETA.]

The Tax Court of Canada decision is not available.  As a result, the facts are not known.  The context of this case may shed light on why the notice of appeal was filed after a 11 year time lapse.

If the appellant merely waited 11 years and filed an appeal after an assessment against a director, it is understandable that the Tax Court of Canada and Federal Court of Appeal rejected the late-filed notice of appeal.  If the appellant waited 11 years and filed an appeal after the collections department started various collections proceedings, it is also clear why the notice of appeal was rejected.

However, if the appellant never received the notice of confirmation of the assessment, then it may be that the appellant recently learned of Canada Revenue Agency's (CRA) position that there is an outstanding tax debt.  In this circumstance, I could understand why the appellant attempted to file an appeal after what appears to be a long time delay.

The over-riding issue is that there are statutory limitation periods in tax legislation.  These statutory limitation periods are used by the CRA to stop further discussion.  Taxpayers must play by the rules when they have a disagreement with the CRA.  One of the key rules is that a taxpayer must adhere to deadlines. 

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In the recent case of Bouganim et al. v. The Queen, the Tax Court of Canada denied a request for an extension of time beyond the 90-day limitation period for filing an appeal.  The taxpayer had been assessed and the objection was denied.  The taxpayer hired a lawyer who did not file the appeal before the 90-day limitation period.  The taxpayer hired a new lawyer and the new lawyer filed an application to the Tax Court of Canada for an extension of time to file the appeal.  Since the Tax Court of Canada would not grant the extension of time, the taxpayer could not appeal the assessment and the assessed amount was due and payable in full.

Unfortunately, I see this situation from time to time.  Lawyers, accountants and advisors who are not familiar with the provisions of the Excise Tax Act do not know the filing deadlines (and often do not know where to find them).  A commodity tax lawyer knows the provisions for filing a notice of objection and notice of appeal.  A commodity tax lawyer will not make the mistake of missing an appeal deadline (unless you contact them after the deadline or give them insufficient time).

There are circumstances when the Tax Court of Canada will grant an extension of time.  For more information, please contact Cyndee Todgham Cherniak at 416-760-8999. 

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It is bad enough to receive a notice of assessment from the Canada Revenue Agency (CRA) or the Ontario Ministry of Revenue or the Canada Border Services Agency (CBSA) or some other tax authority.  You clearly did not want to be in a position that you have to pay an amount of money (especially large assessments) to the government.  However, ignoring the notice of assessment is not the right option to choose concerning what to do next. 

If you do not agree with the amount stated on the notice of assessment as the amount (or the imposition of a penalty amount or the interest calculation) or the basis for the assessment or do not know why you received the assessment and want to have the taxing authority make a correction, you usually must file a notice of objection/notice of appeal/request for redetermination or take a positive step to request further consideration of the matter.  In almost every taxing statute, there are statutory time periods (also called "limitation periods") which are often 30 or 90 or 180 days depending on the tax at issue and the legal route to resolve the dispute.  If you throw the notice of assessment in a drawer, you may miss the filing deadline and lose your opportunity to file a notice of objection, appeal or request for a redetermination. This would be bad for you.

Some tax statutes allow for you to ask the head of the taxing authority or a court or tribunal for an extension of time to file the notice of objection, appeal or request for a redetermination.  However, usually you must make the request within the statutory time period for the objection/appeal/redetermination.  For example, if you have a 90 day period to file a notice of objection, you must ask for your extension of time before the 90 day period expires.  You must explain the reason for needing an extension of time - and saying that you forgot about the notice of assessment is not a good excuse.  You must also demonstrate that you intended to file an objection/appeal/redetermination - and saying that you threw the notice of assessment in a drawer shows that you planned to ignore it.

Pulling the notice of assessment out of the drawer one week or one day before the statutory objection/appeal/redetermination deadline is problematic as you will have to find someone to help you file your objection/appeal/redetermination under extreme stress and you will forget important facts and potentially winning arguments.  You will reduce your likelihood of success when you do not leave yourself and your advisors enough time to do a good job.

Finally, I hear from many clients who pull the notice of objection out of the drawer years after the limitation period for filing an objection/appeal/redetermination has expired.  At that point in time, they are being pursued by the collections department of the taxing authority and the amount of interest after time can double the liability.  At some time, it will catch up with you.  When you are pursued by collections officers or receive a director's liability assessment for the original assessment amount plus interest compounded daily at 6% or more, you will wish that you did not thrown the original assessment in a drawer.  At that stage, there is even less a professional can do to correct any mistakes made by the auditor.

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