Oliveira v. The King (“Oliveria”) demonstrates the need for taxpayers to diligently follow the deadlines stipulated on the notices received from the Canada Revenue Agency (“CRA”). Deadlines stipulated on notices of assessments, reassessments, or confirmations are based upon Canadian tax legislation i.e., the Income Tax Act (“ITA”) and the Excise Tax Act (“ETA”). Failure to follow the deadlines articulated in the legislation can prevent you from appealing to the Tax Court of Canada thereby losing your tax case. Oliveira also illustrates that the Tax Court will enforce these deadlines regardless of the merits of your case.
Timelines are key to a taxpayer’s successful claim.
The taxpayer, Mr. Bruno Oliveira, a high school teacher from Kelowna, British Columbia was assessed by the CRA under director’s liability for his numbered company. The CRA assessed the taxpayer under both the Income Tax Act & the Excise Tax Act. His request for an extension of time to initiate an appeal to the Tax Court was rejected on the grounds that the issue was statute-barred.
The CRA assessed the taxpayer for director’s liability under s.227.1 of the Income Tax Act and s.323 of the Excise Tax Act on September 30, 2019. The taxpayer sent a notice of objection to the CRA on December 19, 2019. The CRA rejected the arguments put forward by the taxpayer and sent a notice of confirmation of the assessments under both the Income Tax Act and the Excise Tax Act to the taxpayer on May 10, 2021. The May 10th notices clearly stipulated that the taxpayer had 90 days to initiate an appeal to the Tax Court of Canada. This 90-day deadline expired on August 8, 2021.
On August 9, 2021, the taxpayer attempted to fax a letter to the CRA’s Western Canada Appeals Intake. He only intended to send this fax to the CRA tax office and not to the Tax Court of Canada – where was required to submit his appeal.
Between May 10, 2021, and August 8, 2021, the taxpayer had already received and read the CRA’s letter. According to the taxpayer, he read the letter in his bathroom shortly before it was flooded, and the letter was lost. Therefore, the taxpayer received replacement copies of the May 10th letter on August 26, 2021, which stipulated the same 90-day deadline to appeal to the tax court.
On September 13, 2022, the taxpayer applied for an extension of time request with the Tax Court of Canada under s.167(1) of the Income Tax Act and s.305(1) of the Excise Tax Act. This was after the 1-year grace period allowed to taxpayers to file an extension of time request after they have received a letter of confirmation from the CRA. Therefore, the time to request an extension elapsed on August 8, 2022. Even if the Canadian tax litigation lawyer of the taxpayer argued that the August 26, 2021, date should be considered as commencement of his 1-year grace period to file, the filing in September 2022, extinguished any chances of meeting that deadline.
A Delay in your Extension of Time Application does not necessarily invalidate it
The court in Oliveira held that although filing an extension of time application is not sufficient for the application to be granted by the court, it is necessary to file one in order to receive any kind of tax relief in Canada. The tax court looks at a number of factors when deciding if it wishes to grant an extension:
- Timeliness of Application – The taxpayer must file an application for an extension of time within 1-year after the 90-day deadline to institute the appeal. This 1-year grace period is provided by s.167(5)(a) of the Income Tax Act and s.305(5)(a) of the Excise Tax Act.
- Equitable – it must be just an equitable to grant the extension.
- Reasonableness – the application must have been made as soon as circumstances permitted, and if not, a bona fide intent to file the application should have been present.
In Oliveira, the tax court was primarily concerned with the timeliness of the application. By not meeting the stipulated deadlines in the Acts, the taxpayer lost his opportunity to appeal his case, regardless of its merits.
The Canadian tax litigation lawyer for the taxpayer unsuccessfully argued that Mr. Oliveira’s application should be granted in light of present case-law. He cited Hickerty v. The Queen (2007) TCC 482 and Breathe E-Z Homes Ltd. V. Minister of Revenue (2014) TCC 122. In Hickerty the taxpayer had filed her application but sent it to the wrong address. In E-Z Homes the taxpayer had entrusted his lawyer to file the application and had taken all reasonable steps to ensure compliance with the statute. Neither case applied to the taxpayer in Oliveira; therefore, the tax court distinguished both cases from that of the taxpayer.
Pro Tax Tips – Do Not Miss your Application Deadline – Even if your case against the CRA is strong
Even if the CRA has wrongly assessed a taxpayer for something, failing to file an appeal within the stipulated time can prevent a taxpayer from seeking relief. For the court to consider the merits of the case, the taxpayer must first cross the hurdle of convincing the judge that their untimeliness entailed a bona fide intent to file the application; and in some cases, was caused by circumstances beyond their control. However, there have been cases before the tax court where an extension of time application was accepted, even though it was filed late.
Regardless of the strengths or perceived merits of a taxpayer’s claim, it may be beneficial to retain the services of an experienced Canadian tax lawyer in Toronto. Canadian tax lawyers can help ensure the court hears the merit of your case by following the filing deadlines stipulated in the Income Tax Act and the Excise Tax Act.
I received a notice of confirmation a month after the date stipulated on the letter. Does that affect my filing deadline?
Generally, the date on your letter is the date from which the CRA calculates the amount of time you have left for filing an appeal with the Tax Court. It may be beneficial to call the CRA agent whose number is listed on your letter – letting them know of the exact date you received the letter. Get in touch with a Canadian tax lawyer to get a better understanding of your options.
I still have 10 days left in the 1-year grace period to file an extension of time application. Will my application be accepted?
According to the Income Tax Act and the Excise Tax Act the timeliness of the application is a necessary condition for the extension of time to be granted, but it is not sufficient on its own. The burden of proof is on the taxpayer to demonstrate that the taxpayer made a bona fide (innocent) intention to appeal, the taxpayer was unable to act during the stipulated period, and that there were legitimate reasons for the delay. Each taxpayer’s situation is unique. Get in touch with a Canadian tax lawyer to consider the statutory validity of your application.
Letters from the Canada Revenue Agency contain legal jargon which I do not understand. What can I do?
Some correspondence from the CRA may include legal terms and references to specific subsections of the Income Tax Act that most taxpayers are unfamiliar with. However, the deadline to respond to the letter will be clearly mentioned in the letter. Some CRA letters may have a 30-day deadline instead of a 90-day deadline. Get in contact with an experienced Canadian tax lawyer to ensure you have the correct course of action to deal with the CRA.
This article just provides broad information. It is only up to date as of the posting date. It has not been updated and may be out of date. It does not give legal advice and should not be relied on. Every tax scenario is unique to its circumstances and will differ from the instances described in the article. If you have specific legal questions, you should seek the advice of a Canadian tax lawyer.