INCOME TAX |
Penalties |
Hillier v. Canada (Attorney General)
A-837-00
2001 FCA 197, Sexton J.A.
11/6/01
12 pp.
Appeal from Trial Division order dismissing application for judicial review of Revenue Canada's decision to not cancel, waive interest, penalties assessed against appellant--Appellant's 1989 to 1992 income tax returns audited in 1993--Discovery of previously unreported income resulting in 1995 reassessments--Penalties, interest also assessed against appellant--Appellant filing notices of objection--Due to staff changes review of objections not commenced until 31 months after notices filed--In 1998 notices of reassessment issued reducing total income assessed for 1990 to 1992 and confirming reassessment for 1989--In 1998 appellant requested Minister to waive, cancel penalties, interest assessed pursuant to Income Tax Act, s. 220(3.1)--S. 220(3.1) permitting Minister to waive, cancel all or any portion of any penalty, interest at any time--Request denied--Motions Judge dismissing application for judicial review--Appeal allowed--Only decision to not waive, cancel interest at issue as penalties assessed related to amounts not altered by 1998 reassessment--S. 152(1) requiring Minister to assess tax return "with all due dispatch"--S. 165(3) requiring Minister to reconsider reassessment "with all due dispatch"--J. Stollar Construction Ltd. v. Minister of National Revenue (1989), 89 DTC 134 (T.C.C.) holding "with all due dispatch" expressing clear intention to require Minister to act within reasonable period, length of which varying in accordance with circumstances--31-month delay before commencement of review of file inordinate, particularly as review completed in little more than six months once commenced--Staff changes insufficient explanation to meet onus on Minister to show delay not unreasonable--By allowing unreasonable length of time to elapse prior to reassessing appellant, informing him of results, Minister failed to act with dispatch required by Act--Minister's delay caused accrual of significant additional interest charges against appellant--Respondent submitted fairness provisions of s. 220 only apply to remedy unfairnesses encountered during period up to time taxpayer first assessed under s. 152--Argument taxpayer's remedy appeal to Tax Court if unhappy with assessment, rejected--No express indication Parliament intended s. 220(3.1) to apply only to actions taken under s. 152--Acceptance of respondent's position would deprive taxpayer of any remedy in event notice of objection not considered in reasonable time--Minister's delegate considered irrelevant factors relating to appellant's failure to report all of income in each of taxation years--Not relevant to unfairness alleged i.e. delay--Also stating applicant not disputing liability--In fact, by filing notices of objection appellant did dispute amount of liability--Appellant not knowing actual liability until final reassessment in August 1998--Total liability significantly reduced--But central error failure to consider one very important, relevant factor i.e. processing delays--Such failure making decision unreasonable--Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, ss. 152(1) (as am. by S.C. 1998, c. 19, s. 42), 165(3) (as am. by S.C. 1994, c. 7, Sch. VIII, s. 98), 220(3.1) (as enacted by S.C. 1994, c. 7, Sch. VIII, s. 127).