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Posted by on in Tax Law

Rosenberg v MNR (2016 FC 1376) shows that the FC will uphold a contractual agreement entered into by the minister and a taxpayer.

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In order to be successful in tax appeals, the rules of evidence can sometimes play a key role.

In Boroumand, the Appellant appealed assessments for unreported income under the Income Tax Act to the Tax Court of Canada (“TCC”) (2015 TCC 239).  The Appellant’s position was that the funds came from non-taxable sources, including primarily an inheritance from family in Iran. The Appellant sought to introduce documents from money exchange enterprises purporting to show that he received nearly $2 million from Iran. The Minister objected to admitting the documents as they were hearsay and under normal circumstances were inadmissible. 

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Whether a notice of assessment was mailed or not has important legal consequences for taxpayers.  There is an irrebuttable presumption of receipt of the notice of assessment by a taxpayer once it is mailed by the Minister (S,248(7)(a) of the Income Tax Act (“ITA”)); a notice of objection must be served on the Minister within 90 days of the date on which the notice of assessment was mailed (s.165(1)); upon receipt of a notice objection, the Minister is obliged to reconsider the assessment and vacate, confirm or vary the assessment or reassess and to notify the taxpayer of its decision (s. 165(3)); and the taxpayer may appeal the assessment to the Tax Court of Canada (“TCC”) if the Minister has not vacated or confirmed the assessment or reassessed within 90 days of receiving the notice of objection (s. 169(1)). Parallel provisions are found in the Excise Tax Act.

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GST/HST rules provide that a notice of objection has to be filed with the Minister within 90 days of the mailing of an assessment (section 301(1.1) of the Excise Tax Act (the “ETA”); the parallel provision in the ITA is section 165(1)).  However, as established in Le sage au piano v. The Queen (2014 TCC 319), the clock may not start ticking on the 90 day period if the CRA has left out important details of the taxpayer’s address on the notice of assessment—extending the previous doctrine from income tax cases that it is insufficient for the CRA to mail a notice of assessment to an incorrect address (The Queen v. 236130 British Columbia Ltd., 2006 FCA 352). The fact that litigation continues in this area also highlights the fact that there is no electronic means of determining whether a notice of assessment has been issued.

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For years it was an open question as to whether or not a Canada Revenue Agency ("CRA") auditor owed a duty of care to a taxpayer under audit.  In the recent case of Leroux (2014 BCSC 720) the Supreme Court of British Columbia (BCSC) concluded that, on the facts, the CRA auditors owed a duty of care to the taxpayer.  But what is the appropriate standard of care a CRA auditor must meet to avoid a finding of negligence? 

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