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Extensions To Tax Appeal Deadlines Should Be Sought ASAP

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Given the tight tax timelines under the Income Tax Act (“ITA”) and the Excise Tax Act (“ETA”), it is not uncommon for tax appeal deadlines to be inadvertently missed. While it is possible to obtain an extension under certain circumstances, there are strict deadlines that must be adhered to in order to do so.

In the recent decision in Canada (National Revenue) v. ConocoPhillips Canada Resources Corp., 2017 FCA 243 (“ConocoPhillips”), the Federal Court of Appeal (“FCA”) confirmed that the Minister of National Revenue (the “Minister”) has no authority to grant an extension to the deadline for filing a Notice of Objection if an extension is not sought within one year of the expiration of the general deadline for doing so.

The ConocoPhillips case involved an appeal from the Minister’s refusal to grant ConocoPhillips a waiver to file a document pursuant to subsection 220(2.1) of the ITA which states that:

220(2.1) Where any provision of this Act or a regulation requires a person to file a prescribed form, receipt or other document, or to provide prescribed information, the Minister may waive the requirement, but the person shall provide the document or information at the Minister’s request.

ConocoPhillips sought the waiver for a Notice of Objection relating to a reassessment issued to it for its taxation year ending November 30, 2000. ConocoPhillips had missed the one year deadline for seeking an extension to the time to file a Notice of Objection for this reassessment.

The Minister refused to grant the waiver on the grounds that subsection 220(2.1) did not apply to a Notice of Objection. ConocoPhillips applied for judicial review of the Minister’s decision.

The Federal Court of Canada (“FC”) allowed ConocoPhillips’ application and set aside the Minister’s decision on the basis that the Minister had applied an unreasonably narrow interpretation of subsection 220(2.1).

On appeal, the FCA found that the FC failed to correctly apply Driedger’s modern rule of statutory interpretation which requires a statutory provision be read “harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.”

In particular, the FCA held that the FC did not give due consideration to subsection 166.1(7) of the ITA which states that the Minister cannot extend the time for filing a Notice of Objection unless “the application is made within one year after the expiration of the time otherwise limited by this Act for serving a Notice of Objection or making a request”.

The FCA found that when subsection 220(2.1) is analyzed together with subsection 166.1(7) it is clear that the general waiver provision in subsection 220(2.1) cannot be used “to engage the objection process without having to comply with its statutory conditions”. To hold otherwise the FCA held would in effect “give the Minister a power that the Minister has been denied in a detailed provision in subsection 166.1(7)”. This would be contrary to the “implied exception” rule of statutory interpretation, which states that a general waiver provision cannot be applied to override a more specific provision.

When the ITA is read as whole, the FCA concluded that it was clear that a taxpayer is either in or out of the objections regime as Parliament did not intend for subsection 220(2.1) to act as a safety value for objections.

The FCA therefore allowed the appeal and reinstated the Minister’s decision.

There is no equivalent to the general waiver provision in subsection 220(2.1) of the ITA in the ETA. However, the decision of the FCA in ConocoPhillips would appear to be equally applicable to missed Notice of Objection deadlines in the GST/HST context because subsection 303(7) of the ETA is analogous to subsection 166.1(7) of the ITA in that it also prohibits the Minister from granting an extension to the deadline for filing a Notice of Objection if the extension is not sought within one year of the expiration of the general filing deadline.

In any event, taxpayers who have missed a Notice of Objection filing deadline – or any tax appeal deadline for that matter – should contact a competent tax professional as soon as possible. Time is of the essence here and the sooner qualified advice is obtained the greater the likelihood of obtaining an extension.

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