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Incomplete Address: Notice of Assessment not “Mailed”

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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.

The facts of the case were simple. In a dispute regarding the amount of net tax to be reported in relation to the fair market value of a residential complex, the Minister advised the taxpayer of the audit results on May 23, 2013, and issued a notice of assessment on June 3, 2013. However, the notice of assessment was addressed to the taxpayer’s office without the suite number, and the taxpayer denied receiving it. The taxpayer became aware of the assessment only on September 16, 2013 after the 90 days had expired. The taxpayer applied to the CRA for an extension of time to file an objection, was refused, and made a further application for extension of time to the TCC.

At the TCC, the CRA submitted that subsection 334(1) creates an irrebuttable presumption of receipt of the assessment by a taxpayer once the assessment is sent to a correct address; failures by the postal system to deliver are not relevant. The taxpayer contended that the absence of the suite number was important in that its office was located in a multi-story building with 20 tenants and the mailbox on the main floor did not bear the taxpayer’s name.  After considering the evidence, the TCC was of the view that the address on the assessment was incomplete and that the suite number was essential in this particular situation.  The TCC found that the Minister failed to prove that the address provided by the applicant did not include the suite number. Thus, the assessment had not been “mailed”. Accordingly, the taxpayer’s application for an extension of time was allowed.

The TCC further addressed the question of whether, had the mailing been correct, the taxpayer could have achieved an extension of time through the normal rules for late filing (section 304). The court concluded that the taxpayer had met all the necessary conditions (section 304(5)), including having a bona fide intention to object and it being just and equitable to grant the application given the reasons set out in the application and the circumstances of the case.

This case serves as a reminder to taxpayers that it is advisable to monitor issuance of assessments after completion of audits or filing of rebate claims. This was not as easy to do as perhaps it should have been. Although individuals could check on income tax assessments through the My Account service, the My Business Account service, until recently, did not cover such notices for either GST or corporate income tax. Inquiries had to be made in writing, or orally via the CRA’s Business Window.  However, since this case was decided, the CRA has created a new service allowing businesses to receive some of their correspondence (including notices of assessment and reassessment) from the CRA online through their “My Business Account” with the CRA.

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