CRA can err, but courts are not bound by CRA errors

Kubbernus v. The Queen (General Procedure).
Tax Court of Canada, June 29, 2009. Neutral Citation: 2009 TCC 311. Court File No. 2008-3239(IT)
G. Angers, J. Appeals – Motions to quash – In an original assessment dated May 25, 2001 the Minister included in the taxpayer’s income for 2000 an amount of $1,997,525 relating to exercised stock options.
On June 29, 2006 the Minister received from the taxpayer an application for relief under ss. 152(4.2) or 164(1.5) of the Act with respect to his 2000 taxation year.
On October 16, 2006 the Minister reassessed the taxpayer permitting a capital loss carryforward of $545 for 2000.
On appeal from this reassessment (the “Reassessment”) the taxpayer objected to the $1,997,525 inclusion in his income for 2000.
The Minister moved for an Order quashing the taxpayer’s appeal from the “Reassessment” on the ground that it had been made under s. 152(4.2), so that no appeal therefrom was available under s. 165(1.2).
The taxpayer’s position was, in part, that: (a) the Reassessment was made under ss. 152(4)(b)(i) and 152(6), and not under s. 152(4.2) as the Minister had contended, so that the prohibition against an appeal in s. 165(1.2) was inapplicable; (b) under the doctrine of implied exception set out by the SCC, s. 169(1) of the Act does not specifically prohibit appeals from reassessments issued under s. 152(4.2); (c) the Minister was estopped from questioning the validity of the taxpayer’s Notice of Objection to the Reassessment; and (d) the Minister’s alternative motion for an order extending the time for filing a Reply should be dismissed because the Minister did not satisfy the test for granting an extension of time to file a Reply
– Appeal dismissed – The TCC concluded, in part, that:
(a) none of the taxpayer’s arguments was tenable;
(b) in a well-established line of cases (e.g. Groulx v. the Queen 2008 TCC 445 (TCC), affirmed 2009 FCA 10 (FCA)) it has been held that a taxpayer is precluded from appealing to the TCC from a reassessment made under s. 152(4.2) of the Act;
(c) s. 169(1) does not specifically prohibit appeals from s. 152(4.2) reassessments, because there is no need for this in light of the clearly worded prohibition in s. 165(1.2) against appealing from s. 152(4.2) reassessments;
(d) there was no evidence in the present case that the Reassessment was issued under s. 152(4)(b)(ii) or 152(6), as opposed to s. 152(4.2); and (e) although the Minister erred in considering the taxpayer’s Notice of Objection to the Reassessment,
the Court was not bound by this error,
and no estoppel arose in this case if the Minister’s conduct was not in accordance with the law.
The taxpayer’s appeal from the Reassessment was quashed accordingly – I.T.A., ss. 152(4)(b), 152(4.01), 152(4.2), 152(6), 164(1.5), 165(1.1), 165(1.2), 169(1), 169(2), 169(2.2).

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