INCOME TAX |
Marina Homes Ltd. v. Canada
T-3237-90, T-3238-90
MacKay J.
15/12/00
19 pp.
Garnishment--Actions in which plaintiffs appealed from notice of assessment by MNR under Income Tax Act, s. 242(1)--Appeals initiated by statements of claim filed on December 7, 1990--Bronson Homes Ltd. loaning money to plaintiffs Marina Homes Ltd., Denver Homes Ltd. in equal amounts which Marina, Denver agreed to borrow, repay--By Resolution dated March 24, 1983, Bronson Homes Ltd. will not, shall not be entitled to demand repayment of said loans--MNR reassessing Bronson's returns of income for 1980, 1981 taxation years--In May 1989, Minister delivering Requirement to Pay to Marina, Denver directing each pay amount in respect of income tax liability of Bronson to maximum of $479,648.48--Neither Marina nor Denver remitted money to Minister under Requirement to pay--In February 1990, Minister delivered notices of assessment to Marina, Denver, alleging each had failed to comply with Requirements to Pay--At no time did Denver Homes, Marina Homes consent to Bronson Homes demanding repayment of loans made to them--Key assumption of Minister in error--Loans to plaintiffs not repayable to Bronson on demand--As of May 30, 1989, thereafter, plaintiff companies did not have obligation to repay amounts each had borrowed from Bronson--Basis of assessment under Act, ss. 224, 227, assessment by garnishment against one liable to make payment to taxpayer, different from assessment under Act, s. 160 against recipient of transferred property where parties to transfer not dealing at arm's length--Original claim arising by assessment under Act, ss. 224(1), 224(4), 227(10)--Assessment by Minister under ss. 224, 227 not valid--Minister in error in issuing to plaintiffs requirements to pay--If prerequisites for repayment liability to Bronson Homes did not exist, plaintiffs not liable to pay to defendant amounts required under s. 224(4)--Assessments under s. 227(10) not valid--Alternative basis for assessment under s. 160 fundamentally altering basis of assessments for Marina, Denver--Such change matter for Minister to determine by formal action with proper notice, not matter for Court to institute--Actions allowed, assessments vacated--Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, ss. 160, 224(1),(4), 227(10), 242(1).