Digests

Canada v. Agazarian

A-36-03

2004 FCA 32, Pelletier, Létourneau JJ.A.

23/4/04

28 pp.

Appeal from Tax Court of Canada's decision ([2003] 2 C.T.C. 2323) with respect to determination of point of law: whether M.N.R. entitled to make reassessment of tax for appellant's 1987 taxation year pursuant to Income Tax Act, s. 152(4)(b)(i) after October 5, 1991, end of appellant's normal reassessment period for 1987 taxation year--In 1988 tax return, taxpayer requesting loss carry-back--Minister conducted second reassessment of 1987 return in 1990-- Normal reassessment period ended October 5, 1991-- Appellant not filing any further forms--Minister filing third assessment for tax liability for 1987 taxation year on April 1, 1993--Taxpayer objected on ground made after expiry of normal reassessment period--Minister confirmed reassessment--Appellant appealed--Question as to whether Income Tax Act as stood in 1993, time at which disputed reassessment made, or as stood following amendments introduced in 1988, which were made effective after April 27, 1989, applied--Parties agreed same effect, whichever disposition applied--Notwithstanding agreement, Court examining both provisions to determine whether saying same thing--Dealing with two concepts, Minister's power to assess and reassess taxpayer's income, and time limits within which Minister may exercise power--Former s. 152(1) conferring upon Minister power to assess income following receipt of taxpayer's return, and s. 152(6) conferring upon Minister power to reassess taxpayer's income in certain circumstances, one of which request by taxpayer for reassessment to claim loss carry-back to prior taxation year--Time limits imposed within which power to assess, reassess must be exercised, and limits as to subject-matter of reassessment--Both kinds of limits found in s. 152(4) as existing at time reassessment in question made--While s. 152(1) conferring upon Minister power to assess taxpayer's income, and to do so with due dispatch, it does not prescribe time within which Minister must exercise power--Similarly, while s. 152(6) conferring upon Minister obligation to reassess taxpayer's income to take into account claim of loss carry-back, it does not impose period within which such reassessment must occur--To determine those limitations periods, must turn to s. 152(4), which speaks of absence of limitation period with respect to Minister's power to assess taxpayer's liability for tax in first instance--S. 152(4) also speaking of Minister's power to reassess--Power to reassess within extended assessment period in s. 152(4)(b) limited to loss carry-back itself--S. 152(4)(b)(i) not limited to single reassessment because referring to reassessment "required" by s. 152(6)--S. 152(4)(b)(i) simply identifying circumstances in which extended reassessment period in s. 152(4)(b) applies; not defining what can occur within extended reassessment period--Definition of what may occur set out in s. 152(4)(c): "reassess or make additional assessments, or assess tax, interest or penalties under this Part as the circumstances may require"--Power to reassess more than once in relation to each of reassessment periods defined in s. 152(4)(a), (b) and (c) found in words "as the circumstances may require"-- Intention of legislator may be found in French version of text--English version simply speaks of "may . . . reassess" which gives no indication of number, while French version refers to "établir des nouvelles cotisations", which is undoubtedly plural--Consequently, even if "as the circumstances may require" applies to choice between enumerated categories, category of reassessment defined as more than one reassessment--French text strengthening argument old version of legislation permitting multiple reassessments within extended reassessment period with respect to request for reassessment made pursuant to s. 152(6)--Current s. 152(4) permitting Minister to assess, reassess at any time--Applies to initial assessment and to any reassessment--But goes on to provide assessment, reassess-ment or additional assessment can only be made outside normal reassessment period in certain circumstances--Since normal reassessment period begins to run from date of mailing of initial assessment, limitation not applying to initial assessment, but only to subsequent reassessments and additional assessments--This establishes general rule Minister may assess, reassess at any time, and the limitation, assessment or reassessment, must occur within normal reassessment period except in certain circumstances, set out in s. 152(4)(a) and (b)--S. 152(4)(b)(i) dealing with reassessments to give effect to loss carry-back in which case power to reassess must be exercised within three years of end of normal assessment period--In so far as time limits concerned, present and former versions of s. 152(4) to same effect--Although present version not containing subject-matter limitations on power to reassess within extended period, same result achieved by providing subject-matter limitations in s. 152(4.01)--S. 152(4)(4.01) restricting right of reassessment within extended reassessment period to subject- matter giving rise to right to reassess outside normal reassessment period--Therefore to same effect as final paragraphs of former s. 152(4)--As to power to reassess more than once, in current s. 152(4), Minister given power to assess and reassess "at any time"--Based on plain meaning of words "at any time", power to assess and reassess more than once applies to reassessments within normal reassessment period as well as to those outside that period--Words equivalent to "at any time" conspicuously absent from French text thus suggesting only single exercise of power to reassess authorized--Necessary to reconcile French, English versions to give effect to meaning compatible with spirit and intent of statute to ensure attainment of its objects--Parliament's intent ascertained by looking at former version of Act--Former version, by use of "as the circumstances require" and "selon les circonstances", supporting proposition Parliament intended Minister have power to reassess more than once also--Difference between former and present versions of text also supporting this proposition--Given legislative direction new provision applies as of April 27, 1989, differing versions of text meaning taxpayers will be treated differently with respect to same taxation year, depending upon time at which Minister choosing to reassess--This is clearly inequitable and to be avoided if possible--Such possibility leading to conclusion words "à un moment donné" implied in opening phrase of French version of s. 152(4)--Such implication justified from inner logic of text itself, but validity of such approach confirmed by mischief which would follow any other interpretation--Thus present and former versions of s. 152(4) to same effect--As result, date of application of current section of administrative significance only--Minister had power to reassess respondent more than once beyond normal assessment period, providing reassessments took place within extended reassessment period--Power to reassess to give effect to loss carry-back found in s. 152(6) while power to reassess more than once found in words "as the circumstances may require" or "at any time", depending upon which version of legislation under consideration--Appeal allowed--Per Létourneau J.A. (concurring): Power to reassess more than once after taxpayer's normal reassessment period not originating, in former s. 152(4), from words "as the circumstances require"--These words referring more to nature of power conferred and subject-matter of that power than to frequency of its use--Power to reassess more than once found in words "at any time", "à un moment donné" as well as in consistent use of plural in French and partial use of plural in English--Legislative provisions under scrutiny "are a mess" and not lending themselves to literal interpretation--They are in such state of disarray that literal interpretation leading to incongruous results regardless of position adopted--However, one incongruity resulting from respondent's contention leading to belief Parliament not intending to limit reassessment to single instance after normal assessment period--If, after initial acceptance of loss carry-back, upon reassessment, Minister concluding reported loss not legally admissible for deduction, would be prohibited from correcting tax assessment so as to disallow loss--Taxpayer would thus deduct legally inadmissible loss--Parliament not intending such absurd result--Income Tax Act, S.C. 1970-71-72, c. 63, s. 152(1) (as am. by S.C. 1978-79, c. 5, s. 5; 1988, c. 55, s. 136), (4) (as am. by S.C. 1990, c. 39, s. 38), (6) (as am. by S.C. 1984, c. 1, s. 84, c. 45, s. 59; 1986, c. 55, s. 59; 1988, c. 55, s. 136; 1990, c. 35, s. 17; c. 39, s. 38)--Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 152(4) (as am. by S.C. 2001, c. 17, s. 149).