Burnet v. M.N.R.
A-492-97
Létourneau J.A., Marceau J.A. (dissenting)
17/3/98
22 pp.
Appeal from trial judgment ([1997] 3 C.T.C. 192) dismissing motion for mandamus to compel respondent to issue notice of determination of loss in amount of $260,460 pursuant to Income Tax Act, s. 152(1.1)-Motions Judge holding conditions of s. 152(1.1) not met-S. 152(1.1) providing where Minister ascertaining amount of taxpayer's non-capital loss and taxpayer not reporting amount as loss, Minister shall at taxpayer's request determine amount of loss, send notice of determination-In 1987 appellant, husband selling jointly owned property, incurring loss of $520,920-Husband claiming entire loss as business loss; appellant not claiming any loss in 1987 return-In 1992 respondent disallowing entire loss on basis personal-use loss-Husband appealed reassessment, claiming only half of loss-Appellant requesting determination of non-capital loss in respect of 1987, and that loss of $260,460 be carried back-Audit Division replied by letter dated January 22, 1993 matter of loss carry-back would be held in abeyance pending resolution of husband's appeal-In July 1994 Senior Appeals Officer confirming in event of decision favourable to husband, loss would be considered in determining appellant's non-capital loss for 1987 and notice of determination would be issued-On August 5, 1994 Senior Appeals Officer writing to inform appellant 1987 taxation year statute-barred from reassessment and Minister would have to exercise discretion pursuant to s. 152(4.2)-Tax Court allowing husband's appeal-Appellant requesting reassessment of 1987 return to allow loss on disposition of property pursuant to s. 152(1.1)-Requesting loss be carried forward pursuant to s. 152(4.3) instead of back-Appeals Division informing appellant reassessment would be considered under s. 152(4.2)-Subsequently Chief of Appeals informing appellant not appropriate to reassess to allow loss-Appeal allowed (Marceau J.A. dissenting)-Per Létourneau J.A. (Strayer J.A. concurring): Nature of loss only issue before Tax Court-Appellant entitled to half of loss as joint owner of property, and her share of loss known at time of request for determination under s. 152(1.1)-Combined reading of January 22, 1993, August 5, 1994 letters revealing definite undertaking, if loss found to be business loss, to take it into consideration in determining appellant's capital loss for 1987 taxation year and therefore issue notice of determination accordingly-When Tax Court issuing decision, amount of appellant's loss certain-Result of August 5, 1994 letter ascertainment of appellant's loss under s. 152(1.1) in amount of $260,460-Even assuming amount conditional on favourable ruling by Tax Court as to deductibility and therefore amount uncertain, condition met by time appellant requesting determination of loss-Minister under legal duty to proceed to second step envisaged by s. 152(1.1) i.e. determination of loss, issuance of notice of determination-Appellant led, entitled to believe Appeals Division having general authority to conduct business on Audit Division's behalf-Appeals Division given authority to deal with appellant's request; subsequent behaviour strong inducement to appellant that possessed at least ostensible, apparent authority to deal with issue-Per Marceau J.A. (dissenting): S. 152(1.1) not applicable to facts herein-Non-capital loss must be calculated, claimed by taxpayer in tax return for year in which ascertained-If tax return filed, assessment no tax payable issued without being objected to, amendment of return for that year would have to be authorized, Minister would have to reassess-Failure to claim non-capital loss in return for year in which occurred remedied only with Minister's consent, during limited time period-"Ascertainment" referred to in s. 152(1.1) can be made by Minister when, after having "examined" tax return, fulfilling duty under s. 152(1) and issues notice of reassessment or notice no tax payable-August 5, 1994 letter having no effect-No way non-capital loss sustained in 1987 could be "ascertained" within meaning of s. 152(1.1) in 1994-Could not even be claimed since Minister could not allow amendment to tax return as no power to proceed to reassessment-Income Tax Act, R.S.C., 1985 (5th Supp.), c.1, s. 152(1.1), (4.2).