Canada v. Canada Safeway Ltd.
A-896-96
Létourneau J.A.
26/11/97
12 pp.
Appeal from T.C.C. determination refund of Federal Sales Tax (FST) under Excise Tax Act should not be included in taxpayer's income in year of receipt-Income Tax Act, s. 12(1)(x)(iv) requiring inclusion in income of amounts received in year, in course of earning income from business or property, from government where received as reimbursement in respect of expense-Between December 1, 1985 and December 31, 1989 taxpayer paying $2,794,438 to Crown on account of FST under Excise Tax Act-Deducted FST paid as expense in computation of taxable income-Applied for refund on certain amounts of FST paid up until January 2, 1988 on ground paid by mistake-MNR refunding $2,794,438-Taxpayer deducting refund as "other income related to prior years" in calculating income for taxation year ending January 1, 1994-MNR including refund in income in year of receipt-Appeal dismissed-Primary meaning of "reimbursement" associated with indemnification through repayment to someone of expense, loss incurred; secondary meaning mere repayment or refund-Primary meaning of "refund" restitution or return of sum received, taken; secondary meaning of reimbursement-Term as used in s. 12(1)(x)(iv) limited by context-Westcoast Energy Inc. v. Canada, [1991] 3 F.C. 302 (T.D.) clearly indicating not every payment or repayment qualifying as reimbursement within s. 12(1)(x)(iv)-All examples of word reimbursement containing flow of benefits between parties-In case of refund of sums paid by error, no flow of benefits between parties: money simply returned to payer-While notion of reimbursement generally involving intervention by third party, refund implying mere return of money between two parties-In both Excise Tax Act and Income Tax Act, Parliament envisaging return of moneys paid by error to taxpayer as refund, not as reimbursement-"Reimbursement" in s. 12(1)(x)(iv) not including "refund"-Refund should not be included in 1994 income-Minister allowed, within certain limits under Act, to reopen accounts of prior years, reassess them-Appropriate, balanced means of correcting bona fide errors without creating injustice to parties-Argument Minister outside time limit to reassess after litigation ignoring fact Minister, can seek from taxpayer waiver of limitation period, and in case of refusal, proceed to reassess on basis of amount in dispute-Case illustrating lack of coordination at time between FST section, Income Tax section within Revenue Canada-Income Tax Act, S.C. 1970-71-72, c. 63, s. 12(1)(x)(iv) (as enacted by S.C. 1986, c. 6, s. 6; 1990, c. 45, s. 39)-Excise Tax Act, R.S.C., 1985, c. E-15.