[2018] 4 F.C.R. D-17
Income Tax
Assessment and Reassessment
Appeal from Tax Court of Canada (T.C.C.) decision (2017 TCC 46) dismissing appellant’s appeal from reassessment confirming that appellant liable for Canada Pension Plan, R.S.C., 1985, c. C-8 (CPP) contribution in relation to income allocated thereto after retiring as partner from accounting firm — Year following appellant’s retirement, appellant allocated income from partnership based on partnership agreement — Including income in 2008 tax return but not including any amount for CPP contribution — Assessed in 2009 on basis that income allocated to appellant resulted in CPP contribution payable by him — Almost 4 years later, appellant requesting that Minister of National Revenue (Minister) reassess amount payable for 2008 by reversing amount payable for CPP contribution; by reversing corresponding amounts for deduction, non-refundable tax credit — In 2014, Minister reassessing appellant — While agreeing to reverse amounts for deduction, non-refundable tax credit, Minister not reversing amount payable for CPP contribution since appellant not making request within four year limitation period — Reassessment thus resulting in appellant having balance payable of over $2,000 — After appellant objecting to reassessment, Minister reassessing appellant in December 2015 — Reassessment reflecting original 2009 assessment — Appellant appealing to T.C. C. concerning December 2015 reassessment — T.C.C. concluding that income appellant allocated could not be considered to be retiring allowance; that since amount included in appellant’s income as business income, it should also be treated as self-employed earnings for CPP purposes — Issues: whether reassessment issued under Income Tax Act, R.S.C., 1985 (5th Supp.), c.1, s. 152(4.2) (Act); whether valid appeal before Tax Court of Canada existing; if so, whether CPP contribution payable in relation to income allocated to appellant for 2008 — Act, s. 152(4.2) providing that, for purpose of determining amount of any refund to which taxpayer entitled, Minister may reassess that taxpayer following application for such determination made by taxpayer — No right to object reassessment made under s. 152(4.2), thus is no right to appeal — While appellant requesting reassessment, refund, Minister determining no such refund owed — In fact, appellant’s tax liability increasing — Reassessment that increases person’s tax liability is not one made for purpose of determining refund but for purpose of determining that person’s liability under Act or CPP — Since reassessment issued in May 2014 increasing appellant’s liability for 2008, not reassessment made under Act, s. 152(4.2) — Regarding validity of appeal, 2014 reassessment issued more than three years after original assessment issued in September 2009 — In accordance with Act, s. 152(8), reassessment made in May 2014 deemed to be valid notwithstanding any error or defect or omission in assessment — Therefore valid appeal to T.C.C. existing in relation to subsequent related reassessment issued in December 2015 — As to CPP contributions following appellant’s retirement [heading, p. 10], T.C.C. finding that amount allocated to appellant in 2008 by accounting firm included in his income under Act, s. 96(1.1) — However, since appellant had ceased to be member of partnership in 2007, he ceased to carry on business in common with other members of partnership at that time — As result, appellant not carrying on business in common with other partners of accounting firm at any time in 2008 for purposes of CPP —Deeming provisions in Act (ss. 96(1.1); 96(1.6)) examined — No provisions existing deeming appellant to be member of partnership or to be carrying on business for CPP purposes — Thus, in 2008, appellant would not be member of partnership, would not be carrying on business for CPP purposes (s. 14) — Income allocated to appellant by accounting firm for 2008 not self-employed earnings for purposes of CPP, s. 14 since income not arising from business appellant carrying on in 2008 — Matter remitted for reconsideration, reassessment — Appeal allowed.
Freitas v. Canada (A-130-17, 2018 FCA 110, Webb J.A., judgment dated February 1, 2018, 17 pp.)