Federal Appeal


Taxation

Income tax

Challenge to amount of tax payable must proceed by way of appeal from assessment or reassessment to Tax Court of Canada

CRA reassessed taxpayer’s 2007 taxation year on basis that taxpayer’s reported capital gain relating to sale of properties made by partnership was business income Reassessment stated that taxpayer’s share of profit was $1,898,828.00, allowed reserve was $919,978.00, and taxpayer’s share of partnership income after taking into account reserve was $978,850.00. CRA’s confirmation of reassessment stated that taxpayer’s share of “profit” was $978,850. Taxpayer requested CRA use profit of $978,850 as stated in confirmation of reassessment, but CRA informed taxpayer that his share of partnership income was as assessed in original reassessment. Taxpayer’s application for judicial review of that decision was dismissed. Trial judge found issue was concerned with manner of how CRA collected taxpayer’s 2007 income tax. Trial judge found Federal Court had jurisdiction over collection matters. Trial judge found taxpayer conceded that CRA’s use of word “profit” in confirmation notice was error by CRA. Trial judge found CRA’s error was not fatal. Trial judge found purpose of notice of confirmation was to confirm findings from original reassessment Error of using term “profit” instead of proper term of “income” was not substantial as to deprive meaning of letter or invite severe misinterpretation. Trial judge found CRA did not err in law in informing taxpayer that his share of partnership’s income was as assessed in original reassessment. Taxpayer appealed. Appeal dismissed. Any challenge to amount of tax payable must proceed by way of appeal from assessment or reassessment to Tax Court of Canada. Appeal constituted collateral attack on reassessment. Argument that notice of confirmation provided legally correct basis of liability for income tax and that Minister’s collection activity was limited to amount owing when assessment was given effect did not succeed.

Karam v. Canada (Attorney General) (Mar. 15, 2016, F.C.A., J.D. Denis Pelletier J.A., Dawson J.A., and Gauthier J.A., A-271-15) Decision at 252 A.C.W.S. (3d) 366 was affirmed. 264 A.C.W.S. (3d) 809.

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