Federal Appeal

Administrative Law

Only Tax Court could grant relief sought of setting aside or vacating assessments

Taxpayer was Canadian corporation that provided investment advice to Canadian clients and it marketed international stock by foreign-related entities. Taxpayer paid foreign-related entities fees to compensate them for services. Minister of National Revenue assessed taxpayer under Part XIII of Income Tax Act (Can.), concerning fees it paid to private Hong Kong corporation for period between December 2002 to December 2008 inclusive. Following assessments, taxpayer brought application in Federal Court for judicial review, alleging that Minister abused discretion by issuing assessments for Part XIII tax for so many years. Minister brought motion to strike out judicial review application. Prothonotary found that application raised independent administrative law ground of review and was properly within Federal Court and dismissed application. Minister brought motion to quash prothonary’s decision, but was unsuccessful. Minister appealed. Appeal allowed. Three things qualified as obvious fatal flaw that warranted striking out of notice of application for judicial review. First, notice of application failed to state cognizable administrative law claim that could be brought in Federal Court. Second, Federal Court was not able to deal with administrative law claim by virtue of s. 18.5 of Federal Courts Act (Can.), or some other legal principle. Third, Federal Court could not grant relief sought. Essential character of taxpayer’s notice of application for judicial review was attack on legal validity of assessments. Taxpayer failed to state cognizable administrative law claim. In circumstances, Minister did not exercise any discretion that was independent of assessments and there was no discretion that could be abused. Tax Court could consider whether Minister was legally entitled to assess Part XIII tax for years in question and there was no reason why it would not have been possible to deal with tax liability issues related to assessments through regular appeal process in Tax Court. Federal Court was not able to grant the relief sought. Only Tax Court could grant relief sought of setting aside or vacating assessments.

JP Morgan Asset Management (Canada) Inc. v. Minister of National Revenue (Oct. 24, 2013, F.C.A., K. Sharlow J.A., David Stratas J.A., and D.G. Near J.A., File No. A-532-12) Decision at 224 A.C.W.S. (3d) 509 was reversed.  235 A.C.W.S. (3d) 288.

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