Federal Appeal


Income tax

Administration and enforcement

Judge held that Rule 58 hearing should not be used as substitute for full hearing?

Determination of question. Minister of National Revenue issued reassessments against taxpayer for taxation years 2000 through 2007 outside normal reassessment periods in relation to taxpayer’s reporting of income and loss from foreign currency trading activities. Taxpayer’s appeal involved issue relating to possibility of reassessments being statute-barred. Taxpayer brought motion, pursuant to R. 58 of Tax Court of Canada Rules (General Procedure), for determination of question of whether taxpayer’s reporting was attributable to neglect, carelessness, or wilful default within meaning of s. 152(4)(a)(i) of Income Tax Act. Tax Court judge dismissed motion and concluded that issue of whether reassessments were statute-barred (statute-barred issue) should be decided in course of trial and not on preliminary basis. Judge found that it would be difficult to address question of misrepresentation in returns, and whether it was attributable to neglect, carelessness or wilful default, without full hearing that addressed all issues raised in pleadings. Judge held that Rule 58 hearing should not be used as substitute for full hearing simply because evidentiary issues could be addressed in order. Taxpayer appealed. Appeal dismissed. Judge made no reversible error in dismissing motion. There was no palpable and overriding error in concluding that taxpayer’s suggested approach to evidence would not provide fair and just adjudication of statute-barred issue. It was open to judge to conclude that proceeding under R. 58 of Rules would not be appropriate. ?

Paletta v. R. (2017), 2017 CarswellNat 567, 2017 FCA 33, Pelletier J.A., Rennie J.A., and Judith M. Woods J.A. (F.C.A.); affirmed (2016), 2016 CarswellNat 3148, 2016 TCC 171, John R. Owen J. (T.C.C. [General Procedure])

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