Tax Court did not have jurisdiction to decide whether Minister was required to make adjustments

Tax - Income Tax - Administration and Enforcement

Taxpayer was formed through amalgamation of predecessors with differing taxation year end dates of January and March 1992. Taxpayer filed tax return for January 1992 taxation year, claiming amount for carryforward of non-capital losses (NCL) that reduced taxable income to loss, but then, after settling dispute over amount of NCL available from earlier taxation year, requested reduction of NCL claimed in tax return. Taxpayer filed tax return for March 1992 taxation year, claiming same NCL on assumption that request would be granted. Minister refused request and reassessed March 1992 taxation year under Income Tax Act to deny doubly-claimed NCL. Taxpayer’s appeal was dismissed. Taxpayer appealed. Appeal dismissed. As no taxes were payable before request was made and no taxes would be payable if request was granted, it was questionable whether this was request to reassess tax so as to trigger obligation on Minister under s. 152(4.3) of Act . In any event, request was not part of objection and appeal regime. There was no appeal before Tax Court for January 1992 taxation year and so there was no provision of Act that would allow Tax Court to make requested adjustments for that year even if taxpayer established its entitlement to have adjustments made. There was no dispute that NCL as claimed for January 1992 taxation year were valid non-capital losses that could be claimed in that year Taxpayer’s disagreement with Minister’s refusal of request should have been resolved by applying to Federal Court for judicial review. Tax Court did not have jurisdiction to interpret s. 152(4.3) of Act to decide whether Minister was required to make adjustments requested by taxpayer for January 1992 taxation year. Since taxpayer did not seek judicial review, Minister’s decision not make adjustments would stand and so NCL were claimed in January 1992 taxation year and could not again be claimed in March 1992 taxation year. Taxpayer’s arguments relating to procedural fairness and natural justice had no merit.

Bakorp Management Ltd. v. Canada (2019), 2019 CarswellNat 3011, 2019 FCA 195, Wyman W. Webb J.A., D.G. Near J.A., and J.B. Laskin J.A. (F.C.A.); affirmed (2018), 2018 CarswellNat 5991, Robert J. Hogan J. (T.C.C. [General Procedure]).

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