Fault of third party was not valid basis for judicial review

Tax – Income Tax - Administration and Enforcement

Quebec Revenue Agency assessed taxpayer for undeclared taxable capital gain generated by sale of taxpayer’s properties to his companies. Taxpayer made late election for rollover under s. 85 of Income Tax Act. Minister of National Revenue refused taxpayer’s late election because sale contracts did not contain clauses permitting rollover, companies’ financial statements did not reflect existence of transfer of property under s. 85(1) of Act, and corporate documents demonstrating intention to make rollover at time of transfer were not provided to auditors. Taxpayer brought application for judicial review of decision denying late election under s. 85(7.1) of Act. Application dismissed. Minister could reasonably reject taxpayer’s late election. Auditor’s report, signed by Minister’s representative, sufficiently explained reasons why election was denied. Minister did not fail to consider alleged errors or omissions made by taxpayer’s notary or accountant. Fault of third party, including accountant, was not valid basis for judicial review. Refusal to grant late election was based on absence of evidence establishing intention of parties at time of transfer to effect rollover. Even though there was no logical reason to proceed by outright sale when there was rollover mechanism, it was not role of court to exercise Minister’s discretion.

Masson c. Canada (Procureur général) (2019), 2019 CarswellNat 3145, 2019 CarswellNat 3480, 2019 FC 887, 2019 CF 887, Sylvie E. Roussel J. (F.C.).

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