Published: October 19, 2023
Last Updated: October 19, 2023
Introduction: Extension of Time Applications
The Canada Revenue Agency regularly assesses or reassesses taxpayers and issues notices of assessment or CRA reassessment. Upon receiving a notice, the taxpayer has the option to accept the assessment or object to it. The taxpayer has either one year after the taxpayer’s filing-due date for that year or 90 days after the day the notice of assessment was dated to object. If this deadline is missed, then the taxpayer may request an extension of time in writing.
The 2023 Tax Court case of DiPierdomenico v. The King focused on the provisions of the Income Tax Act by which a taxpayer may seek such an extension. In this case, Michael DiPierdomenico sought an extension of time from the Tax Court to serve a notice of objection on the Minister of National Revenue regarding reassessments for his taxation years 2011, 2012, 2013, 2015, and 2016. The Tax Court, however, dismissed DiPierdomenico’s application.
Background: DiPierdomenico’s Reassessment and Objection
Michael DiPierdomenico is a mail carrier for Canada Post in Windsor, Ontario, and was for a time the owner of a nail salon business. DiPierdomenico’s was subject to a business audit by the CRA to determine the accuracy of his reported income and taxes. At the conclusion of the audit, the CRA issued notices of reassessment for the years 2011, 2012, 2013, 2015, and 2016. These reassessments were dated July 4th, 2016.
DiPierdomenico filed an objection to challenge the reassessments, but not within the specified timeframes required by the Income Tax Act. His objection was not filed until January 4th, 2017. As mentioned, the deadline for objecting is 90 days from the date of the reassessment. Thus, the objection was well past the deadline and rejected by the CRA.
Before applying to the Tax Court for an extension, taxpayers are required to first apply to the CRA for an extension. DiPierdomenico did this as well; however, he was also late for applying for this extension. Under 166.1(7)(a) of the Tax Act, the application to the CRA must be made within one year after the deadline for filing the objection. Mr. DiPierdomenico’s application was not made until May 2018, which was again well past the deadline.
This was not the final recourse for Mr. DiPierdomenico, as taxpayers can apply to the Tax Court as well for an extension of time to file an objection. His representative filed this application with the Tax Court on June 9, 2022, which was decided in an application hearing before the Tax Court.
The Court’s Decision: Fatal Flaws in the Extension of Time Application
To justify his application DiPierdomenico claimed that he never received the notices of reassessment for the tax years at issue. The court, in assessing the application, dealt with the reassessments as two separate groups. The first being 2011, 2012, and 2013, which were sent by mail. The second set being 2015 and 2016, which were sent electronically.
For the first set of reassessments, the Court found that the 90-day deadline to object had been triggered. There were three factors that the Tax Court focused on: DiPierdomenico confirmed that his address on record with the CRA was indeed his address from 2013 to 2020, each notice of reassessment bears that address, and DiPierdomenico sent the Minister a notice of objection in respect of those reassessments. After these facts were presented, DiPierdomenico made no further argument to support the claim that the reassessments were not sent to him.
For the second set of reassessments, the court found that DiPierdomenico failed to meet the requirements to file for a tax extension with the court. As mentioned, taxpayers are required to apply to the CRA first before applying for an extension with the Tax Court. This is set out in 166.2(1) of the Tax Act. While DiPierdomenico did file an application for an extension of time with the CRA, he did not do so for his 2015 and 2016 tax years. This would prove to be fatal for his application for these tax years; however, the Tax Court commented further on electronic sending.
Electronic Notices from the CRA
The electronic sending of notices falls under subsection 244(6.1) of the Tax Act. Proving that a notice was sent electronically is allowed to be evidenced through an affidavit of an officer. This subsection comes with several requirements for that affidavit, such as:
- the officer has knowledge of the facts in the particular case;
- the notice was sent electronically to the person on a named day; and
- the officer identifies as exhibits attached to the affidavit copies of an electronic message confirming the notice has been sent to the person and the notice.
In the case at hand, there were two affidavits, with one missing a copy of the notice. However, the Tax Court found that the notice attached as an exhibit to the other affidavit sufficed as evidence. DiPierdomenico did not produce any evidence to the contrary; thus, the Tax Court accepted the affidavits as evidence of the notices being sent.
The date of when those notices were sent is determined by subsections 244(14) and 244(14.1) of the Tax Act. Subsection 244(14) presumes the date sent to be the date of the notice. Subsection 244(14.1) explains that electronic notices are presumed to be sent to the individual and received by the individual on the date that an electronic message is sent to the electronic address most recently provided by the individual to the CRA, notifying them that a notice is available. Furthermore, a notice is considered available if it is posted to the taxpayer’s online account with the CRA, provided the taxpayer authorized notices to be received that way.
The CRA claimed that DiPierdomenico had authorized electronic communication through their “My Account” system, which allowed the agency to send notices electronically. The CRA contended that they had sent electronic notices of reassessment for the 2015 and 2016 taxation years, which DiPierdomenico did not contest within the required timeframes.
Pro Tax Tips – The Importance of Evidence and Timelines for an Application
This case highlighted two key factors that need to be considered when deciding to object or apply for an extension. The first is assessing and compiling appropriate documentation and arguments for the objection or application. The Tax Court in this case highlighted Mr. DiPierdomenico’s lack of evidence and vague recollection when considering the evidence of whether he had received the notices of reassessment from the CRA. The second is the time limits and deadlines involved, which heavily dictate the next appropriate step for a taxpayer wishing to dispute an assessment or reassessment. Following the appropriate time limits ensures that the taxpayer will have the opportunity to challenge their reassessment. Understanding the deadlines and ensuring the best evidence is put forward can be a complex matter; however, our tax lawyers in Toronto can help guide taxpayers through these processes.
What happens if I miss the deadline to object to a CRA reassessment?
If you’ve missed the 90-day deadline to object to a CRA reassessment, you should promptly apply for an extension of time. This must be done within one year after the expiration of the 90-day time limit for serving a notice of objection. While it’s crucial to act as soon as possible, an extension can ensure you retain the opportunity to challenge the reassessment. Canadian tax professionals would be suited for helping taxpayers understand the deadlines for their case and assessing the strength of their objections.
Can the CRA provide electronic notices of reassessment, and what are the requirements for proving their delivery?
The CRA can send electronic notices of reassessment through their “My Account” system if authorized by a taxpayer to do so. This may later be revoked by the taxpayer as well. To prove these electronic notices were sent the CRA must meet specific requirements outlined in subsection 244(6.1) of the Tax Act, including the use of an affidavit to confirm the notice was sent electronically. Understanding your rights as a taxpayer is important and Canadian tax professionals can help you understand and protect them.
This article just provides broad information. It is only up to date as of the posting date. It has not been updated and may be out of date. It does not give legal advice and should not be relied on. Every tax scenario is unique to its circumstances and will differ from the instances described in the articles. If you have specific legal questions, you should seek the advice of a Canadian tax lawyer.
"This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."