FEDERAL INCOME TAX - Administration and enforcement - Objections - Limitation period - Extension of time to object by Minister

Appeals by the Minister of National Revenue from a decision allowing a judicial review application by ConocoPhillips Canada Resources Corp. (ConocoPhillips) in relation to the Minister’s refusal to grant ConocoPhillips a waiver to file a notice of objection relating to a reassessment for the 2000 taxation year. The Minister refused to grant the waiver on the ground that s. 220(2.1) of the Income Tax Act (Act) did not apply to notices of objection. ConocoPhillips was involved in the Syncrude oilsands project. The project participants instituted judicial review proceedings relating to an amount determined by the Minister under a remission order, affecting the 2000 taxation year. ConocoPhillips’ application was held in abeyance pending the resolution of lead cases involving Imperial Oil. If the project participants succeeded, ConocoPhillips would have additional consequential income for 2000. ConocoPhillips declined to provide a waiver to overcome the possibility that a reassessment of its income could become statute-barred during the Imperial Oil litigation. The Minister issued a reassessment for 2000 on a protective basis, increasing ConocoPhillips’ taxable income by approximately $17 million. ConocoPhillips paid the reassessment and served a notice of objection. The Imperial Oil litigation was resolved in May 2010. The project participants were ultimately unsuccessful and ConocoPhillips should have been entitled to a refund of the overpayment of tax it made pursuant to the protective reassessment. The Minister refused to issue a refund because a further reassessment had been issued for the 2000 taxation year in 2008, against which no notice of objection was served. ConocoPhillips claimed it only became aware of this reassessment on April 14, 2010. It attempted to serve a notice of objection in June 2010, but the Minister refused to consider it on the ground that it was out of time. ConocoPhillips successfully applied for judicial review of the Minister’s refusal, but this decision was overturned on appeal by the Federal Court on jurisdictional grounds. When ConocoPhillips then requested a waiver, the Canada Revenue Agency informed it that the Minister lacked the authority under s. 220(2.1) of the Act to waive a notice of objection. The Federal Court determined that this decision was unreasonable and remitted the waiver application back to the Minister to exercise the discretion provided by s. 220(2.1).

HELD: Appeals allowed. Parliament had set out a detailed regime applicable to all taxpayers wishing to dispute tax assessments. The clear statutory intent was to provide conditions on the ability of taxpayers to invoke the objection process, including strict time limits for serving objections and seeking time extensions. ConocoPhillips was seeking to use the general waiver provision in s. 220(2.1) of the Act to engage the objection process without complying with its statutory conditions. Applying s. 220(2.1) in this manner would give the Minister a power that the Minister had been denied in s. 166.1(7). In accordance with the implied exception rule of statutory interpretation, the general waiver provision could not be applied to override a more specific provision, namely s. 166.1(7), which provided for specific time limits. Parliament did not intend that s. 220(2.1) act as a safety value for objections. A taxpayer was intended to be either in or out of the objections regime. The specific limitation periods provided for in the objections regime were to be applied in this case.

ConocoPhillips Canada Resources Corp. v. Canada (Minister of National Revenue - M.N.R.), [2017] F.C.J. No. 1214, Federal Court of Appeal, J. Gauthier, Y. de Montigny and J.M. Woods JJ.A., December 11, 2017. Digest No. TLD-January82018001