http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/144019/index.do
Imperial Oil Resources Limited v. Canada (Attorney-General) (May 5, 2016 – 2016 FCA 139, Nöel C.J. (author), Near, Scott JJ. A.).
Précis: This is an appeal of a decision blogged earlier on this site where Justice Gagné of the Federal Court dismissed two judicial review applications asking for interest on funds received pursuant to the operation of the Syncrude Remission Order. The decision involves the rather novel proposition of the applicants that they were entitled to interest on the funds remitted on the remission order by analogy to tax overpayments under the Income Tax Act. The Federal Court of Appeal upheld the earlier decision holding that the remission order had nothing to do with tax payable and did not engage the refund interest mechanism under the Income Tax Act. Both appeals were dismissed with costs.
Decision: The Court of Appeal dismissed both the application of Imperial Oil Resources Limited (“IORL”) and Imperial Oil Resources Venture Limited (“IORVL”) both on the basis that the remission order did not engage the refund interest mechanism under the Income Tax Act and, in the latter case, that the application was 7 years out of time:
[57] As to the question that is in issue, it is clear that an overpayment of taxes payable cannot result without some form of payment being made beforehand, and no such payment can result from a remission order whose sole effect is to prevent the collection of what is, and remains, a validly assessed tax debt. Given that a remission order can do no more than that, no amount can be said to have been “paid on account of [IORL’s] liability” (paragraph 164(7)(b) of the ITA) by reason of the SRO.
[58] It follows that the Federal Court judge has not been shown to have erred in holding that IORL had no entitlement to the payment of refund interest, and in dismissing the application for judicial review on this basis.
[59] Given this conclusion, the appeal brought by IORVL becomes moot as it also hinges on this entitlement. However, I believe it useful to add in light of the reasons given in disposing of the first appeal, that there is no basis for IORVL’s contention that the Minister’s refusal to pay refund interest could only be challenged after the objection process had been exhausted (IORVL’s memorandum of fact and law, paras. 24-26 and 37).
[60] I refer in particular to the above finding that a remission has no bearing on tax liability as assessed or reassessed, and therefore cannot be the subject matter of an assessment or reassessment.
[61] The objection procedure before the Minister and the subsequent right to bring an appeal before the Tax Court only applies to assessed amounts (Perley, paras. 1 and 7). An assessment determines or confirms the liability of a taxpayer to pay specified amounts. Pursuant to subsection 152(1) of the ITA, the only amounts that can be assessed are taxes, interest and penalties. To be clear, assessed interest is interest claimed by the Minister pursuant to the ITA (see for example section 161), and interest payable by the Minister pursuant to section 164 does not come within that description. As explained by Rip J. (as he then was) in McMillen Holdings Ltd v. M.N.R., [1987] 2 C.T.C. 2327 (T.C.C.) [McMillen], the amount of a refund resulting from an overpayment, although often set out on the notice of assessment, is not an assessed amount (McMillen, para. 47). The objection procedure does not apply to a contested refund and the Tax Court is therefore without jurisdiction to hear an appeal pertaining to its computation (McMillen , para. 51; see also Topol v. Canada, [2003] 4 C.T.C. 44 (F.C.T.), paras. 11 and 12, where the Federal Court came to the same conclusion).
[62] It follows that the Federal Court judge came to the correct conclusion when she held that the time within which IORVL could file its judicial review application began to run on June 10, 2003, when the Minister’s refusal was first communicated with the result that IORVL’s application was some seven years late in the making.
As a result both appeals were dismissed with costs.