Turcotte v. The Queen – TCC: The Meaning of “Reasonable Grounds for the Appeal”

Bill Innes on Current Tax Cases

http://decision.tcc-cci.gc.ca/en/2013/2013tcc171/2013tcc171.html New Window

Turcotte v. The Queen[1] (May 29, 2013, posted to TCC website July 17, 2013) is a decision on an application to late file a Notice of Appeal pursuant to subsection 167(1) of the Income Tax Act[2].  In a nutshell the proposed appeal dealt with whether the applicant’s salary from employment with an aboriginal organization in the city of Kitchener, Ontario was exempt from tax by virtue of section 87 of the Indian Act.[3]  The Crown opposed the application on the basis that the proposed Notice of Appeal disclosed no reasonable grounds for the appeal and therefore contravened subparagraph 167(5)(b)(iv) of the ITA:

167(5) No order shall be made under this section unless

(a) the application is made within one year after the expiration of the time limited by section 169 for appealing; and

(b) the taxpayer demonstrates that […]


(iv) there are reasonable grounds for the appeal.

[Emphasis added]

The Tax Court judge described the applicant’s position as follows:

[7]            Notwithstanding the non-descript Application and Notice of Appeal, Ms. Turcotte gave viva voce evidence at the Application Hearing. She suitably demonstrated her intention to appeal which caused the Respondent to resile from a previous secondary challenge to the Application for a failure to disclose a bona fide intention to appeal under clause 167(5)(b)(i)(B).

[8]             Ms. Turcotte is a status Indian and member of the Six Nations Band of the Grand River. She resides in Ayr, Ontario, a small town on the banks of the Grand River located between Kitchener and Brantford. She works in Kitchener, Ontario, a major Ontario city which also straddles the banks of the Grand River. Her employment in Kitchener is as an employee of the K-W Urban Native Wigwam Project, a “geared to income” support organization for native families. The organization’s general offices are located on the Six Nations’ Reserve, but its operational offices are located of the Reserve.  It is asserted that the personal property of Ms. Turcotte is created on the Reserve for native purposes and for the benefit of natives and their community. If that were the totality of the argument, this Application would likely lack the requisite “reasonable grounds” for granting the Application since those precise legal arguments based upon those precise facts have been heard previously by this Court. Almost factually identical appeals, including the Applicant’s own previous appeal, have been dismissed on such a basis. Aside from the Applicant’s previous case, both counsel referred to many cases before this Court, the Federal Court of Appeal and the Supreme Court of Canada.

The interesting aspect of this decision is that at the hearing of the application the applicant raised a new aspect of her appeal which had never been brought up in any previous proceeding (the “Disputed Reserve Lands” issue):

[9]             In the present case and in respect of subsequent assessment years, counsel for the Applicant has ably pressed the argument that the location of the Applicant’s residence and workplace are situated within the well publicized pending disputed land claim of the Six Nations known by many names, the most common of which may be the Haldimand Tract land claim. It is well known and observed that the imperial Crown granted title to these lands through a grant of land measuring six miles on either side of the banks of the Grand River from its mouth to its source. Much has been written, alleged and debated, without resolution, about that grant and its related challenged subsequent surrenders. That longstanding confusion aside, what remains clear to this day is that the land claim, its extent and the method of any resolution remain active issues politically, socially and legally both within and beyond the Grand River Valley and various Courts.

While the consequences of this argument are not specified in the decision presumably it would go to whether her work in Kitchener was work on a Reserve.

The court granted the application on the basis that the novel issue raised by the applicant should see the light of day before a trial judge and not be simply dismissed on an application:

[22]        The case before me has a better footing than that of Rock since fuller facts are embedded in the Disputed Reserve Lands issue. There is reason to be applied by the Court to these facts and related arguments. Moreover, some of these facts, although likely existing at the time of the Applicant’s previous appeals, were not marshalled to present the Disputed Reserve Lands issue.

[23]        In light of these additionally adduced facts and potential submitted arguments and the absence of any Court having recently, previously and precisely heard and decided same, the success or failure of the Appeal will not be determined presently by virtue of a dispositive order in a mere Application for extension to file the Notice of Appeal. Instead, they shall see the light of day before a hearing judge of this Court. The granting of this Application is consistent with the preceding cases since the particular facts of this Application, given their highest and best weight at this Application stage, not only afford, but require the mind or “reason” of this Court to be brought to bear upon these facts and related arguments since this has not yet occurred, based upon the authorities submitted, in respect of the Disputed Land Issue.

In granting the application, the court ordered the applicant to file a fresh Notice of Appeal within 30 days outlining the additional facts relied upon and gave the Crown liberty to file a fresh Reply thereafter if it wished.

Thus this case is authority for the proposition that “reasonable grounds for the appeal” are not necessarily confined to the contents of the taxpayer’s application but can also be established by additional arguments raised upon the hearing of the application.  This decision is a good example of what might be termed the remedial jurisdiction of the Tax Court under section 167 of the ITA not to be bound by the content of the taxpayer’s application where reasonable grounds are disclosed upon the hearing of the application and the interests of justice are best served by letting the appeal proceed to trial.

[1] 2013 TCC 171.

[2] R.S.C. 1985, c. 1 (5th Supp.), as amended (“ITA”).

[3] R.S.C. 1985, c. I-5, as amended.