https://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/366251/index.do
Kirschke v. The Queen (March 29, 2019 – 2019 TCC 68, Monaghan J.).
Précis: Ms. Kirschke applied for an extension of the time to file notices of objection in respect of reassessments of her HST liability for the periods ending December 31, 2010, December 31, 2011, December 31, 2012, December 31, 2013 and December 31, 2014. She filed a notice of objection to the reassessments on May 24, 2018, almost two years after the date of the reassessments. [Note: There seems to be a typo in paragraph [1] of the Reasons which read “May 24, 2016” not “May 24, 2018”.] Ms. Kirschke had last filed a HST return in 2014. In 2015 she moved to a new address which CRA had on file since she used it on her current income tax returns. The disputed notices of reassessment for HST were sent to her old address. Ms. Kirschke testified that she did not become aware of the reassessments until she received a collection letter in 2018 and that she filed notices of objection shortly thereafter.
The Court held that that notices of objection were filed in a timely manner since CRA did not send the reassessment to the last address known to them at the time.
Decision: The facts of this case were not complex:
[4] Prior to 2010, the Applicant carried on a restaurant business as a sole proprietor in Ontario. As proprietor of that business, the Applicant was a registrant under the ETA and was required to collect harmonized sales tax (“HST”).
[5] Although Ms. Kirschke was uncertain of the exact date on which she ceased operating the restaurant business, she testified that it was sometime before 2010. Nonetheless, she decided not to close the HST account because she thought that she might restart that business in a different location. Ms. Kirschke said that, at that time, she spoke with a representative of the Canada Revenue Agency (“CRA”). She said she explained the nature of her ongoing business to him as real estate financing and mentioned mortgages, investments and insurance as her planned sources of income. She said he advised her that, provided she continued to file nil HST returns, she could keep the HST account open. She said he told her it was very important that she continue filing HST returns, and that, as long as she did, there was no issue in keeping the account open. He also told her that her HST account was linked to her social insurance number and her profile. This made sense because the restaurant business had been carried on by her personally, not through a corporation.
[6] In accordance with that advice, Ms. Kirschke filed nil HST returns for each of the 2010, 2011, 2012, 2013 and 2014 annual reporting periods. Each was initially assessed as filed. Ms. Kirschke did not file a HST return for the 2015 reporting period.
[7] In early 2015, Ms. Kirschke moved from a home on Rosette (the “old address”) to a home on Blue Springs (the “new address”). She advised the CRA of her new address on or about March 26, 2015 by filing her 2014 income tax return using the new address. Ms. Kirschke concedes that she did not separately notify CRA of the new address for HST purposes, as she had been told that both her accounts were linked to her profile. She was not aware that she had to separately update the address for HST purposes.
[8] The CRA records relating to the Applicant’s income tax account show the new address effective March 26, 2015, but the HST address is not updated until March 6, 2018. As Ms. Kirschke did not file a HST return for any reporting period after the one ending December 31, 2014, she did not file a HST return using the new address. She said the HST account was closed effective March 6, 2018 when she gave CRA verbal authorization to do so during her call to CRA following receipt of a collection letter, as described below.
[Footnote omitted]
Justice Monaghan held that under the circumstances the notices of objection filed by the taxpayer were timely and no extension was required:
[33] In my view, given the conversation that Ms. Kirschke had with the CRA representative who assured her that her income tax and HST accounts were linked with her profile, it was reasonable for her to have assumed that, once she updated her address with CRA, that update would apply to all accounts linked to her profile. Indeed, it was because of her income tax filings (reporting GBI) that the CRA determined that it was appropriate to investigate her HST returns. In other words, it was her income tax account – which had the new address – that sparked CRA’s interest in her HST account.
[34] The Respondent led no evidence regarding the means by which a single taxpayer’s tax accounts are linked or how address updates are or should be reflected in the CRA electronic database. I have no evidence regarding the CRA practice for updating addresses in the CRA electronic database.
[35] As a result, I find that the reassessments mailed to Ms. Kirschke in 2016 were not mailed to a correct mailing address. They were sent to an address which she had advised CRA, more than a year earlier and in a tax context, was no longer her address.
[36] However, that a notice of assessment is mailed to the wrong address does not end the matter. Other communication of a notice of reassessment may be sufficient communication of the assessment. The evidence suggests Ms. Kirschke first learned of the reassessments in late February or early March, 2018. Ms. Kirschke submitted to the Court a copy of CRA’s February 26, 2018 collection letter on which she made notes of a telephone call she had with a representative of the CRA. Those notes suggest the call occurred on March 6, 2018. Therefore, I am satisfied she had actual notice of the June 14, 2016 reassessments no later than March 6, 2018 when she spoke with the CRA, and possibly deemed notice of them no later than February 26, 2018. According to Ms. Faria’s affidavit, Ms. Kirschke’s notice of objection to those reassessments was served on May 24, 2018, which is less than 90 days after February 26, 2018. Accordingly, I find that her notice of objection was filed within 90 days of the reassessments being validly sent (i.e. communicated) to Ms. Kirschke.
[Footnote omitted]
There was no order as to costs.