Clover International Properties (L) Ltd. v. Canada (Attorney General), (2013) 435 F.T.R. 1 (FC)

• Judge: Strickland, J.
• Court: Federal Court (Canada)
• Case Date: April 16, 2013
• Jurisdiction: Canada (Federal)
• Citations: (2013), 435 F.T.R. 1 (FC);2013 FC 676

Clover Intl. Prop. Ltd. v. Can. (A.G.) (2013), 435 F.T.R. 1 (FC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

.........................

Temp. Cite: [2013] F.T.R. TBEd. JN.042

Clover International Properties (L) Ltd. (applicant) v. The Attorney General of Canada (respondent)

(T-835-12; 2013 FC 676; 2013 CF 676)

Indexed As: Clover International Properties (L) Ltd. v. Canada (Attorney General)

Federal Court

Strickland, J.

June 18, 2013.

Summary:

A non-resident corporate taxpayer overpaid taxes for 1996. An income tax return for 1996 was not filed until 2000. Had the taxpayer filed its 1996 tax return within three years, it would have been entitled to a refund of the overpaid tax under s. 164(1) of the Income Tax Act. The taxpayer did file its 1999 income tax return within the three year time limit. The taxpayer requested that the Minister exercise her discretion under s. 221.2 to appropriate the 1996 overpayment to the 1999 tax year. Since no tax was owing for 1999, the result would be a refund of the overpayment that was precluded by s. 164(1). The taxpayer argued that theoretically there could be an amount owed for 1999 if the Minister chose to reassess for fraud or misrepresentation. The Minister determined that the overpayment could only be appropriated where there was "another amount" that "is or may become payable". Since no tax was actually owed or anticipated to be owed for the 1999 tax year, there was no statutory authority to appropriate the overpayment to that year, as this would result in a prohibited refund. The taxpayer sought judicial review.

The Federal Court dismissed the application.

Income Tax - Topic 7902

Returns, assessments, payment and appeals - Refunds - Overpayments - [See Income Tax - Topic 9239 ].

Income Tax - Topic 7908

Returns, assessment, payment and appeals - Refunds - Request for - Bars - [See Income Tax - Topic 9239 ].

Income Tax - Topic 9239

Enforcement - Collection - Appropriation of tax payments - A non-resident corporate taxpayer overpaid taxes for 1996 - An income tax return for 1996 was not filed until 2000 - Had the taxpayer filed its 1996 tax return within three years, it would have been entitled to a refund of the overpaid tax under s. 164(1) of the Income Tax Act - The taxpayer did file its 1999 income tax return within the three year time limit - The taxpayer requested that the Minister exercise her discretion under s. 221.2 to appropriate the 1996 overpayment to the 1999 tax year - Since no tax was owing for 1999, the result would be a refund of the overpayment that was precluded by s. 164(1) - The taxpayer argued that theoretically there could be an amount owed for 1999 if the Minister chose to reassess for fraud or misrepresentation - The Minister determined that the overpayment could only be appropriated where there was "another amount" that "is or may become payable" - Since no tax was actually owed or anticipated to be owed for the 1999 tax year, there was no statutory authority to appropriate the overpayment to that year, as this would result in a prohibited refund - The Federal Court dismissed the taxpayer's judicial review application - The court stated that "section 221.2 does not permit the Minister to indirectly issue a refund of the 1996 Overpayment when she is precluded by subsection 164(1) from doing so directly. In other words, while section 221.2 does permit re-appropriation of overpayments to satisfy debts owed or that will become due in other taxation years pursuant to identified legislation obligations, it does not go further and permit a statute-barred refund of a prior year's overpayment, in the guise of a newly created credit balance, in a non-statute barred taxation year. ... what section 221 accomplishes is to permit the Minister to set apart an overpayment, the refund of which is statute barred, to be applied as payment of another debt that exists or may arise. However, this is at the Minister's discretion. If no amount is, or the Minister reasonably believes that no amount will become payable, the Minister may not make the re-appropriation" - See paragraphs 41 to 69.

Cases Noticed:

New Brunswick (Board of Management) v. Dunsmuir, [2008] 1 S.C.R. 190; 372 N.R. 1; 329 N.B.R.(2d) 1; 844 A.P.R. 1; 2008 SCC 9, refd to. [para. 15].

Sheldon Inwentash and Lynn Factor Charitable Foundation v. Minister of National Revenue (2012), 432 N.R. 338; 2012 FCA 136, refd to. [para. 17].

Sherway Centre Ltd. v. Minister of National Revenue (2003), 300 N.R. 43; 2003 FCA 26, refd to. [para. 23].

Chalifoux v. Minister of National Revenue, [1991] 2 C.T.C. 2243 (T.C.C.), refd to. [para. 23].

Minister of National Revenue v. Canada Trustco Mortgage Co., [2005] 2 S.C.R. 601; 340 N.R. 1; 2005 SCC 54, refd to. [para. 29].

Canada (Attorney General) v. Yannelis (1995), 190 N.R. 391; 130 D.L.R.(4th) 632 (F.C.A.), refd to. [para. 30].

Indalex Ltd. et al., Re (2013), 439 N.R. 235; 301 O.A.C. 1; 2013 SCC 6, refd to. [para. 48].

Indalex Finance, LLC v. United Steelworkers - see Indalex Ltd. et al., Re.

Bell ExpressVu Limited Partnership v. Rex et al., [2002] 2 S.C.R. 559; 287 N.R. 248; 166 B.C.A.C. 1; 271 W.A.C. 1; 2002 SCC 42, refd to. [para. 50].

Canada (Attorney General) v. Yannelis (1995), 190 N.R. 391 (F.C.A.), refd to. [para. 52].

Friends of the Oldman River Society v. Canada (Minister of Transport and Minister of Fisheries and Oceans), [1992] 1 S.C.R. 3; 132 N.R. 321, refd to. [para. 59].

Florence Mining Co. v. Cobalt Lake Mining Co. (1909), 18 O.L.R. 275 (C.A.), refd to. [para. 67].

Authorson v. Canada (Attorney General), [2003] 2 S.C.R. 40; 306 N.R. 335; 175 O.A.C. 363; 2003 SCC 39, refd to. [para. 67].

Statutes Noticed:

Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, sect. 221.2 [para. 41].

Counsel:

Ian S. MacGregor and Peter Macdonald, for the applicant;

Ifeanyi Nwachukwu and Tanis Halpape, for the respondent.

Solicitors of Record:

Osler, Hoskin & Harcourt LLP, Ottawa, Ontario, for the applicant;

Department of Justice, Tax Law Services Section, Ottawa, Ontario, for the respondent.

This application was heard on April 16, 2013, at Ottawa, Ontario, before Strickland, J., of the Federal Court, who delivered the following judgment on June 18, 2013.