Kutlu v. M.N.R.
T-205-96
Joyal J.
21/2/97
13 pp.
Application for judicial review of decision by Director of International Tax Services Office refusing applicants' request for extension of time for filing income tax return for 1992 taxation year-In September 1988, applicant, Deukmedjian, non-resident, purchased 18-unit residential apartment building in Westmount, Quebec-Applicant Kutlu appointed agent responsible for overall management of building, including filing of income tax returns-Building generated nothing but losses since acquired-Since 1989, agent had to complete form NR-6 in order to be taxed only on net rental income from building-Case involving two rather rigid deadlines to be met-First requiring filing of NR-6 form with Revenue Canada by commencement of fiscal year to which it relates-Second having to do with filing of income tax return itself, within six months of end of fiscal year-For 1989, 1990 and 1991 taxation years, Revenue Canada accepted tax returns filed beyond established deadlines and sent notices of assessment indicating no tax payable-1992 return subject of present proceedings-On February 10, 1994, Revenue Canada sent agent notice stating it planned to impose assessment of $31,867.25, or 25% of gross rental income, against him personally-Agent wrote Department, deploring that between 1990 and February 9, 1993, no warning, oral or written, was conveyed to him concerning date of filing of returns-On February 1, 1995, Minister forwarded notice of assessment for 1992 taxation year-Applicants served Revenue Canada with notice of objection to assessment-Without holding oral hearing, respondent Michael Québec rendered disputed decision refusing to grant applicants extension of time for filing 1992 return-Where return not filed within time provided in Income Tax Act, s. 216(1), s. 216(4) requires agent to deduct 25% of gross rent that should have been collected by him and remit amount to Receiver General-Under Act, s. 220(3), Minister has discretion to accept return even if filed beyond time provided-In exercising discretion, necessary to keep within statutory mandate and consider all factors relevant to statutory decision-making function-Discretion established in s. 220(3) primarily to remedy injustices caused by nonresident owner income tax regime-Applicants made several inquiries of Minister's officers-Latter never indicated any problem with late filing of returns-Discretion to extend time limits in Act should not be limited to consideration of circumstances which precluded taxpayer from complying with deadlines-Director failed to analyze file in context of factors on which deemed to have wished to exercise discretion-Counsel for respondents unable to suggest any adverse effect her clients might suffer if extension granted-Application allowed-Income Tax Act, S.C. 197071-72, c. 63, s. 216(1) (as am. by S.C. 1991, c. 49, s. 178(1))-Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 220(3).