https://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/365889/index.do
Viterra Inc. v. Canada (March 25, 2019 – 2019 FCA 55, Stratas, Laskin, Rivoalen (Author) JJ. A.).
Précis: This GST case was blogged in the Tax Court last year on this site. The taxpayer, formerly known as the Saskatchewan Wheat Pool, administered three pension funds during the periods from August 1, 2003 to July 31, 2004 and August 1, 2004 to July 31, 2005. It used the services of investment managers to provide services (the Investment Services) to the funds. CRA reassessed the taxpayer in 2016 allowing investment tax credits on the fees paid to the investment manages but imposing GST on the supply of the Investment Services by the taxpayer to the funds. The taxpayer applied pursuant to Rule 58 for the determination of a question:
Was the Minister statute barred on February 19, 2016 from assessing GST collectible totalling $640,492.69 on the supply of investment management services made by the Appellant to three pension plan trusts (assuming such supplies were made), for the monthly reporting periods ending between August 1, 2003 and July 31, 2005?
The Tax Court ruled that it did not have enough evidence to answer the question and ruled that the matter should be determined by the trial judge.
The taxpayer and the Crown both appealed to the Federal Court of Appeal arguing that the Motion Judge erred in holding he did not have enough evidence to answer the question. The Crown also argued on appeal that the Judge erred in law in his interpretation of the limits on the Minister’s reassessing powers under subsection 298(3) of the Excise Tax Act, in response to a notice of objection, after the expiry of the normal limitation period.
The Court of Appeal dismissed the appeal holding that the Motion Judge was owed a high degree of deference in the exercise of his discretion when considering a Rule 58 question. The Crown’s cross-appeal was also dismissed as it was an appeal of the reasons, not the decision. Thus both the appeal and cross-appeal were dismissed without costs.
Decision: Rule 58 motions in the Tax Court are, by their nature, discretionary determinations of the Motion Judge. Thus it was not surprising that the Court of Appeal declined to interfere with that discretion:
[18] At the commencement of the hearing, the Judge informed the parties that he was concerned he could not answer the Rule 58 question with the limited evidence before him and invited the parties to submit further evidence. The parties declined the Judge’s invitation. The Judge heard the parties’ submissions and determined that he did not have sufficient evidence before him to answer the Rule 58 question. He ordered that the parties proceed with the trial and stated that they were free to raise the Rule 58 question with the trial judge.
[19] Central to the Judge’s decision is whether there were two transactions that formed the basis of the original assessments of the appellant’s net tax, or only one, which was simply re-characterized by the Minister in the reassessments. The Judge determined that he could not resolve this question of fact given the limited facts before him, and accordingly, could not answer the Rule 58 question.
[20] It is clear from both their written and oral submissions that the parties disagree as to the characterization of the transactions that formed the basis of the initial assessments and the Minister’s reassessments. The Judge is owed a high degree of deference in the exercise of his discretion when considering a Rule 58 question. The Judge made no reviewable error in finding that he could not answer the Rule 58 question given the facts before him.
Similarly the Crown’s appeal on the interpretation of subsection 298(3) of the Excise Tax Act was not well received by the Court of Appeal:
[22] I note that the respondent’s cross-appeal, in reality, is directed against the Judge’s reasons for declining to answer the Rule 58 question. It is fundamental that a cross-appeal lies against judgments and orders, not reasons (Teva Canada Limited v. Canada (Health), 2012 FCA 106, [2013] 4 F.C.R. 391, at paragraph 46).
[23] I find that it is more appropriate to leave the interpretation of the Minister’s reassessing powers in response to an objection under the Excise Tax Act to the trial judge in the circumstances of this case. The trial judge is better placed to examine the facts and the applicable law de novo, with the benefit of all of the relevant evidence the parties are able to muster. The trial judge will also be in a position to consider and address the consequences of any inability the parties may encounter in bringing forward additional evidence.
Thus both the appeal and cross-appeal were dismissed without costs.