Radelet v. R. – TCC: Waiver of limitation period was effective

Radelet v. R. – TCC:  Waiver of limitation period was effective


Radelet v. The Queen (August 16, 2017 – 2017 TCC 159, Bocock J.).

Précis:   Subparagraph 152(4)(a)(ii) of the Income Tax Act (the “Act”) permits a taxpayer to waive the normal reassessment period:

Assessment and reassessment

(4) The Minister may at any time make an assessment, reassessment or additional assessment of tax for a taxation year, interest or penalties, if any, payable under this Part by a taxpayer or notify in writing any person by whom a return of income for a taxation year has been filed that no tax is payable for the year, except that an assessment, reassessment or additional assessment may be made after the taxpayer’s normal reassessment period in respect of the year only if


(a) the taxpayer or person filing the return


(i) has made any misrepresentation that is attributable to neglect, carelessness or wilful default or has committed any fraud in filing the return or in supplying any information under this Act, or


(ii) has filed with the Minister a waiver in prescribed form within the normal reassessment period for the taxpayer in respect of the year;

In this case Mr. Radelet attempted to set aside a waiver in a hearing that was bifurcated from the underlying tax issues which involved an alleged unreported capital gain and a disallowed business loss.  He argued that the waiver should be set aside because it was obtained by coercion, that he lacked the mental capacity to execute such a waiver because of illness and, finally, that he did not understand the effect of the waiver.  The Tax Court rejected all three grounds, holding the waiver was valid and ordered that Part II of the trial dealing with the substantive tax issues be set down for hearing.  Costs were reserved until the conclusion of Part II.

Decision:   Mr. Radelet, who was self-represented had three arguments in support of his attempt to have the waiver he executed set aside, all three of which were rejected by the Tax Court:


[23]        Mr. Radelet’s outrage at the “threat” seems to be rooted in his fundamental disagreement with the correctness of the reassessment and the initial possibility of penalties. He also fundamentally believes the prospect of penalties should not have been raised in the November 15, 2011 letter. Objectively, the letters and positions of CRA were not inconsistent, unreasonable or particularly ominous given the presence of an unreported capital disposition of some magnitude from Mr. Radelet’s tax return. The perceived threat is possibly related to Mr. Radelet’s specific plight and circumstances: his accountant had died, he, himself, was ill and had no ready access to the documents at the time of the request for information. He reasonably requested one extension. It was granted unconditionally. When he missed that deadline, he reasonably requested another one, three times as long. This time, with that background and mindful of the then missed deadline and upcoming expiration of normal reassessment rights, the CRA itself reasonably granted the extension, but in exchange for a waiver relevant to the upcoming reassessment period. These seems a normal quid pro quo involving mutual benefits to both parties.


[24]        Mr. Radelet signed the waiver at the time it was requested without then contesting or characterizing it as draconian, unilateral or coercive. There was no evidence that Mr. Radelet, a reasonably intelligent and above-average literate person felt manipulated, coerced or unduly influenced in signing the document, flawlessly completed under his own hand, on January 31, 2012.

Mental Capacity:

[33]        As described above, quite apart from the admissibility issues, the letters from Mr. Radelet’s physician and psychologist do not reference any of: mental capacity; the effects of PTSD on mental capacity; or, the consequences of executing the waiver during symptomatic manifestations of PTSD. These letters are not relevant to that question. Testimony of such medical professionals before the Court may have been helpful, but it did not occur.


[34]        Further, on the issue of his other ailments and treatment withdrawal, Mr. Radelet quite competently provided wording, by his own hand, concerning the extension in which he was most interested: extending the time for his representations. This also included his completion of the date relating to the assessment year limitation to be extended as referenced in the cited proposal letter of November 15, 2011. Moreover, the waiver also produced partial success for him: the CRA’s deletion of gross negligence penalties from the July 12, 2012 reassessment. His letters written at the time strike the Court as clear, lucid, and effective. He managed to print, complete and execute the form and take the form and have it sent. He also acted, through his correspondence at least, in a manner that was efficient, professional and courteous as witnessed by his letters and phone discussions. He suggested, in response to questions on this approach during cross-examination, that he was merely “buttering up” Ms. Anderson [of CRA]. While not exactly cunning, this extra effort was strategic and politic. Cumulatively, this evidence before the Court, concerning mental capacity on January 31, 2012, suggests the spectral opposite of Mr. Radelet lacking mental capacity.

Lack of Understanding:

[40]        Previously, Mr. Radelet was granted an extension in the absence of a T2029 waiver. Mr. Radelet insists he was simply receiving an extension. Reasonably, an objective bystander would then ask, why would Mr. Radelet, who previously received an extension without executing a T2029 not query why one was subsequently needed? Instead, Mr. Radelet meticulously completed it to include the waiver and reassessment delay and signed it. The logical conclusion for the difference: this time, the Minister wanted something in exchange, after having been promised documentation by a previous deadline and received none. An objective bystander, given these circumstances, would conclude Mr. Radelet understood all of this and the reciprocal bargain achieved both by him and the Minister.


[41]        Lastly, Mr. Radelet had choices and alternatives. He had a lawyer, his donee under a subsisting power of attorney, Mr. Fenton. Mr. Radelet asserts he had no legal advice at the time of executing the waiver. Yet, at the time, he advised CRA not to deal further with his lawyer. It is more likely than not that Mr. Radelet did not consult Mr. Fenton because he did not need to, did not feel he ought to and/or knew precisely what the waiver achieved. While the print in the waiver is small, it is for a tax matter relatively simple. One can reasonably and objectively conclude, given the relative ease, precision and detail exercised by Mr. Radelet in completing the form without consulting his retained solicitor that he knew its contents, particularly its inclusion of the waiver of the reassessment limitation period for the 2008 taxation year so that he had time to provide written representations.


[42]        Quite apart from the separately analyzed issues of coercion and mental capacity, Mr. Radelet otherwise intended the T2029 to waive the reassessment period limitation as described in the waiver.

The Tax Court held the waiver was valid and ordered that Part II of the trial dealing with the substantive tax issues be set down for hearing. 

Costs were reserved until the conclusion of Part II.