In the land of income taxes and income tax law, it is generally understood that a taxpayer cannot appeal another taxpayer’s assessment without legal standing to do so. This is particularly relevant when the taxpayer being assessed or re-assessed is deceased.
In the Estate of Straessle v. the Queen 2018 DTC 1106, the issue of legal standing was put to the test with interesting results.
Sometime ago, The Canada Revenue Agency (“CRA”) issued reassessments with respect to an estate for a number of taxation years, which resulted in increases of taxable income for those years. The daughter of the deceased filed an appeal from those reassessments with the Tax Court of Canada; however, she was not the legal representative or the executor of her late mother’s estate. The CRA brought a motion under rules of the Tax Court of Canada to have the appeal dismissed, on the basis that the daughter had no legal standing to bring the appeal, as she was not and had never been an executor or administrator of the estate.
The Tax Court heard arguments put forward by the parties which raised questions of statutory interpretation in regard to the definition of “person” in the Income Tax Act (the “Act”). The Act provides that a taxpayer who objects to an assessment may file an appeal to the Tax Court of Canada. The Act also defines the word “taxpayer” to include “any person whether or not liable to pay tax” and includes in the definition “the heirs, executors, liquidators of a succession, administrators or other legal representatives of such person”. Consequently, a party who purports to appeal from someone else’s assessment has to fit within the definition of “person”. However, The Tax Court held that the definition of “person” in the Act must be interpreted “according to the law of that part of Canada to which the context extends.”
The Court noted that the deceased had died intestate while she was domiciled in the province of Quebec and that, accordingly, reference must be made to the Civil Code of Quebec. The Court held that the word “heir” contemplated by the definition of “person” had to be interpreted in accordance with the Civil Code and that the relevant provisions of the Code did not require that, to be considered an “heir”, one had to administer, wind-up, control, or otherwise deal in a representative or fiduciary capacity with property that belongs to another person. The Court held that the appellant was qualified as an heir of the estate and was a “person” and a “taxpayer” as defined in the Act. Accordingly, she could object to the reassessments and initiate an appeal to the Tax Court.
The motion was dismissed.