Conocophillips Canada: The Jurisdictional Obstacle Course

The FC recently decided in favour of the taxpayer on a judicial review application in Conocophillips Canada (2013 FC 1192). This decision illustrates the uncertainty facing taxpayers in Canada due to the potentially overlapping jurisdiction of the TCC and the FC.

In Conocophillips, the taxpayer argued that it had not received a notice of reassessment that was allegedly mailed by the CRA until it was provided to the taxpayer’s representatives several years after the date on the reassessment. Subsequently, the taxpayer filed a notice of objection to the reassessment, which the CRA rejected on the basis that it was filed after the limitation period (90 days from the date of the reassessment: see section 165 of the Act). Further, the CRA rejected the taxpayer’s request for an extension of time to file the objection because it was made outside of the applicable statutory limitation period (90 days plus one year from the date of the reassessment: see section 166.1).

The taxpayer filed an application in the FC for judicial review of the minister’s decision to deny its objection. The minister took the position that the taxpayer should have appealed to the TCC and “demonstrated the validity” of the notice of objection in that forum. The FC decided in favour of the taxpayer and overturned the minister’s decision.

Although the taxpayer in Conocophillips won its appeal to the FC, it was an administrative win at best. The FC did not make any determination on the merits of the objection because it had no jurisdiction to do so: such exclusive jurisdiction belongs to the TCC. Thus, the case serves as a warning of the difficulties that may arise when one is navigating the jurisdictions of the TCC and the FC. It would be helpful for Canadian taxpayers if there were a one-stop shop for dealing with various tax matters, which could eliminate or reduce the potential confusion, delays, and costs encountered by both taxpayers and the Crown. In Conocophillips, the taxpayer sought relief (initially) in the FC. If it is not successful on its objection, the taxpayer may need to appeal to the TCC to resolve the dispute. The FC in Conocophillips appeared to be hinting that divided jurisdiction was causing problems when it stated that the taxpayer had “no other access to justice besides the filing of the present Application.”

Ironically, the taxpayer in Conocophillips could find itself back in the FC again with respect to the very same assessments. If the taxpayer is unsuccessful in its appeal on the merits of the objection, it will face the issue of accrued interest on the balance outstanding on its tax account. The only way it can obtain relief from payment of this interest is by making an application to the minister through the taxpayer relief program, which is subject to judicial review — by the FC.

Amanda S.A. Doucette
Stevenson Hood Thornton Beaubier LLP, Saskatoon

Canadian Tax Focus
Volume 4, Number 1, February 2014
©2014, Canadian Tax Foundation