INTERPRETATION ACT - FRIEND & FOE?
FCA RULING CONFIRMS INTERPRETATION ACT CUTS BOTH WAYS FOR TIME DEADLINES
A recent decision of the Federal Court of Appeal, Canada v. Csak, 2025 FCA 60, underscores that the federal Interpretation Act (the “Act”) rules concerning the computation of time for deadlines are complicated, and can both help and harm taxpayers depending on the circumstances.
Taxpayers will need legal advice to determine how the Act’s computation of time rules intersect with various deadlines under the Excise Tax Act (“ETA”) and other federal legislation. How that intersection plays out may impact taxpayers’ rights.
Canada v. Csak – Background
The deceased husband (the “Spouse”) of Maria Csak (the “Respondent”) accrued tax liabilities under the Income Tax Act (“ITA”) due to partnership loses denied by the Canada Revenue Agency (“CRA”). In 1993, the Spouse transferred real property to the Respondent when he had unpaid taxes and interest owing for taxation years 1988-1991 (the “Reassessments”).
The Spouse appealed the Reassessments to the Tax Court of Canada (“TCC”), which was ultimately unsuccessful. The Spouse subsequently passed away in 2002. The Respondent was then assessed by the CRA under subsection 160(1) of ITA (s. 325(1) ETA) for $1.2 million, being the fair market value of the real property transferred by the Spouse while he was a tax debtor.
The TCC’s Ruling
The Respondent argued on appeal at the TCC that two of the underlying Reassessments - for taxation years 1988 and 1989 - were statute-barred. Her position was that waivers enabling the CRA to reassess outside the normal reassessment period were not filed prior to the end of the normal reassessment period as required under subparagraph 152(4)(a)(ii) of the ITA (s. 298(7) ETA).
The TCC ruled in favour of the Respondent, finding there was insufficient evidence that the waiver for 1988 was timely filed, and that the waiver for 1989 (the “1989 Waiver”) was filed one day late on Monday when the normal reassessment period ended Sunday.
In doing so, the TCC held that it would be against the purpose of the Act and subparagraph 152(4)(a)(ii) of the ITA (s. 298(7) ETA) to find that the 1989 waiver was timely filed when the benefit of the Act’s computation of time rules would solely accrue to the CRA.
The FCA’s Decision
On appeal by the CRA, the Court rejected the TCC’s decision through a textual, contextual, and purposive analysis of the Act’s computation of time rules and subparagraph 152(4)(a)(ii) of the ITA (s. 298(7) ETA) , finding that:
- A waiver is a bargain that may benefit the taxpayer and the CRA.
- The Act’s computation of time rules extended the CRA’s normal reassessment period in the circumstances and it would have been illogical for the deadline to file the 1989 Waiver not to match that same deadline.
The federal Interpretation Act computation of time rules are complicated and may hurt or harm taxpayers.
Legal advice will be required to determine their impact on a taxpayers' rights.
Takeaways
The Act’s computation of time rules are difficult to understand, particularly given their intersection with deadlines under the ETA and other federal legislation. Navigating the intersection of these time deadline rules and determining their impact on one’s rights is a difficult task that will require the advice of experienced counsel.
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