Gagné, Cournoyer, Harvie

Appeal from a Court of Québec judgment on a question of law. Allowed.

Under the Tax Administration Act (CQLR, c. A-6.002), the Minister of Revenue has four years to determine or redetermine the amount of the duties, interest and penalties owed by a person as well as the amount of the refund to which a person is entitled under a fiscal law. After this normal time limit, the Minister may send a notice of assessment at any time if, among other circumstances, a waiver has been sent to the Minister. This waiver may be revoked at any time. Section 25.3 of the Tax Administration Act then grants the Minister six months to make a redetermination.

The Agence du revenu du Québec (ARQ) claims that this six-month time limit is a prescription period. It relies on the Act respecting mainly the implementation of certain provisions of the Budget Speech of 10 March 2020 (SQ 2021, c. 15), which, due to the COVID-19 pandemic, suspended the prescription periods applicable to an assessment or determination established under a tax law. If it is instead a term of forfeiture, the Minister’s right to make a redetermination is extinguished. The ARQ therefore cannot rely on the first paragraph of section 41 of the Act respecting mainly the implementation of certain provisions of the Budget Speech of 10 March 2020.

The trial judge erred in determining that the time limit prescribed in section 25.3 of the Tax Administration Act is not a term of forfeiture but is instead [translation] “an extension of the normal time limit for assessment, for which [the appellant] signed a waiver”.

This time limit has the three characteristics of a term of forfeiture: it is short (six months), the words used in the law are imperative (the Minister “may not make such a redetermination”) and, especially, its purpose and role in the scheme support the conclusion that the legislature wanted to protect taxpayers who waive the normal time limit by quickly putting an end to the Minister’s possibility to make a reassessment by virtue of a waiver. This interpretation is the most consistent with “the principles of predictability, certainty, and fairness” of tax law.

The normal time limit of four years set out in section 25 of the Tax Administration Act and the six-month time limit in section 25.3 are two separate time limits. The second is not an extension of the first. The waiver under section 25.1(b) concerns the normal time limit of four years. It allows the Minister to send a notice of assessment after this time limit has expired but does not extend the time limit. The normal time limit is not a term of forfeiture because it may be waived by the taxpayer. Conversely, the six-month time limit is a form of grace period beyond which the Minister “may not make such a determination”. The terms of the provision are clear and no extension is possible.

The waiver of the normal time limit therefore does not extend, suspend, or interrupt this time limit. It creates an exception terminated by the revocation. The Minister then has six months to “redetermine the amount of the duties, refunds, interest and penalties under a fiscal law”. This time limit is a term of forfeiture such that the ARQ cannot rely on the suspension of prescription periods under the Act respecting mainly the implementation of certain provisions of the Budget Speech of 10 March 2020.

Legislation interpreted: section 25.3 of the Tax Administration Act

Text of the decision: http://citoyens.soquij.qc.ca