Executive Summary: Key Legal and Evidentiary Issues

• Terrence D. Tolley sought to extend the time for filing a notice of objection to reassessments for his 2011, 2012, and 2013 taxation years under section 166.2 of the Income Tax Act.

• Reassessments for 2011 and 2012 were issued under the taxpayer relief provisions in subsection 152(4.2), which bars taxpayers from filing objections pursuant to subsection 165(1.2).

• The CRA declined to refund excess CPP contributions for 2011 and 2012 because it did not receive Mr. Tolley's request within the four-year limitation period specified in subsection 38(4) of the Canada Pension Plan.

• Mr. Tolley argued that his Position Letter of October 16, 2017 constituted a valid notice of objection served within the 90-day deadline mandated by subsection 165(1).

• For the 2013 taxation year, the Minister already issued the relief sought, rendering any objection unnecessary.

• The Tax Court of Canada lacks jurisdiction to review the Minister's discretion under subsection 152(4.2) or to order refunds under the CPP provisions.

Background and employment reclassification

In spring 2008, Terrence D. Tolley was hired as a contractor by the Ministry of Corrections, Public Safety and Policing, a ministry within the Government of Saskatchewan (referred to in the decision as the "Provincial Crown"). In fall 2013, the Canada Revenue Agency undertook a review of certain operations conducted by the Provincial Crown and concluded that Mr. Tolley, along with approximately 80 other individuals, did not meet the criteria to qualify as a contractor. The CRA issued a ruling on December 23, 2013, indicating that the reclassification from contractor to employee would take effect for the 2011 taxation year. As a result, the Provincial Crown began to pay Mr. Tolley as an employee in January 2014.

Issuance of T4s and T1 adjustment requests

In October 2016, the CRA advised the Provincial Crown that it needed to generate T4s for each of the 2011, 2012, and 2013 taxation years for all individuals affected by the earlier CRA ruling. The Provincial Crown issued such T4s in January 2017. At the time the new T4s were issued, Mr. Tolley and the other impacted individuals were advised that they would have 10 years to request T1 adjustments to remove the business income they had previously reported, replace it with employment income, and receive any resulting refunds of excess Canada Pension Plan contributions that they had previously paid. These excesses resulted from the Provincial Crown agreeing to pay both the employer and the employee portions of the required CPP contributions for all impacted individuals for each of the 2011, 2012, and 2013 taxation years. Mr. Tolley filed T1 adjustment requests for each of his 2011, 2012, and 2013 taxation years with the CRA in January 2017, and the CRA issued Notices of Reassessment on July 31, 2017.

The CPP refund dispute

The CRA took the view that the request for the 2013 taxation year was filed within the normal reassessment period as defined in subsection 152(3.1), but that the requests for the 2011 and 2012 taxation years were filed outside of the applicable normal reassessment periods. Under the reassessments issued, the CRA processed the adjustments as Mr. Tolley requested. However, the CRA only issued the resulting refund in respect of the 2013 taxation year. The CRA said that it was unable to refund the excess contributions for the 2011 and 2012 taxation years since it did not receive Mr. Tolley's request within the four-year limitation period specified within the CPP. Subsection 38(4) of the CPP provides that the Minister may refund excess contributions, but must make such a refund if the application is made in writing by the contributor not later than four years after the end of the year. Mr. Tolley testified that he should not be denied refunds to which he is entitled as it was impossible for him to meet the four-year deadline; he did not receive the T4s necessary to apply for such refunds until after the applicable limitation periods for the 2011 and 2012 taxation years had expired.

Attempts to resolve the matter

After receiving the Notices of Reassessment, Mr. Tolley engaged in numerous discussions with certain officials within the Provincial Crown to resolve what he considered to be an unfair situation. On October 16, 2017, Mr. Tolley sent a letter addressed to the Canada Customs and Revenue Agency, Winnipeg Tax Centre (referred to in the decision as the "Position Letter"), reviewing the history and requesting that the CRA "redo" the T1 adjustments. Despite ongoing discussions between Provincial Crown officials and the CRA, there was no progress being made with respect to him obtaining refunds of his excess CPP contributions. On November 20, 2018, Mr. Tolley was invited to participate in a conference call with officials from both the CRA and the Provincial Crown. During this call, he was informed by the CRA officials that the decision of the CRA to deny the refunds for 2011 and 2012 could not be appealed, but that he could file a Notice of Objection to the Notices of Reassessment. It was determined by all parties on the call that such a Notice of Objection would be viewed more positively if it included a letter from the Provincial Crown explaining the history of the matter. Mr. Tolley received such a letter from an official of the Provincial Crown on December 3, 2018, and then immediately attempted to file the Notice of Objection on December 4, 2018. On December 21, 2018, the Respondent notified Mr. Tolley that the Notice of Objection was filed beyond the time permitted by the Act to object to the Notices of Reassessment.

The Court's analysis and statutory limitations

The Court examined whether the Notices of Reassessment were made under subsection 152(4.2), which allows the Minister to reassess an individual taxpayer after the expiration of the normal reassessment period for the purpose of determining a refund. Evidence from the affidavit of Barry Fong, a litigation officer in the Vancouver Tax Services Office of the CRA, established that Notices of Assessment were sent on April 2, 2012 for the 2011 taxation year; March 25, 2013 for the 2012 taxation year; and April 14, 2014 for the 2013 taxation year. Since Mr. Tolley filed his T1 adjustment requests in January 2017, the requests for the 2011 and 2012 taxation years were made after the end of the normal reassessment period. Mr. Tolley testified that his purpose in making the requests was to obtain the refunds to which he was entitled because of the reclassification of his employment status. The Court therefore determined that the Notices of Reassessment in respect of each of the 2011 and 2012 taxation years were made under subsection 152(4.2). The Court cited Letendre v. The Queen, 2011 TCC 577, where Justice Woods held that subsection 165(1.2) precludes a taxpayer from objecting to an assessment made under subsection 152(4.2). Similarly, in Siam v. The King, 2025 TCC 69, Justice Gagnon wrote that the Act is clear that subsection 165(1.2) prevents taxpayers from objecting to reassessments issued under subsection 152(4.2), and the Court does not have jurisdiction to hear an appeal without a valid notice of objection.

Ruling and outcome

The application was dismissed without costs. For the 2011 and 2012 taxation years, the Court determined that Mr. Tolley cannot object to reassessments issued under subsection 152(4.2), and therefore cannot be granted an extension of time to file an objection that cannot legally be made. For the 2013 taxation year, although Mr. Tolley's Notice of Objection included this year, the Minister reassessed such year in accordance with the T1 adjustment request that Mr. Tolley filed and issued the resulting refund he sought in accordance with paragraph 38(4)(b) of the CPP. In his testimony, Mr. Tolley did not raise any specific concerns with respect to the 2013 Notice of Reassessment. The Court was not prepared to extend the time to object to a reassessment which the Applicant does not challenge. Justice J. Scott Bodie stated that although he was very sympathetic to the position in which Mr. Tolley finds himself, he had no choice but to dismiss the application. The Court noted that it does not have the ability or the jurisdiction to order a refund under the CPP provisions, citing Jamal v. The Queen, 2018 TCC 196; Freitas v. The Queen, 2017 TCC 46; and Tharle v. The Queen, 2011 TCC 325. The Court suggested that Mr. Tolley may wish to consider seeking a remission order by applying to the Minister pursuant to section 23 of the Financial Administration Act as a potential avenue to address the situation. No exact amount of the disputed CPP contributions was specified in the decision. No monetary award, costs, or damages were granted or ordered.