In its recent decision in Canada v. Csak,1 the Federal Court of Appeal revisited the role of and consequences from the filing of a waiver in respect of the normal reassessment period.2 It emphasized that a waiver represents a bargain struck between the taxpayer and the Minister, and not a unilateral concession made by the taxpayer. By extending the limitation period within which the Minister may reassess, taxpayers may in turn reap significant benefits, including by narrowing the scope of any eventual reassessments. In light of the purpose served by waivers, the FCA found that where a limitation period expires on a Sunday, a waiver will remain valid if sent the Monday thereafter.
Background
In Csak, the taxpayer argued that a reassessment made by CRA was invalid because the waiver on which the reassessment relied had been filed one day too late (i.e. the normal reassessment period had expired on Sunday May 30, 1991, but the waiver had been received by CRA on the Monday, May 31).
The case turned on the interpretation of section 26 of theInterpretation Act, which says that "where the time limited for the doing of a thing expires or falls on a holiday, the thing may be done on the day next following that is not a holiday".3
The Tax Court found the waiver to be invalid and the year to be statute-barred. Extending the limitation period would be contrary to the relieving nature of section 26. In the Tax Court's view, this rule offers benefits that would accrue only to the Minister; a waiver does not preserve any right that the taxpayer may have.4
The FCA Decision
The Federal Court of Appeal disagreed. Writing for a unanimous court, Justice Biringer highlighted many of the potential benefits that waivers can bring to taxpayers. Notably, waivers avoid hasty reassessments, thereby giving additional time for the taxpayer to make representations in support of a more favourable outcome.5 Premature reassessments are also likely to be much broader in scope. This can potentially be heavily detrimental for the taxpayer, given that he alone has the burden of disproving the facts on which the reassessment relies.6
Moreover, an assessment issued pursuant to a waiver is limited to the issues described therein. As such, a waiver represents a tool to limit the broad power of the Minister to advance an alternative basis or argument in support of all or any portion of the balance of an assessment later in the process.7
Relying on those principles, the FCA ultimately found that under a textual, contextual and purposive interpretation of section 26, the waiver was valid. Holding otherwise would be conceptually illogical, given that section 26 would clearly have permitted the Minister to reassess on the Monday following the expiry of the limitation period had the Minister sought to do so.8
Takeaways
Although waiving the benefit of the limitation period may seem contrary to the taxpayer's interests, theCsakdecision serves as a helpful reminder that waivers are trade-offs which can actually play out in the taxpayer's favour. For instance, absent a waiver, the CRA may not reassess beyond the limitation period,even ifthat is what the taxpayer desires. Also, reassessments issued without a waiver at the term of an audit can ultimately be supported by a new basis that was originally unknown to the Minister and discovered as the tax dispute moves forward.
Footnotes
1. 2025 FCA 60 [Csak].
2. Subparagraph 152(4)(a)(ii) of theIncome Tax Act, R.S.C., 1985, c. 1 (5th Supp.) (the "Act").
3. Interpretation Act, R.S.C., 1985, c. I-21; Sunday is a holiday under subsection 35(1) of the Interpretation Act.
4. Tax Court's decision (2024 TCC 9), paras. 152 to 159.
5. Csak, at paragraph 38; citing Bailey v. The Minister of National Revenue, [1989] 2 C.T.C. 2177 at 2181-2182.
6. Ibid, citing CAL Investments Ltd. v. Canada (T.D.), [1991] 1 F.C. 199, at 213-214.
7. Absent a waiver, there are very limited restrictions for the Minister to raise an alternative basis at any point of the litigation process, per subsection 152(9) of the Act.
8. Csak, at paragraph 48.
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