A group settlement reached in respect of the appeals of a large group of taxpayers including the taxpayer allowed a deduction of losses in a specified amount for their 1995 and 1996 taxation year, allowed interest expense claims for various periods and allowed “any consequential claims by me for the carryforward or carryback of any losses resulting from the reassessments set forth above.” Without further communication with the taxpayer, the Minister carried back the resulting non-capital loss of the taxpayer of $303,374 to his 1992 and 1993 taxation years. The taxpayer objected on the basis that this carryback was done without giving him a choice as to the application of the loss, and that he would have applied the loss to years under appeal, i.e. 1997 and 1998.
After noting (at para. 18) that “the starting point is that it is the taxpayer’s choice as to the application of available non-capital losses” and (at para. 21) that the wording of the settlement agreement did “not suggest an express or implied direction from the appellant as to how to apply the loss, nor a waiver of his ability to choose,” Wong J stated (at para. 24) before allowing the taxpayer’s appeal:
[I]t cannot be inferred that the Minister sought the appellant’s directions, nor that the appellant gave directions or acquiesced to the Minister’s loss applications. There was no basis for the Minister to impose the allocation she did because she could not assume that the appellant’s original carrybacks to 1992 and 1993 meant his intentions would be the same post-settlement (and over 13 years later).