In 1992 the taxpayer, a large corporation under the Act, redeemed shares of a corporation not connected to the taxpayer for $338,213,849, resulting in a deemed dividend under s. 84(3), before s. 55(2) applied to convert a portion thereof into proceeds of disposition. Some of the redemption proceeds were not immediately payable. The taxpayer included $52,912,264 of the proceeds in its income in its 1995 return and paid Part IV tax thereon. The Minister reassessed the taxpayer to reduce the the 1995 deemed dividend which was subject to Part IV tax by $25,332,237.
The taxpayer's Notice of Objection indicated that this decrease to the 1995 deemed dividend should be reversed, without further discussion. The taxpayer's Notice of Appeal stated instead that no amount of deemed dividend should be included in "taxable [sic] income" in 1995. The Minister moved to have the taxpayer's appeal dismissed on the ground that it did not comply with s. 169(2.1).
After referring (at para. 34) to "the purpose of allowing the Minister to know the nature and quantum of tax litigation at the earliest possible date," Webb JA found that the issue raised in the Notice of Objection (where the taxpayer "was taking the position that it had filed its Part IV return correctly" for 1995 (para. 35)), did not match the position taken by the taxpayer on appeal (that the taxpayer received deemed dividends only in 1993 when the shares were redeemed), although the Notice of Appeal itself did not identify this issue (para. 39). Accordingly, the taxpayer had not complied with the requirement in s. 165(1.11) to raise this timing issue at the Objection stage.
The relief sought also did not match. Webb JA stated (at para. 47):
Asking for a full refund of all Part IV tax paid in relation to 1995, cannot be said to be the relief identified in the notice of objection, in which Bakorp was not asking for a full refund of all Part IV tax paid in 1995 but rather was asking to pay more Part IV tax that had been reassessed.