Executive Summary: Key Legal and Evidentiary Issues

• John Toutain sought a time extension to appeal a tax assessment (dated July 11, 2024) that imposed a penalty for late filing of Form T1135 for the 2022 tax year.

• Multiple assessments were issued for the same tax year, raising the technical question of whether two separate appeals could coexist for different assessments covering the same period.

• Distinguishing between a "reassessment" and an "additional assessment" was central, as the latter does not replace prior assessments under subsection 152(4) of the Income Tax Act.

• The Canada Revenue Agency (CRA) initially declared Toutain's objection to the Third Assessment invalid, later acknowledging its error and confirming the Third Assessment.

• Jurisprudence from Abrahams c R, 684761 BC Inc. c R., Lambert, Walkem, and Fiset was applied to determine whether subsequent assessments replaced or coexisted with earlier ones.

• A consent to judgment was filed, and the Court granted the extension while Toutain waived his right to appeal the Third Assessment, with no costs awarded.

The facts of the case
John Toutain, a self-represented taxpayer, brought an application before the Tax Court of Canada in connection with his 2022 tax year. His tax year was the subject of an initial assessment issued on April 6, 2023 (the "First Assessment"), which imposed more than $22,000 in federal tax. On July 11, 2024, a second assessment (the "Second Assessment") was issued, adding a penalty and interest for the late filing of Form T1135. Toutain duly objected to the Second Assessment, and the CRA confirmed it on February 10, 2025.

The Third Assessment and procedural complications
Shortly after confirming the Second Assessment, the Minister issued a new assessment on March 17, 2025 (the "Third Assessment"), which added taxable amounts from foreign dividends for the 2022 tax year. The Third Assessment made no reference to the penalty assessed under the Second Assessment. Toutain filed a notice of objection to the Third Assessment; however, the CRA declared this objection invalid, which was not the appropriate step. The CRA subsequently acknowledged its error and confirmed the Third Assessment.

Toutain's filings with the Court
On August 14, 2025, Toutain filed two documents with the Tax Court. The first, titled "Grounds for the Application for Extension of Time," requested an extension to challenge the CRA's decision rendered on February 10, 2025, and was in reality a request to extend the time to appeal the Second Assessment. The second document, titled "Grounds of Appeal," contested the Third Assessment of March 17, 2025. Justice Ezri noted that it was difficult to understand why Toutain sought an extension to appeal the Second Assessment while simultaneously filing an appeal against the Third Assessment, and concluded it appeared to be an error. The Court interpreted the filings as follows: Toutain filed an extension request to appeal the Second Assessment, and, in parallel, filed an appeal against the Third Assessment.

The legal distinction between a reassessment and an additional assessment
The core technical issue was whether the Second Assessment functioned as a "reassessment" — which would have replaced the First Assessment — or an "additional assessment" that added a new amount without disturbing the prior assessment. According to the decisions in Abrahams c R and 684761 BC Inc. c R., the Second Assessment should have replaced the First Assessment. However, Justice Ezri noted this is no longer invariably the case: the CRA may sometimes issue an "additional assessment" that adds an amount for a year without changing the other amounts assessed for that year, pursuant to subsection 152(4) of the Income Tax Act. Justice Ezri determined that whether an assessment is a reassessment or an additional assessment is a question of fact, not law, citing the Lambert decision, which in turn cited the Walkem decision for the principle that the true distinction lies in whether the subsequent assessment completely replaces all prior assessments or merely constitutes a supplementary assessment for an additional amount on a possibly different basis. The Court found that the Second Assessment was an additional assessment: the CRA had added a penalty without modifying the tax amounts assessed for the year. The Court reached this conclusion despite the fact that the notice for the Second Assessment bore the title "Reassessment" rather than "Additional Assessment," as the Court concluded it should have been titled.

Whether the Third Assessment replaced the Second Assessment
Justice Ezri then considered whether the Third Assessment replaced the Second Assessment. Drawing on the Fiset decision — where subsequent reassessments that modified other elements of taxable income did not replace earlier penalty assessments under section 162(7) — the Court concluded that the Third Assessment did not replace the Second Assessment. The Court observed that it was theoretically possible that between February 10 and March 17, 2025, the CRA changed its mind and decided to abandon a penalty it had just confirmed; however, the Court found this hypothesis unconvincing. The affidavit of the CRA's litigation officer confirmed that the Third Assessment was established to assess foreign dividends. Accordingly, even though the Third Assessment constituted a reassessment, it did not replace the Second Assessment. The two assessments coexist: one addresses the taxpayer's taxable income, while the other concerns the imposition of a penalty for late filing of a form.

The ruling and overall outcome
On the basis of a consent to judgment filed by the parties on April 2, 2026, and following a case management conference held on April 7, 2026, and a hearing held on April 8, 2026, in Montréal (Québec), Justice Michael U. Ezri issued an order on April 14, 2026. The Court granted Toutain's application for an extension of time to appeal the Second Assessment dated July 11, 2024, and ordered that Toutain file his notice of appeal no later than May 15, 2026. The order recorded Toutain's waiver of his right to appeal the Third Assessment dated March 17, 2025. The order was rendered without costs. No specific monetary amount was awarded or ordered in favour of either party. The decision permitted Mr. Toutain to proceed with his challenge to the penalty assessment.