Judicial Review of CRA Decisions
Challenging a discretionary CRA decision? Our tax lawyers represent taxpayers in Federal Court judicial review proceedings involving CRA relief and administrative decisions.
Challenging a Discretionary CRA Decision?
Not every decision made by the Canada Revenue Agency (CRA) is challenged through a Notice of Objection or an appeal to the Tax Court of Canada.
Where the CRA has exercised a discretionary administrative power — for example, in deciding whether to grant taxpayer relief, Voluntary Disclosures Program relief, or certain other discretionary requests — the appropriate recourse may involve a second administrative review followed, where appropriate, by an application for judicial review in the Federal Court.
Judicial review focuses on whether the CRA exercised its discretion lawfully, fairly, and reasonably. It is different from asking a court to decide whether a tax assessment itself is correct.
At KR Law Firm, our tax lawyers represent individuals, businesses, and corporations in Federal Court judicial review proceedings involving CRA decisions. We can review the administrative decision and record, assess possible grounds for review, prepare the Federal Court application and supporting materials, and represent clients throughout the proceeding.
What Is Judicial Review of a CRA Decision?
Judicial review is a Federal Court process used to review decisions made by federal administrative decision-makers, including certain discretionary decisions made by the CRA.
The purpose of judicial review is generally to determine whether the decision was made within the decision-maker’s legal authority and in accordance with applicable principles of administrative law and procedural fairness.
Judicial review is not a new hearing of the underlying tax matter. The Federal Court does not simply reconsider the case from the beginning or decide what result it personally would have preferred.
What CRA Decisions May Be Subject to Judicial Review?
Judicial review may be relevant where the CRA has made a discretionary administrative decision and there is no ordinary statutory right of objection or appeal.
Depending on the circumstances, these decisions may include:
- Taxpayer Relief Decisions: Denials or partial approvals of requests to cancel or waive penalties and interest;
- Voluntary Disclosures Program Decisions: Certain discretionary decisions concerning VDP relief;
- Late, Amended, or Revoked Tax Elections: Certain discretionary CRA decisions concerning tax elections;
- Discretionary Refund or Reassessment Requests: Certain requests involving periods beyond the ordinary reassessment or refund rules;
- Remission-Related Decisions: Certain administrative decisions connected with requests for extraordinary remission; and
- Other Discretionary CRA Decisions: Other administrative decisions for which Federal Court judicial review is legally available.
Whether judicial review is the correct remedy depends on the nature of the CRA decision and whether another statutory process is available.
What CRA Matters Are Usually Not Judicial Review Cases?
Judicial review is generally not the normal process for challenging whether a tax assessment or reassessment is correct.
For example, disputes involving:
- Unreported income;
- Denied business expenses;
- Tax credits or deductions;
- Gross-negligence penalties included in an assessment;
- GST/HST assessments;
- Capital gains or business-income characterization; or
- Other assessed tax amounts
are generally addressed through the statutory objection and Tax Court appeal process where those rights are available.
Learn more about our CRA tax objection services and Tax Court appeal representation.
Judicial Review vs. a CRA Notice of Objection
A Notice of Objection generally challenges whether a CRA assessment or reassessment is legally or factually correct.
A judicial review application generally challenges the CRA’s exercise of discretionary administrative authority.
For example, if you disagree with the amount of income assessed by the CRA, the appropriate remedy may be a Notice of Objection.
If the CRA denies a discretionary taxpayer relief request after the available administrative review process, Federal Court judicial review may instead be the appropriate court proceeding.
Judicial Review vs. a Tax Court Appeal
The Tax Court of Canada and Federal Court have different roles.
The Tax Court of Canada generally hears statutory appeals involving tax assessments and reassessments.
The Federal Court generally hears applications for judicial review of decisions made by federal administrative decision-makers, including certain discretionary CRA decisions.
The Federal Court does not normally use judicial review to determine whether an income tax or GST/HST assessment itself should be reduced where Parliament has provided an objection and Tax Court appeal procedure.
Should You Request a Second Administrative Review First?
Where a second administrative review process is available, the CRA generally recommends requesting that review before filing an application for judicial review.
A second administrative review gives the CRA an opportunity to reconsider the original discretionary decision.
Depending on the type of request, the second review may be conducted by CRA officials who were not involved in the first decision.
A second-review request may address:
- Relevant evidence that was overlooked;
- Facts that were misunderstood or taken out of context;
- Errors in the CRA’s reasoning;
- New relevant documents or information;
- Procedural concerns; or
- Reasons why the discretion should have been exercised differently.
If the CRA maintains the decision after the second administrative review, judicial review may then be available.
Federal Court Judicial Review Deadline
Judicial review deadlines can be short.
Under the Federal Courts Act, an application for judicial review generally must be commenced within 30 days after the decision was first communicated to the applicant, unless another statutory limitation period applies.
For many CRA discretionary relief matters that involve a second administrative review, the relevant 30-day period generally runs from receipt of the second-review decision.
If more than 30 days have passed, it may be possible to ask the Federal Court for an extension of time, but an extension is discretionary and should not be assumed.
Taxpayers considering judicial review should obtain advice promptly after receiving the CRA’s final administrative decision.
What Are the Grounds for Judicial Review?
Judicial review focuses on whether the CRA’s decision-making process and outcome comply with administrative law principles.
Potential grounds may include:
Unreasonable Decision-Making
A decision may be challenged where its reasoning or outcome is not justified in light of the relevant facts, evidence, law, and statutory framework.
Failure to Consider Relevant Evidence
A decision may be vulnerable to review where important evidence or circumstances were ignored, misunderstood, or not meaningfully addressed.
Reliance on Irrelevant Considerations
Judicial review may be available where the CRA relied on considerations that were legally irrelevant to the discretionary decision.
Procedural Unfairness
Depending on the circumstances, procedural fairness issues can include:
- Failure to provide a meaningful opportunity to respond;
- Failure to consider submissions;
- Bias or reasonable apprehension of bias;
- Failure to follow a fair process; or
- Other procedural defects that materially affected the decision.
Misapplication of the Governing Legal Framework
A discretionary decision may also be challenged where the CRA misunderstood or misapplied the statutory authority governing the decision.
What Can the Federal Court Do?
The Federal Court generally does not replace the CRA’s discretionary decision with its own.
If the Court determines that the CRA did not properly exercise its discretion or that the decision cannot legally stand, it may set the decision aside and return the matter to the CRA for reconsideration.
This means that success on judicial review does not necessarily mean that the taxpayer immediately receives the requested relief.
Instead, the CRA may be required to reconsider the matter in accordance with the Court’s judgment.
Judicial Review of Taxpayer Relief Decisions
The taxpayer relief provisions give the CRA discretion to cancel or waive certain penalties and interest.
If a taxpayer relief request is denied or only partially granted, a taxpayer may generally request a second administrative review.
If the taxpayer remains dissatisfied after the second review, Federal Court judicial review may be available.
Learn more about our CRA penalty and interest relief services.
Judicial Review of Voluntary Disclosures Program Decisions
The CRA’s Voluntary Disclosures Program involves discretionary decisions concerning eligibility and the relief available.
Where a taxpayer disagrees with a VDP discretionary decision, administrative review may be available before a Federal Court judicial review application is considered.
Judicial review does not determine the taxpayer’s underlying tax liability. It reviews whether the CRA properly exercised the discretion granted to it.
Learn more about our Voluntary Disclosures Program services.
Judicial Review of Late, Amended, or Revoked Election Decisions
The CRA has discretionary authority in certain circumstances to accept late tax elections or permit certain elections to be amended or revoked.
Where a discretionary request is denied, a second administrative review may be available.
If the taxpayer remains dissatisfied after that process, judicial review in the Federal Court may be available.
Where the CRA accepts an election and issues an assessment or reassessment as a result, separate objection rights may apply to issues connected with that election.
Judicial Review and Remission Requests
Remission is an extraordinary discretionary remedy that may be considered where relief from tax, penalties, interest, or other amounts is sought outside ordinary statutory remedies.
Because remission involves discretionary governmental decision-making, judicial review may potentially arise depending on the nature and stage of the decision.
Learn more about CRA remission orders.
How Our Tax Lawyers Assist With Judicial Review
1. Review the CRA Decision and Administrative Record
We review the original application or request, supporting documentation, CRA correspondence, administrative decisions, and other relevant material to understand how the decision was reached.
2. Assess Whether Judicial Review Is the Correct Remedy
Before commencing Federal Court proceedings, we assess whether the matter is properly one of judicial review or whether another tax remedy — such as an objection or Tax Court appeal — should be pursued instead.
3. Identify Potential Grounds for Review
We assess whether the decision may be unreasonable, procedurally unfair, based on irrelevant considerations, unsupported by the record, or otherwise legally vulnerable.
4. Prepare and File the Notice of Application
A judicial review proceeding is generally commenced by filing a Notice of Application in the Federal Court.
We can prepare and file the required court documents within the applicable limitation period.
5. Prepare the Federal Court Record
Judicial review proceedings can involve affidavits, supporting documents, certified administrative materials, cross-examinations, and written legal submissions.
We prepare the evidentiary and legal record necessary to advance the application.
6. Represent Clients at the Federal Court Hearing
Our tax lawyers can represent clients before the Federal Court and present oral submissions concerning the CRA’s decision and the relief sought.
What Happens During a Federal Court Judicial Review?
A judicial review proceeding generally involves several procedural stages.
1. Notice of Application
The applicant files a Notice of Application identifying the CRA decision being challenged, the grounds for review, and the relief requested.
2. Affidavit Evidence and Supporting Materials
The parties may serve affidavits and supporting documents relevant to the judicial review.
3. Certified Administrative Record
Relevant material that was before the CRA decision-maker may form part of the Federal Court record.
4. Cross-Examinations
Depending on the proceeding, parties may cross-examine individuals who have sworn affidavits.
5. Written Legal Submissions
The parties prepare records containing relevant evidence and memoranda of fact and law.
6. Federal Court Hearing
The parties present oral submissions before a Federal Court judge.
7. Court Decision
The Court may dismiss the application or grant relief, which can include setting aside the CRA decision and sending the matter back for reconsideration.
Can New Evidence Be Introduced on Judicial Review?
Judicial review generally focuses on the record that was before the administrative decision-maker.
The Federal Court is not normally conducting a new hearing of the underlying CRA application.
For that reason, developing a strong evidentiary record during the original CRA proceeding and any second administrative review can be important.
New evidence may be permitted in limited circumstances depending on the purpose for which it is introduced.
Why Work With KR Law Firm on a CRA Judicial Review?
Judicial review of CRA decisions requires an understanding of both tax administration and federal administrative law.
- Tax-Focused Legal Representation: Our practice focuses on Canadian tax matters and disputes involving the CRA.
- Correct Remedy Analysis: We assess whether the dispute belongs in Federal Court, the CRA objection process, or the Tax Court of Canada.
- Administrative Law Analysis: We evaluate the CRA’s reasoning, evidentiary record, and procedural fairness.
- Federal Court Representation: Our lawyers can prepare the Notice of Application, court record, written arguments, and oral submissions.
- Integrated Tax Dispute Strategy: We understand how taxpayer relief, VDP, remission, objections, and other CRA processes interact with judicial review.
Frequently Asked Questions About Judicial Review of CRA Decisions
What is judicial review of a CRA decision?
Judicial review is a Federal Court proceeding used to review the lawfulness and reasonableness of certain discretionary administrative decisions made by the CRA.
Is judicial review the same as appealing a tax assessment?
No. Tax assessments are generally challenged through the CRA objection and Tax Court appeal process. Judicial review generally concerns discretionary administrative decisions.
Can a CRA penalty be challenged through judicial review?
It depends on the nature of the decision. A penalty included in an assessment is generally challenged through the ordinary objection and Tax Court process. A discretionary decision concerning whether to cancel or waive penalties may instead be subject to administrative review and potentially judicial review.
Can a denied taxpayer relief request be judicially reviewed?
Yes, in appropriate circumstances. A taxpayer would generally first request a second administrative review and may then seek judicial review in Federal Court if dissatisfied with that decision.
Can a VDP decision be judicially reviewed?
Potentially. Certain VDP relief decisions involve CRA discretion and may be subject to administrative review and, where appropriate, Federal Court judicial review.
Do I need a second CRA review before applying to Federal Court?
Where a second administrative review is available, the CRA generally recommends using that process before filing for judicial review.
How long do I have to apply for judicial review?
The general Federal Court deadline is 30 days after the decision is communicated, unless another statutory period applies.
What happens if I miss the 30-day deadline?
It may be possible to ask the Federal Court for an extension of time, but an extension is discretionary.
Can the Federal Court grant the tax relief itself?
Generally, the Federal Court does not substitute its own discretionary decision for the CRA’s. If judicial review succeeds, the Court may set aside the CRA decision and return the matter for reconsideration.
Can new evidence be introduced in Federal Court?
Judicial review generally focuses on the record that was before the administrative decision-maker. New evidence is permitted only in limited circumstances.
Speak With a Tax Lawyer About Judicial Review
If the CRA has denied or partially denied a taxpayer relief request, VDP application, tax election request, remission-related request, or another discretionary tax application, KR Law Firm can assess whether further administrative review or Federal Court judicial review may be available.
Judicial review deadlines can be short, so a final CRA administrative decision should be reviewed promptly.
Contact KR Law Firm to Book a Free Consultation with one of our tax lawyers.