Tax Court Documents: Lists of Documents, Disclosure and Books of Documents

 

Documents play a central role in many Tax Court of Canada appeals. Financial records, contracts, correspondence, CRA working papers, bank records, invoices, tax returns, and other documents may be important to proving or defending the issues in dispute.

In a General Procedure appeal, the Tax Court of Canada Rules contain formal requirements governing document disclosure, inspection, discovery, and the use of documents at trial.

Parties and counsel may also prepare organized books or binders of documents for use during discoveries, motions, settlement discussions, or trial. However, a practical “Book of Documents” should not be confused with the formal disclosure obligations imposed by the Tax Court Rules.

For an overview of the litigation process, see our Tax Court of Canada procedure guide.

What Is a List of Documents in Tax Court?

Under the Tax Court of Canada Rules (General Procedure), documentary discovery generally begins with a formal List of Documents.

Under the partial disclosure rule, each party generally must file and serve a list of documents within 30 days after the close of pleadings.

The list identifies documents known to the party at that time that might be used:

• To establish or assist in establishing allegations of fact made in that party’s pleadings; or
• To rebut or assist in rebutting allegations of fact made by another party.

The list is generally prepared using Form 81.

The current Tax Court Rules can be reviewed on the Justice Laws Website.

What Is Full Documentary Disclosure?

The parties may agree to broader documentary disclosure, or a party may apply to the Court for an order requiring full disclosure.

Under full disclosure, the parties may be required to identify all documents that are or were in their possession, control, or power and that are relevant to matters in issue in the appeal.

The list generally separates documents into categories, including:

• Relevant documents that can be produced;
• Documents over which privilege is claimed; and
• Relevant documents formerly in the party’s possession, control, or power but no longer held by that party.

A full List of Documents is generally verified by affidavit.

What Is the Difference Between a List of Documents and a Book of Documents?

A List of Documents is part of the formal discovery process governed by the Tax Court Rules.

A Book of Documents is generally a practical compilation of documents organized for convenient reference during litigation.

Depending on the case, a book may contain documents that counsel expects to use during:

• Examinations for discovery;
• Motions;
• Settlement discussions;
• Trial preparation; or
• The hearing itself.

The contents and format of a book can depend on the case, agreements between the parties, directions from the Court, and whether particular documents are admitted into evidence.

Does Every Document in a Book of Documents Automatically Become Evidence?

No.

Simply placing a document into a binder or Book of Documents does not necessarily make that document admissible evidence.

Questions may still arise regarding:

• Relevance;
• Authenticity;
• Hearsay;
• Privilege;
• Admissions between the parties; and
• Other evidentiary requirements.

The Tax Court Rules expressly provide that disclosure or production of a document does not itself amount to an admission that the document is relevant or admissible.

When Must the List of Documents Be Served?

Under the partial disclosure procedure in the General Procedure Rules, a party generally must file and serve its List of Documents within 30 days after the pleadings have closed.

This is different from saying that a Book of Documents must be exchanged 30 days before an examination for discovery.

The timing of discovery itself depends on the procedural status of the case, the parties’ arrangements, and any Court directions.

What Does “Close of Pleadings” Mean?

Pleadings generally include documents such as the Notice of Appeal, the Crown’s Reply, and any permitted Answer.

Once the pleadings are considered closed under the Rules, the documentary discovery process generally moves forward.

This stage is important because the pleadings define the factual and legal issues in dispute, which in turn help determine which documents may be relevant.

Can the Parties Agree to Limit Document Discovery?

Yes.

The Tax Court Rules allow the parties to agree to dispense with or limit documentary discovery that would otherwise be required.

This can sometimes reduce the cost and complexity of litigation where the parties can agree on an appropriate scope of disclosure.

In larger or more complex tax disputes, however, documentary production can involve thousands of pages of records and require careful management.

What Documents May Be Relevant in a Tax Court Appeal?

The relevant documents depend on the issues in the appeal.

Examples may include:

• Tax returns and schedules;
• Notices of Assessment and Reassessment;
• Notices of Objection;
• CRA audit correspondence;
• CRA working papers;
• Bank statements;
• General ledgers and accounting records;
• Invoices and receipts;
• Contracts and agreements;
• Emails and other correspondence;
• Corporate records;
• Real estate documents;
• Loan agreements;
• Shareholder records;
• Expert reports; and
• Other records relevant to the facts in dispute.

Can Privileged Documents Be Withheld?

Potentially, yes.

A party may identify relevant documents over which it claims privilege, including solicitor-client privilege or litigation privilege where applicable.

Under full disclosure, privileged documents are generally identified separately along with the basis for the privilege claim.

A privilege claim should be considered carefully because the Court may review disputes concerning whether privilege was properly asserted.

Can the Other Side Inspect the Documents?

Generally, yes.

A party that provides a List of Documents must ordinarily allow the other party to inspect and copy listed documents that are not protected from production.

The Rules also provide mechanisms for obtaining copies and dealing with disputes over inspection or production.

What Happens If the List of Documents Is Incomplete?

Document disclosure is an ongoing obligation.

If a party later discovers that its List of Documents is inaccurate or incomplete, the party generally must provide a supplementary list identifying the additional document or correcting the earlier disclosure.

This can arise where additional records are located during litigation or where new information reveals that another document is relevant.

Can Documents Be Used at Discovery?

Yes.

Documents are often central to examinations for discovery.

Unless the parties agree otherwise, documents listed and available for production generally must be taken to and produced at the examination for discovery.

During discovery, counsel may use documents to:

• Question the opposing party’s representative;
• Clarify transactions;
• Test factual allegations;
• Identify inconsistencies;
• Obtain admissions;
• Request additional information; and
• Generate undertakings for further records or answers.

What Are Discovery Undertakings?

During an examination for discovery, the person being examined may not have every answer or document immediately available.

In appropriate circumstances, a party may undertake to provide additional information or documents after the examination.

Undertakings can become an important part of the evidentiary and trial-preparation record and should be tracked and completed carefully.

Can an Undisclosed Document Be Used at Trial?

There can be serious consequences for failing to disclose documents properly.

Under the General Procedure Rules, a party generally cannot use a document in evidence unless the applicable disclosure or production requirements have been satisfied, subject to exceptions and the Court’s discretion.

The Court also has broad powers where a party fails without reasonable excuse to comply with document discovery obligations.

Potential consequences can include:

• Orders requiring additional disclosure;
• Orders requiring production for inspection;
• Costs consequences;
• Restrictions on using evidence; and
• Other procedural sanctions considered appropriate by the Court.

What Is a Joint Book of Documents?

In some cases, the parties may cooperate to prepare a joint collection of documents for use at trial.

A joint book can make a hearing more efficient by allowing the judge, counsel, and witnesses to refer to consistently numbered and organized documents.

However, the parties should be clear about what is agreed concerning each document.

Agreement that a document may appear in a joint book does not necessarily resolve every issue concerning the truth of its contents, relevance, weight, or admissibility unless those matters are expressly admitted or otherwise determined.

How Should a Book of Documents Be Organized?

The appropriate organization depends on the case, but a useful document book will generally be clear and easy to navigate.

It may include:

• A table of contents;
• Numbered or tabbed documents;
• Consistent page numbering;
• Chronological or subject-based organization;
• Clear document descriptions; and
• Electronic bookmarks where the book is provided electronically.

Effective document organization becomes particularly important in cases involving extensive accounting records, multiple taxation years, numerous transactions, or lengthy CRA audit histories.

Are Four Paper Copies of the Book of Documents Always Required?

No universal rule should be assumed.

The number and format of document books required for a hearing can depend on the Court’s directions, whether documents are filed electronically or in paper form, the nature of the proceeding, and arrangements made for the particular hearing.

Parties should follow current Tax Court directions and any case-specific orders rather than relying on a fixed number of copies from an older practice.

How Do Documents Fit Into the Overall Tax Litigation Process?

In a General Procedure appeal, the litigation may progress through stages such as:

• Pleadings;
• Documentary discovery;
• Examinations for discovery;
• Undertakings;
• Motions where necessary;
• Settlement discussions;
• Trial preparation; and
• The Tax Court hearing.

Document disclosure is therefore not simply a trial-preparation exercise. It can affect discovery, settlement strategy, witness preparation, and ultimately the evidence presented at trial.

For a broader explanation, see our Tax Litigation in Canada guide.

How Our Tax Lawyers Assist With Tax Court Document Discovery

KR Law Firm represents individuals and businesses in Tax Court proceedings and related CRA disputes.

Depending on the case, our tax lawyers can assist with:

• Identifying relevant documents;
• Preparing Lists of Documents;
• Reviewing privilege issues;
• Managing large documentary records;
• Responding to production requests;
• Preparing for examinations for discovery;
• Managing undertakings;
• Preparing document books for hearings;
• Addressing evidentiary issues; and
• Representing taxpayers at Tax Court trials.

For legal representation, visit our Tax Court appeal lawyers page.

Frequently Asked Questions About Tax Court Documents

Is a Book of Documents the same as a List of Documents?

No. A List of Documents is part of the formal disclosure process under the Tax Court Rules. A Book of Documents is generally an organized compilation of documents used for convenience during litigation or at a hearing.

When is the List of Documents due?

Under the partial disclosure procedure in the General Procedure Rules, the List of Documents is generally due within 30 days after the close of pleadings.

Does every disclosed document become evidence?

No. Disclosure or production does not automatically establish that a document is relevant or admissible at trial.

Can privileged documents be excluded from production?

Yes, where a valid privilege applies. Privileged documents may still need to be identified appropriately depending on the disclosure procedure being used.

Can I use a document at trial if I did not disclose it?

Potentially not. The Tax Court Rules restrict the use of undisclosed documents, subject to specific exceptions, consent, and the Court’s discretion.

Do I always need four paper copies of a Book of Documents?

No. The appropriate format and number of copies should be determined from current Court requirements and any directions applicable to the particular case.

Speak With a Tax Court Lawyer

Document discovery can be one of the most important and time-consuming stages of a Tax Court appeal, particularly where a case involves extensive banking, accounting, corporate, or CRA audit records.

KR Law Firm assists taxpayers with Tax Court appeals, documentary discovery, examinations for discovery, settlement negotiations, and trial preparation.

Book a Free Consultation with one of our tax lawyers to discuss a Tax Court matter.

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By Kaveh Rezaei – Principal Lawyer, KR Law Firm

Disclaimer: This article provides general information only and does not constitute legal advice. Tax Court procedures and documentary requirements depend on the applicable rules, Court directions, and the circumstances of each proceeding.