Tax Court of Canada – Procedure & Process Guide

What Is the Tax Court of Canada?

The Tax Court of Canada is an independent federal court that hears disputes arising under Canadian tax legislation, including many appeals involving income tax and GST/HST assessments made by the Canada Revenue Agency (CRA).

For many taxpayers, a Tax Court proceeding begins after the CRA has completed the administrative objection process and the taxpayer continues to disagree with the resulting confirmation, reassessment, or redetermination.

This guide explains how a Tax Court appeal begins, the difference between the Informal and General Procedures, what happens after an appeal is filed, how CRA collections may be affected, and what taxpayers should expect as the case moves toward resolution or trial.

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

When Can You Appeal to the Tax Court of Canada?

For most income tax and GST/HST disputes, the taxpayer must first file a Notice of Objection with the CRA.

After reviewing the objection, the CRA may:

• Confirm the assessment;
• Issue a reassessment;
• Vacate or vary the assessment; or
• Issue another determination or redetermination depending on the matter.

If the taxpayer remains dissatisfied, an appeal may then be available to the Tax Court of Canada.

For information about the objection stage, see our Notice of Objection (T400A) guide.

What Is the Deadline to Appeal to the Tax Court?

A Tax Court appeal involving income tax or GST/HST generally must be filed within 90 days after the CRA sends the applicable notice of confirmation, reassessment, or redetermination following the objection.

If the deadline is missed, an application for an extension of time to appeal may be available in certain circumstances.

For income tax and GST/HST appeals, an extension application generally must be made no later than one year and 90 days after the applicable decision.

The taxpayer must also satisfy the statutory requirements for an extension.

For official information, see the CRA’s Tax Court appeal guidance.

How Do You Start a Tax Court Appeal?

A Tax Court proceeding begins by filing a Notice of Appeal with the Court.

The form and content of the Notice of Appeal depend on whether the taxpayer proceeds under the Informal Procedure or the General Procedure.

A Notice of Appeal should clearly identify:

• The taxpayer and assessment being appealed;
• The taxation years or reporting periods involved;
• The issues in dispute;
• The material facts relied upon;
• The legal basis for the taxpayer’s position; and
• The relief being requested from the Court.

The Tax Court provides an electronic filing system for eligible appeals and documents.

What Is the Difference Between the Informal and General Procedures?

The Tax Court has two principal procedures for many income tax and GST/HST appeals:

• The Informal Procedure; and
• The General Procedure.

The appropriate procedure depends primarily on the amount in dispute, the type of appeal, and the taxpayer’s election.

What Is the Informal Procedure?

The Informal Procedure is intended to provide a less formal and generally more accessible process for smaller tax disputes.

For income-tax appeals, a taxpayer can generally elect the Informal Procedure where:

• The aggregate amount of tax in dispute for a taxation year does not exceed $25,000; or
• The amount of a loss in issue does not exceed $50,000.

A taxpayer with a larger dispute may in some circumstances elect the Informal Procedure by agreeing to limit the amount in issue to the applicable statutory maximum.

For GST/HST appeals, the Informal Procedure is generally available where the amount in dispute does not exceed $50,000.

There is currently no filing fee for an appeal commenced under the Informal Procedure.

The Court has greater flexibility regarding procedure and evidence in an informal appeal than it does under the General Procedure.

What Is the General Procedure?

The General Procedure is the Tax Court’s more formal litigation process.

It is governed by the Tax Court of Canada Rules (General Procedure) and can involve:

• Formal pleadings;
• Documentary discovery;
• Examinations for discovery;
• Interlocutory motions;
• Expert evidence;
• Settlement discussions;
• Trial preparation; and
• A formal hearing before a Tax Court judge.

The procedural requirements are more extensive than under the Informal Procedure, and costs can potentially be awarded.

What Are the Tax Court General Procedure Filing Fees?

Current filing fees for many income tax and GST/HST appeals under the General Procedure are based on the amount in dispute.

• Class A: less than $50,000 in dispute — $250;
• Class B: at least $50,000 but less than $150,000 — $400; and
• Class C: $150,000 or more — $550.

Tax Court fees and rules can change, so the current Court instructions should be confirmed when an appeal is filed.

Do You Need a Lawyer for Tax Court?

An individual may generally represent themselves in a Tax Court proceeding or be represented by counsel.

Whether self-representation is practical depends on the complexity of the case, the amount in dispute, the evidence required, and the procedure being used.

Under the General Procedure, a party that is not an individual, such as a corporation, is generally required to be represented by counsel unless the Court grants leave otherwise and imposes any conditions it considers appropriate.

Legal representation can be particularly valuable where the case involves complex statutory interpretation, significant documentary evidence, expert witnesses, penalties, or examinations for discovery.

What Happens After the Notice of Appeal Is Filed?

After the appeal is filed and served, the respondent — representing the Crown — generally files a document called a Reply.

In a General Procedure appeal, the Reply is generally required to be filed within 60 days after service of the Notice of Appeal, unless the deadline is extended by consent or by order of the Court.

The Reply generally sets out:

• The facts admitted or denied;
• The assumptions relied upon by the Minister;
• The respondent’s position on the issues;
• The statutory provisions relied upon; and
• The basis on which the Crown says the assessment should be upheld.

Who Represents the CRA in Tax Court?

Tax Court proceedings are not ordinarily argued by the CRA auditor or appeals officer.

The Crown is generally represented by lawyers acting for the Attorney General of Canada, commonly through the Department of Justice.

The litigation therefore becomes a court proceeding between the taxpayer and the Crown rather than a continuation of discussions with the CRA auditor.

What Happens During Discovery in the General Procedure?

Discovery is an important part of many General Procedure appeals.

Depending on the case, discovery may include:

• Exchange of lists of relevant documents;
• Production and inspection of documents;
• Examinations for discovery;
• Written questions in appropriate circumstances; and
• Follow-up undertakings arising from examinations.

Discovery allows each side to understand the other party’s case, obtain relevant evidence, narrow the issues in dispute, and prepare for trial.

Can a Tax Court Case Settle Before Trial?

Yes.

Many tax disputes resolve before a full hearing.

Settlement discussions can take place at different stages of the litigation, including after pleadings, during discovery, or as trial approaches.

Any settlement must be legally supportable under the applicable tax legislation. Unlike an ordinary commercial dispute, the Crown generally cannot simply compromise tax liability on an arbitrary basis.

What Happens at a Tax Court Trial?

If the case does not settle, it proceeds to a hearing before a judge of the Tax Court of Canada.

Depending on the procedure and issues involved, a trial may include:

• Opening statements;
• Fact witnesses;
• Expert witnesses;
• Documentary evidence;
• Cross-examination;
• Legal argument; and
• Submissions concerning the appropriate disposition of the appeal.

The judge may give a decision orally, issue written reasons later, or reserve the decision after the hearing.

What Can the Tax Court Do?

Depending on the legislation and appeal, the Tax Court may have authority to:

• Dismiss the appeal;
• Allow the appeal;
• Vacate an assessment;
• Vary an assessment;
• Refer the assessment back to the Minister for reconsideration and reassessment; or
• Grant other relief authorized by the applicable legislation.

The Tax Court generally deals with whether an assessment is legally correct. It does not exercise the same discretionary relief jurisdiction as the CRA’s taxpayer-relief program.

Does Filing a Tax Court Appeal Stop CRA Collections?

For many disputed income-tax amounts, the CRA will generally postpone collection action while a Tax Court appeal is pending.

However, important exceptions apply.

Collection may continue in relation to certain amounts, including:

• GST/HST liabilities;
• Payroll source deductions and other amounts required to be withheld or remitted;
• Certain large-corporation amounts;
• Jeopardy situations; and
• Other statutory exceptions.

Interest generally continues to accrue on unpaid amounts while the appeal is outstanding.

If you are dealing with active CRA enforcement, see our CRA collections and enforcement guide.

What Happens After the Tax Court Gives Judgment?

The result depends on the Court’s judgment and the issues decided.

The CRA may need to reassess the taxpayer in accordance with the judgment.

If a party believes the Tax Court made a reviewable legal error, an appeal may be available to the Federal Court of Appeal, subject to the applicable legislation and deadline.

Further appeal to the Supreme Court of Canada generally requires leave from that Court.

What Is the Difference Between a Tax Court Appeal and Judicial Review?

A Tax Court appeal generally concerns whether a tax assessment or reassessment is correct under the applicable taxing legislation.

Judicial review in the Federal Court generally concerns the lawfulness or reasonableness of an administrative or discretionary decision, such as certain taxpayer-relief or other CRA administrative decisions.

The two proceedings have different jurisdictions, remedies, procedures, and deadlines.

For discretionary CRA decisions, see our judicial review of CRA decisions page.

How Our Tax Lawyers Assist With Tax Court Appeals

KR Law Firm represents individuals and businesses in Canadian tax disputes and Tax Court proceedings.

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

• Assessing whether a Tax Court appeal is available;
• Identifying and preserving appeal deadlines;
• Preparing Notices of Appeal;
• Reviewing the Crown’s Reply;
• Managing documentary discovery;
• Conducting and defending examinations for discovery;
• Preparing witnesses and documentary evidence;
• Negotiating legally supportable settlements;
• Preparing for trial; and
• Representing taxpayers before the Tax Court of Canada.

Frequently Asked Questions About the Tax Court of Canada

Do I have to file a Notice of Objection before going to Tax Court?

For most income tax and GST/HST assessment disputes, yes. The taxpayer generally must first complete or engage the CRA objection process before appealing to the Tax Court.

How long do I have to appeal to the Tax Court?

An income tax or GST/HST appeal generally must be filed within 90 days after the CRA sends the relevant confirmation, reassessment, or redetermination following the objection.

What is the Informal Procedure limit?

For many income-tax appeals, the Informal Procedure generally applies where the amount of tax in dispute for a taxation year does not exceed $25,000 or the loss in issue does not exceed $50,000. For GST/HST appeals, the amount in dispute generally cannot exceed $50,000.

Is there a filing fee for the Informal Procedure?

No. There is currently no filing fee for appeals commenced under the Informal Procedure.

Can a corporation represent itself?

Under the General Procedure, a corporation or other non-individual party is generally required to be represented by counsel unless the Tax Court grants leave otherwise.

Does the Department of Justice have 60 days to reply?

In a General Procedure appeal, the respondent’s Reply is generally due within 60 days after service of the Notice of Appeal, although the deadline may be extended by consent or by the Court.

Does a Tax Court appeal stop CRA collections?

The CRA generally postpones collection of many disputed income-tax amounts while an appeal is pending, but important exceptions apply, including certain GST/HST and source-deduction debts. Interest generally continues to accrue.

Speak With a Tax Court Lawyer

A Tax Court appeal involves strict deadlines, formal legal issues, evidence, and procedural requirements that can significantly affect the outcome of a tax dispute.

KR Law Firm represents taxpayers in Tax Court proceedings and related CRA disputes across Canada.

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

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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 disputes depend on their specific facts, applicable legislation, and procedural history.