Simply speaking, there are two streams in tax litigation: the appeal to the Tax Court of Canada and the judicial review before the Federal Court. If you want to take your matter to court, it is important that you take it to the right court. If you take your matter to the wrong court, the court will refuse to look at it for lack of jurisdiction.
Generally, when the matter in dispute relates to the correctness of a tax reassessment, an appeal must be instituted before the Tax Court of Canada. However, if you’re challenging a discretionary decision of the Minister of National Revenue (i.e., the Canada Revenue Agency (“CRA”)), you must apply for judicial review before the Federal Court.
Tax Court of Canada
An appeal to the Tax Court of Canada can only be instituted once a notice of objection has been served on the CRA. In other words, you cannot bypass the CRA and appeal directly to the Tax Court of Canada.
An appeal to the Tax Court of Canada is instituted by filing a notice of appeal. By default, appeals proceed under the General Procedure Rules. In order to have the Informal Procedure Rules apply, you have to make an election to that effect.
Following are some distinctions between an appeal proceeding under the Informal Procedure Rules and an appeal proceeding under the General Procedure Rules:
- The key distinction between an appeal under the Informal Procedure Rules and the General Procedure Rules is the amount of relief that a taxpayer can obtain, if successful. The maximum relief available in a proceeding under the Informal Procedure Rules is $25,000 or, if the appeal relates to a loss amount, $50,000. There is no limit under the General Procedure Rules.
- Appeals under the Informal Procedure Rules generally proceed more expeditiously because the court procedures are simplified. For instance, there are no examinations for discovery under the Informal Procedure Rules, meaning that the parties don’t have a mechanism to compel each other to answer questions or produce documents ahead of trial.
- The rules of procedure under the Informal Procedure Rules are more relaxed. As an example, whereas a notice of appeal in due form must be filed under the General Procedure Rules, an appellant under the Informal Procedure Rules need only file a document setting out, in general terms, the reasons for the appeal and the relevant facts, unless special circumstances.
- The rules of evidence do not apply in appeals that proceed under the Informal Procedure Rules. At the hearing, the Tax Court of Canada is not bound by any legal or technical rules of evidence and has the latitude to deal with the appeal “as informally and expeditiously as the circumstances and considerations of fairness permit.”
- A taxpayer need not be represented by a lawyer in an appeal under the Informal Procedure Rules.
If you applied for taxpayer relief and the CRA declined your application, you must apply for judicial review before the Federal Court. Since the CRA has discretion to accept or reject a taxpayer relief application, it is not for the Court to substitute its views for those of the CRA. Generally, the Federal Court will limit itself to considering the reasonableness of the decision rendered by the CRA. If the decision rendered was reasonable, it will not be set aside, even though the Federal Court judge would have come to a different conclusion based on the facts.
Cour du Québec
At the provincial level, taxpayers who want to challenge a reassessment from Revenu Québec must file an originating application with the Cour du Québec.