Five Quick Facts about the Tax Court of Canada

September 21, 2020

I had planned to take a week off from the blog to focus on a Tax Court of Canada hearing I am running this week which involves the application of the specific anti-avoidance rule in ss. 256(2.1) of the Income Tax Act… but… I was sitting in my living room working on my opening statement for Court and realized I had a serious case of writer’s block.

In the past, when I have writer’s block, I find it helpful to switch gears and write about something that I know. So here goes nothing!

Clients often find the Tax Court of Canada process to be quite mysterious. Just the other day, I had a witness ask if we still wore robes and wigs to court. (As an aside, I had the privilege of taking Appellate Advocacy in law school from a visiting professor who also happened to a be a judge in Australia – where the judges (at that time) still wore wigs. He brought his wig to class so we could check it out! If you are interested in learning more about the history of wig wearing by the Courts in Australia, here is a great article: http://www.courts.sa.gov.au/Community/ForSchools/Resources/Pages/History-of-wigs.aspx).

But I digress… no, we do not wear wigs to court in Canada, but we do still wear the traditional black robe. I recognize that not everyone is a fan of this “uniform”, but I have always felt more “lawyerly” when I put it on. It reminds me that what I do is serious, and has an impact on the lives of Canadians.

Here are five quick facts about the Tax Court of Canada:

Fact #1: The Tax Court of Canada was not established until 1983 (which also happens to be the year I was “established” (a.k.a born)… coincidence?)

For the first 30 years following the introduction of the Income War Tax Act (the precursor to the Income Tax Act), tax assessments were informally appealed to the Minister of Finance, and formally appealed to the Exchequer Court of Canada. Eventually, the Tax Appeal Board was formed in 1946, which served as more an administrative tribunal, and decisions of the Board could still be appealed to the Exchequer Court. In 1970, the Board became the Tax Review Board – but taxpayers could skip the board altogether and appeal directly to the then, newly instituted, Federal Court – Trial Division. So in 1983, the Tax Court of Canada was formed as a court of record, and became a superior court of record in 2003.

Fact #2: There are two “streams” within the Tax Court

There are two types of procedures within the Tax Court: (1) informal procedure, and (2) general procedure.

Informal Procedure is limited to cases in which the amount of federal tax and penalties in dispute for each taxation year, excluding interest, is $25,000 or less. For GST appeals, the amount in dispute cannot exceed $50,000. Taxpayers can represent themselves in informal procedure appeals.

General Procedure is a more formalized procedure for cases where the amount of federal tax and penalties in dispute exceeds the threshold noted above. Taxpayers can represent themselves or be represented by a lawyer – however, corporate taxpayers are required to be represented by a lawyer unless the Court grants a request allowing an officer of the corporation to represent it.

Fact #3: Tax Court Justices are appointed by the Minister of Justice on the recommendation of a Judicial Advisory Committee

There are currently 25 Justices of the Tax Court of Canada – see this link for more information: https://www.tcc-cci.gc.ca/tcc-cci_Eng/About/Judges.html.

In order to be appointed, a judge must have been a lawyer for at least 10 years. When a lawyer is appointed as a Tax Court Justice, he or she is required to maintain a residence within 40 km of Ottawa, where the Tax Court is based.

Fact #4: The Tax Court is a travelling Court

Justices of the Court travel from Ottawa to other cities in order to hear appeals. The purpose for Parliament creating a “circuit” court was to ensure that each region of the country would have its cases heard by the same pool of judges. This was intended to achieve the goal of ensuring that tax laws are applied consistently across Canada.

Fact #5: The Tax Court’s jurisdiction may be more limited than you think

The Tax Court has the jurisdiction to hear appeals under various statutes, including: the Income Tax Act, the Excise Tax Act, and the Employment Insurance Act. For a full list of statutes, see this link: https://www.tcc-cci.gc.ca/tcc-cci_Eng/About/Jurisdiction.html.

However, the Tax Court has no jurisdiction over the “fairness” relief portions of the Income Tax Act and the Excise Tax Act (described in last week’s blog post: https://taxchickca.wordpress.com/2020/09/14/taxpayer-relief-i-have-applied-so-why-dont-i-feel-relieved/). The Tax Court also lacks jurisdiction over provincial income tax and sales tax matters, and does not have the power to grant relief where a taxpayer wishes to sue CRA for damages.

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I feel so much better now… Back to working on my opening statement… and I promise a blog post on ss. 256(2.1) in the coming weeks!

If you are interested in learning more about the Tax Court of Canada, keep an eye out for an upcoming episode of The Tax Chick Podcast featuring fellow tax chick, Sophie Virji, where we break down the anatomy of a tax appeal. Episode dropping October 8, 2020 – if you subscribe now on Apple Podcasts or Spotify you will be notified when the new episode is available!