The Tax Court of Canada – How to Start the Process
What is a Notice of Appeal?
A Notice of Appeal is a document that is filed with the Tax Court of Canada (or whatever court the taxpayer is appealing to), to provide that court with notice that you are appealing a decision, of either a lower court, or in our case, a Canada Revenue Agency decision (“CRA”).
A Notice of Appeal is rather straightforward in its purpose, but can be rather complex to draft, and file.
What is the Purpose of the Notice of Appeal?
The purpose of filing a Notice of Appeal in the Tax Court of Canada is to continue fighting a CRA decision. You cannot appeal an assessment under the Income Tax Act (“ITA”) or Excise Tax Act (“ETA”), unless you have already filed a Notice of Objection. Generally, that objection will result in a reassessment, redetermination or confirmation. However, if the CRA takes too long in responding to your objection, you may file an appeal directly to the Tax Court without having first received a decision.
Informal versus General Procedure
There are two types of procedures at the Tax Court of Canada (and your choice of procedure must be identified in your notice of appeal): the Informal Procedure and the General Procedure.
The informal procedure is designed for smaller disputes, to help minimize the length of time of a proceeding and to simplify what is required. For starters, in the informal procedure, there is no filing fee associated with filing your appeal. To qualify for the informal procedure, your amount in dispute per year (federal tax and penalties) must not be greater than $25,000. If the matter relates to GST, then this limit is set at $50,000.
The general procedure on the other hand, is more formal and rigid than the informal procedure. There is a filing fee associated with the appeal and it will vary depending on the dollar value of the appeal. The different classes are as follows:
- Class A
- Where the amount in issue is less than $50,000
- Filing fee is $250
- Class B
- Where the amount in issue is between $50,000 and $150,000
- Filing fee is $400
- Class C
- Where the amount in issue is over $150,000
- Filing fee is $550
The General Procedure is governed by the Tax Court of Canada Rules and, deviation from the rules, is strictly prohibited unless a court order is obtained stating otherwise.
When appealing under the General Procedure, you may represent yourself or be represented by a lawyer. However, corporations must be represented by a lawyer.
In most situations, once you file a Notice of Appeal, the debt you owe is uncollectible by the Canada Revenue Agency’s Collections Department until your file is over and a decision has been rendered. However, it is important to remember that interest will continue to accumulate on this amount during this time frame. Furthermore, if your appeal involves trust funds, those funds remain collectible. So it is very important to be in touch with CRA Collections to ensure that they do not take legal action against you while you are fighting in the Tax Court.
The Department of Justice (the lawyers for the CRA), then have 60 days from the date a taxpayer files a Notice of Appeal to submit a Reply (their response).
Overall, while the Notice of Appeal seems rather straightforward, the process for drafting and filing of the appeal can be rather complex. More importantly, if the process is not executed correctly, it can prevent you from having your day in court. If you have any questions or need any assistance regarding the preparation and filing of a Notice of Appeal, or any Tax Court matter, please feel free to call us today!
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.