Fighting the CCRA--Part 2.

• Author: Kirby, Richard
• Position: Tax law

This is the second article in a three part series which describes the process by which disputes between taxpayers and the Canada Customs and Revenue Agency (the CCRA) are resolved. Such disputes usually arise when the CCRA and a taxpayer disagree with the proper amount of income tax that a taxpayer owes the government for a given period. As discussed in Part 1 of this series, the CCRA may audit a taxpayer and subsequently assess the taxpayer based on its view of the amount of income tax (plus interest and penalties) that the taxpayer owes. The taxpayer can file a Notice of Objection with respect to this assessment and the CCRA Appeals Division will consider the issue and either confirm the assessment or issue a subsequent Notice of Reassessment. The story does not end there, however, as the taxpayer may appeal to the Tax Court of Canada and beyond.

When Can Taxpayers Appeal to the Tax Court of Canada?

There are two circumstances under which a taxpayer may appeal an income tax case to the Tax Court of Canada:

(1) where the Minister of National Revenue (the Minister who is represented by the CCRA) has confirmed or reassessed the original assessment after a Notice of Objection has been filed by the taxpayer; and

(2) where 90 days have elapsed since the taxpayer filed a Notice of Objection and the Minister has not yet confirmed the assessment or reassessed.

Informal vs. General Procedure

The Tax Court of Canada hears appeals under two distinct procedures: the informal and the general procedures. Both procedures carry specific advantages, restrictions and rules. While a taxpayer always has the right to appeal under the general procedure, the informal procedure is only available where the disputed amount of federal tax and penalties is not more than $12,000 per assessment under appeal and the taxpayer elects to proceed under the informal procedure (or the taxpayer elects to limit recovery to $12,000). It is therefore not surprising that the informal procedure is sometimes referred to as the small claims court of the Tax Court of Canada. The informal procedure imposes quicker time limits than the general procedure and is usually less expensive than the general procedure. Also, it is not uncommon for taxpayers to represent themselves under the informal procedure, as the complex rules of evidence (such as hearsay) do not strictly apply. In contrast, general procedure appeals are usually more complicated and may require examinations for discovery...