Tax Disputes & Notices of Objection

The Tax Court of Canada hears appeals under two procedures. The Informal Procedure is available where the federal tax and penalties in dispute for a year (excluding interest) are $25,000 or less, or the loss in dispute is $50,000 or less, among other narrowly defined cases. Pleadings are simpler, discovery is limited, costs awards are modest, and self-representation is common — though decisions carry limited precedential value.

The General Procedure applies to all other appeals, and a taxpayer can elect it regardless of the dollar amount. Pleadings, discovery, and procedure resemble Federal Court civil litigation, costs awards apply, and decisions have full precedential value.

Choosing between them is strategic. The Informal Procedure is faster and cheaper for smaller files; the General Procedure is required above the dollar limits and is often the right choice for complex legal issues, larger amounts, or where the costs and precedent benefits of full procedure matter.

After the CRA confirms a reassessment (or 90 days have passed since you filed a Notice of Objection without the CRA acting on it), you have 90 days to file a Notice of Appeal with the Tax Court of Canada. As with the objection, this deadline is statutory and firm.

If the 90-day appeal deadline is missed, a late appeal may be brought under section 167 of the Tax Court of Canada Act, but the threshold is demanding and there is an outer time limit. Relying on a late application is far riskier than meeting the original deadline.

In almost all cases, you must have filed a Notice of Objection before you can appeal to the Tax Court. If a confirmation has arrived, the clock is running — treat the 90 days seriously.

A Notice of Objection is an administrative step within the CRA. It is a written submission telling the CRA you disagree with a reassessment, and it sends the file to a CRA Appeals officer — a more senior CRA employee than the auditor — to review independently. Many disputes are resolved, in whole or in part, at this stage.

A Tax Court appeal is the next step, taken to an independent court rather than to the CRA. It becomes available after the CRA confirms the reassessment, or after 90 days have passed without the CRA acting on the objection. You generally must have filed an objection first before you can appeal.

The two stages also differ in nature. The objection is largely a paper review by the CRA; the Tax Court hears the matter afresh on the evidence, with pleadings and procedure resembling other litigation. Building a strong objection early often improves the position if the matter later proceeds to court.

Timelines depend on the procedure and complexity. Informal Procedure appeals typically run twelve to eighteen months. General Procedure appeals typically run eighteen to thirty-six months, and complex matters can take longer because of discovery, motions, and trial scheduling.

On cost, smaller Informal Procedure cases can sometimes be handled for fees in the low five figures. General Procedure cases vary widely with complexity and the length of trial. We provide a written estimate after reviewing the file, and we factor potential costs awards into strategy, since the General Procedure allows costs to be awarded.

A consultation lets us assess your file and give you a realistic sense of both the likely timeline and the fee structure before you commit.

The Informal Procedure is generally available where the federal tax and penalties in dispute for each year (excluding interest) are $25,000 or less, where a disputed loss for a year is $50,000 or less, or where a GST/HST amount in dispute is $12,000 or less. An appeal that concerns only interest can also proceed informally.

The limits are applied year by year, so a multi-year reassessment can still qualify provided the federal tax in dispute for each individual year stays within the threshold. If you are over the limit, you can still elect the Informal Procedure by giving up the amount above the ceiling, or proceed under the General Procedure instead.

Yes. A GST/HST assessment under the Excise Tax Act is appealed to the same Tax Court of Canada that hears income-tax appeals. You first file a Notice of Objection within ninety days of the assessment. If the CRA confirms the assessment, or does not decide the objection within one hundred and eighty days, you can take the matter to the Tax Court. Note that the wait before you can go to Court is 180 days for GST/HST, compared with 90 days for income tax.

If you win, the Court refers the reassessment back to the Minister for reconsideration and reassessment in accordance with the Court's reasons. The Minister then issues a corrected reassessment, and you may receive a refund of any disputed amounts already paid, together with refund interest.

If you lose, the reassessment stands and costs may be awarded against you, particularly in the General Procedure. A further appeal to the Federal Court of Appeal is available, generally within 30 days, but it is limited to questions of law and palpable error rather than a fresh hearing of the facts.

Because the Tax Court hears the matter afresh on the evidence, the strength of the evidentiary record built during the audit and objection stages often shapes the outcome. We assess the realistic odds candidly before and during litigation.

Once the CRA confirms a reassessment or reassesses following your objection, you have 90 days from the date on that notice to file a notice of appeal with the Tax Court of Canada. The 90 days runs from the date printed on the notice, not the date you received it.

You can also appeal without waiting for a CRA decision: if you filed a valid objection and the CRA has not decided it within 90 days (180 days for GST/HST), you may appeal directly. If you miss the 90-day deadline after a confirmation, you can apply to the Court for an extension of time under section 167 of the Tax Court of Canada Act, generally within one further year, but the threshold for relief is high.

No. GST/HST is a trust amount — tax you collected from customers on the government's behalf — and the collections pause that applies to disputed income-tax assessments does not apply to it. The CRA can collect a disputed GST/HST assessment while your objection or appeal is still alive. This is one reason registrants with a clearly wrong GST/HST assessment sometimes go straight to the Tax Court once the 180-day waiting period has passed, to compress the timeline.

It depends on the procedure. In the Informal Procedure you may represent yourself or be represented by an agent who is not a lawyer, including an accountant, and a corporation may have an officer appear for it. In the General Procedure an individual may self-represent, but a corporation generally must be represented by counsel.

The Informal Procedure is designed to be navigable without a lawyer, but the burden of proof still rests on the taxpayer and the assumptions of fact still have to be addressed. For larger or legally complex files, the framing of the appeal shapes everything that follows, which is why representation is often valuable even where it is not required.

The CRA does. In almost every tax appeal the taxpayer carries the burden of proving the assessment wrong, but the gross negligence penalty under subsection 163(2) is the exception. Subsection 163(3) places the onus on the Minister to establish the facts justifying the penalty. The CRA must prove that your conduct met the high threshold the provision demands — a high degree of negligence tantamount to intentional acting — not merely that there was an error in your return.

It depends on the type of debt. Objecting to an income tax assessment — personal or corporate — applies a "stall code" in the CRA's system: collections action that has started will stop, and action that has not yet begun will not start, while the amount is in dispute.

Trust amounts are different. Objecting to a GST/HST or source-deduction assessment does not stop collections, so a trust debt remains fully collectible even while it is being disputed. For that reason, a clearly incorrect GST/HST assessment can take a year or two to correct while the disputed amount is being collected — one reason taxpayers sometimes choose to skip the appeals officer and go straight to the Tax Court of Canada on trust-debt files.

In most Tax Court appeals the burden is on the taxpayer. CRA assessments are presumed correct, and the Minister's assumptions of fact — set out in the Crown's reply — are taken as true unless the taxpayer rebuts them. The taxpayer's task is to "demolish" those assumptions with credible evidence on a balance of probabilities.

There are exceptions. The most important is gross-negligence penalties under subsection 163(2), where the burden shifts to the Crown to justify the penalty. But on the substantive reassessment, the appellant generally carries the onus, which is why identifying and addressing each assumption of fact is the foundation of any appeal.

Yes, and it happens often. The underlying tax and the penalty are decided on different burdens. On the tax, you must prove the assessment wrong; on the penalty, the Minister must prove gross negligence. Even where some additional tax survives, the Crown may be unable to show your omission was anything more than an ordinary mistake — in which case the fifty per cent penalty is removed. Given the size of the penalty, that split outcome is frequently the most valuable result in the appeal.

Yes, after a waiting period. For income tax matters, once 90 days have passed since you filed your notice of objection, you can appeal directly to the Tax Court of Canada without waiting for an appeals officer to decide. For GST/HST matters, the waiting period is 180 days from the filing of the objection.

Skipping ahead can save considerable time, and it is especially useful for a GST/HST assessment that is incorrect but remains collectible while in dispute. The Tax Court also applies the rules of evidence, which the CRA can sidestep at the audit and objection stages — so a well-documented case that stalled inside the agency often fares better before a judge or with Department of Justice counsel.

When the CRA reassesses, it relies on factual conclusions — that a deposit was income, that an expense was personal, that a transaction lacked substance. In a Tax Court appeal, the Crown sets those conclusions out in its reply as the Minister's assumptions of fact, and they are presumed true unless the taxpayer rebuts them.

The assumptions effectively define what the taxpayer has to disprove, which is why the reply is the most important document the Crown files. You cannot rebut an assumption you have not identified, so the first step in building an appeal is to read the assumptions one by one and assemble the evidence that demolishes each.

A net-worth assessment estimates your income from the growth in your wealth plus your living expenses, treating the unexplained increase as unreported income. The appeal attacks the methodology: showing the auditor understated your opening net worth, identifying non-taxable sources (gifts, loans, inheritances, sales of personal property, accumulated savings) that explain apparent increases, correcting misvalued or double-counted assets, and challenging inflated personal-expenditure estimates. Every dollar traced to a non-taxable source comes out of the assessment.

Most Tax Court appeals settle before trial, frequently after discovery once both sides can see the strengths and weaknesses of the case. The Crown is represented by Department of Justice counsel, who assess each file for its litigation risk and are often open to a reasonable resolution where an assumption is weak.

Settlement in tax litigation must rest on a principled basis — a result the law and the facts can actually support — rather than simply splitting the difference. That makes issue-by-issue settlements common: the Crown concedes the issues the evidence supports and maintains the ones it does not. A pure question of law, where there is no factual middle ground, is less likely to settle and may have to be decided at a hearing.

Possibly some of them. Costs at the Tax Court are discretionary and generally follow the event, so a successful taxpayer is presumptively entitled to costs. Historically that meant a modest tariff amount, but the Court now frequently awards a lump sum — a percentage of the legal fees you actually paid, often a quarter to a half. A written settlement offer under Rule 147 that the CRA rejects, where you then do as well or better at trial, can entitle you to substantially enhanced costs from the date of the offer.

In the General Procedure, after the pleadings close, each party may orally examine one representative of the other side, under oath and before a court reporter, in advance of trial. This is the examination for discovery. Its purpose is to learn the other side's case, obtain admissions, and test the strength of the assumptions before any hearing.

Discovery is where many appeals are effectively won or lost, because it exposes the evidentiary foundation of each side's position. Questions that cannot be answered in the room are often the subject of undertakings — commitments to provide a document or answer afterward. There is no oral examination for discovery in the Informal Procedure.

Yes. A Tax Court general-procedure judgment can be appealed to the Federal Court of Appeal, generally within thirty days of the judgment (July and August are not counted in the computation). The deadline is strict; missing it requires an application to extend time, which is not assured. Because the window is short, the decision whether to appeal has to be made quickly, while the trial is still fresh.

If you succeed, the Court rarely fixes a final tax figure itself. Most commonly, when a taxpayer wins in whole or in part, the Court refers the reassessment back to the Minister for reconsideration and reassessment in accordance with the Court's reasons. The CRA then issues a corrected reassessment reflecting the judgment.

You may receive a refund of disputed amounts already paid, together with refund interest, and in the General Procedure a successful party can be awarded a portion of their costs. If you lose, the reassessment stands, costs may be awarded against you in the General Procedure, and a further appeal to the Federal Court of Appeal is available on a question of law or a palpable and overriding error of fact.

No — it is not a retrial. The Federal Court of Appeal reviews the Tax Court's decision for error under a standard of review that depends on the type of question. Questions of law (how the Income Tax Act was interpreted, the legal test applied) are reviewed for correctness. Questions of fact are reviewed only for "palpable and overriding error," a demanding standard that gives deference to the trial judge who heard the witnesses. An appeal that is really a complaint about how the evidence was weighed usually fails; an appeal that identifies a genuine legal error has a real prospect.

Yes. The Tax Court of Canada was designed so that taxpayers can appeal without a lawyer, and many do — particularly under the Informal Procedure, which is the simpler, lower-cost track. The judge controls the process and will generally help a self-represented taxpayer understand what is being asked. Preparation matters more than legal training: organized documents, a clear chronology, and a focus on the specific issues go a long way.

For larger or legally complex disputes, or where significant penalties are at stake, many taxpayers choose to consult or retain a tax lawyer. But self-representation is a realistic option, especially under the Informal Procedure.

The Informal Procedure is the simpler, faster track built for self-represented taxpayers: no filing fee, relaxed evidence rules, and a hearing that is usually a few hours to a day. You can elect it when the federal tax and penalties in dispute are $25,000 or less per year (or $50,000 or less of GST/HST). If your dispute is larger, you can still choose the Informal Procedure by waiving the excess.

The General Procedure is more formal — it has prescribed pleadings, examinations for discovery, stricter rules of evidence, a filing fee, and the possibility of costs awards. It is used for larger disputes. You elect the Informal Procedure right in your Notice of Appeal.

For most income tax and GST/HST disputes, yes. The Notice of Objection filed with the CRA is the mandatory first step, and it preserves your right to appeal. You can appeal to the Tax Court only after the CRA confirms or reassesses in response to your objection, or after 90 days have passed since you filed the objection with no decision.

Skipping the objection stage is a common reason appeals get blocked, so if you have not objected yet, start there.

Informal Procedure files often resolve in 6–18 months. General Procedure can run 18–36 months from Notice of Appeal to judgment, depending on complexity, discovery, and whether the case settles or proceeds to trial.

Under the Informal Procedure there is no mandatory form — a clear letter is enough, and the court publishes a model. A good Notice of Appeal identifies the tax year(s) and the CRA notice you are appealing by date, states the relevant facts, lists the issues, explains why you say the assessment is wrong, states the exact relief you want, and elects the Informal Procedure if you qualify. Include an address for service in Canada.

Keep it factual and organized; you do not need legal language. The General Procedure uses a more formal prescribed form.

If you are the appellant and there are factual issues in dispute, yes — you will usually be a key witness. Your counsel will prepare you. For purely legal arguments, attendance is optional in most cases.

You generally have 90 days to file your Notice of Appeal, measured from the date on the CRA's notice of confirmation or reassessment. The clock runs from the CRA's date, not the day you received the letter, so file early.

If you miss the 90 days, you can apply for an extension of time — but only within one year after the deadline expired (15 months total), and only if you intended to appeal within the original period, have reasonable grounds, and applied as soon as you could. Treat the extension as a safety net, and act quickly if you need it.

A document only becomes evidence once it is introduced at the hearing. Bring copies for the judge, the Crown, and yourself; introduce each key document through a witness who can speak to it (usually you), and ask the judge to mark it as an exhibit. Then tie each document to the specific fact it proves. Under the Informal Procedure the judge is not bound by the strict rules of evidence, so this is more relaxed than in a regular courtroom.

Organize everything in a tabbed, numbered binder, and consider agreeing a joint book of documents with the Crown so exhibits go in by consent. If originals are missing, you can prove the same facts with bank statements, vendor copies, or a consistent reconstruction.

Yes — most appeals settle rather than going to a decision. After you file, a Department of Justice (Crown) lawyer is assigned to your file and may discuss resolution. The key rule is that a settlement must be "principled": it has to reflect a result the facts and the law actually support. The Crown cannot simply split the difference to close a file.

The way to move a settlement is to show, with documents, why a particular number is the legally correct one — issue by issue. When you agree, the terms are written into Minutes of Settlement, which are binding once signed.

Minutes of Settlement are the written, binding record of a deal you reach with the Crown to resolve some or all of your Tax Court appeal. Before signing, read every line: confirm the dollar amounts, tax years, and issues match what you agreed, check that each issue is addressed (settled, conceded, or left for hearing), and understand the costs treatment (usually each side bears its own). Based on the Minutes, the court issues a judgment and the CRA reassesses accordingly.

Because they are binding once signed, it is reasonable to ask the Crown lawyer to explain any clause, or to take time to review. If the amount is significant or the issues are complex, a short consultation with a tax lawyer before signing can be worthwhile.