Originally established in 1983, the Tax Court of Canada is a Federal Superior Court that deals with tax-related concerns and issues. But what exactly does the Tax Court do? In this article, we’ll learn more about how the Tax Court operates, what you can do to file an appeal and the difference between formal and general procedures.
So if you’re new to the concept of a tax court – let’s start learning about Canada’s Tax Court.
What is the Tax Court of Canada?
As mentioned above, the Tax Court of Canada is a Federal Superior Court that is designed to handle tax-related matters with the Government. The court is designed to handle any issues or disputes against taxes as designated by the CRA. In other words, if you would like to dispute your taxes that are owed to the CRA, you would head to the Tax Court of Canada.
The Tax Court of Canada handles all different types of tax-related disputes and concerns ranging from concerns about estate tax to concerns about classification types.
How does the Tax Court of Canada work?
In order to be fair to anyone who takes a tax case to the court, the Tax Court of Canada runs independently from the CRA. Rather, it is a federal court. If a Canadian citizen or business thinks that their taxes are incorrect, they take that concern to the Tax Court of Canada, who will then hear the case and provide a final ruling.
If the ruling is made in favor of the citizen, taxes can be amended to repair the deficiency. If the ruling is made in favor of the CRA, the citizen will still be responsible to pay the amount owing.
Formal vs. General Procedures
The amount that you are disputing on your taxes will decide whether you need to file for a general or informal procedure.
Informal procedures are a much simpler process than general procedures. They are designed to “simplify the legal steps involved in the appeal process”. These cases are also preferred, as they do not involve any filing fees such as those included in the formal process.
Having said that, in order to qualify for an informal procedure, the amount in dispute must be less than $25,000 for each taxation year. GST appeals are limited to cases worth $50, 000 or less.
If your dispute amount is over the allotted appeal amount but you would still like to apply for an informal procedure, you can do so by agreeing to limit your appeal amount to $25, 000 or $50, 000 (whichever applies for your case).
General procedures are much more costly and time-consuming than informal procedures. This is because there are more legal steps and actions that need to be taken. Filing fees are also charged for General Procedures that are taken to the Tax Court of Canada.
General Procedures can be broken down into 3 types. In a Class A procedure, the amount of loss must be less than $100, 000 and the amount to be issued must be less than $50, 000.
Class B procedures must have a loss between $100, 000 to $300, 000 and an amount to be issued of between $50, 000 and $150, 000. If the amount of loss is $300, 000 or more, and the amount to be issued is more than $150, 000, then a Class C procedure is required.
Filing fees will vary depending on which Class of procedure you are filing for. Class A procedures are $250, Class B are $400, and Class C are $550.
To learn more about formal and general procedures, you can visit the Tax Court Official Website.
Can I represent myself in the Tax Court of Canada?
Yes. Should you choose to forgo your right to an attorney, you can represent yourself in the Tax Court of Canada. If you decide to represent yourself in court, you will become what is known as a “Self-Represented Litigant”.
As a Self-Represented Litigant, it’s your job to ensure that you are familiar with all Court associated and Legal Rules. Registry staff is available to assist you with some matters, but are not able to provide you with legal advice.
If you are interested in representing yourself in the tax court of Canada, you may want to read this article first.
Unless you are in the legal field or have a strong background in the Court of Law, it is strongly advised that you seek legal counseling in all matters related to the Canadian Tax Court.