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Can You Appeal an Unsuccessful Tax Dispute?

October 27, 2022

By: Rimo Rico, Associate, Farber Tax Law

In my previous blog post, I went over the process of how a tax dispute is filed with the Canada Revenue Agency (CRA). But let’s take that one step further: what happens after an unsuccessful tax dispute with the CRA? 

If the CRA decides that you have a tax liability in whole or in part after your tax dispute, your next step is to take the matter to court by filing a Notice of Appeal with the Tax Court of Canada (Tax Court).

What is a Notice of Appeal? 

The Notice of Appeal is a document that states the facts, reasons, and legal basis for your dispute. It should be filed with the Tax Court by mail or digitally through the Tax Court website within 90 days of the date stated in the CRA’s decision (i.e., Notice of Confirmation or Notice of Reassessment). 

While there are no filing fees for a small “informal procedure” (an appeal that goes straight to a hearing without additional steps) matter, most Tax Court appeals will have filing fees of $250 to $400. 

There are two important things to avoid when filing a Notice of Appeal: 

  1. Failing to appeal all issues you are disputing, such as filing an income tax appeal but failing to do the same for a related GST/HST issue
  2. Choosing to proceed under the informal procedure when there is a larger amount at issue

As with many things in tax, these early errors can cause permanent financial headaches. 

What Happens Next? 

After the Notice of appeal is filed with the Tax Court, it will serve the appeal on the CRA’s lawyers—the Department of Justice—and send you a letter advising that it has been done. They will then have 60 days to file a “Reply,” which is the counterpoint to your Notice of Appeal.  

Don’t be concerned if they disagree with everything you say—the role of these two documents is to neatly set out the issues that the court is being asked to decide. 

In informal procedure appeals, the only next step is for the Tax Court to let you know when your hearing date is so you can attend and make your case. 

In general procedure appeals, the two sides exchange documents, then engage in a formal round of questioning one another called an examination for discovery. These steps take place over months and are there to make sure each party knows the other side’s case and the information or documents they rely on. 

Answers given on examinations for discovery can be used against you in court, and failure to list a necessary document can lead to cost consequences or an inability to use that document at trial. These are high-pressure steps that should not be taken on your own. 

At every stage of the process, it is in your best interest to engage in settlement discussions with the Department of Justice. Unfortunately, this can be difficult to do on your own since tax cases must be decided on a “principled basis.” That means they can’t just agree to split the difference, but instead must be convinced of your position on the facts or the law.  

Navigating an appeal before the Tax Court shouldn’t be taken lightly. It’s best to have an experienced tax lawyer in your corner. At Farber Tax Law we know that any disputes with the CRA can be complex, that’s why we dedicate ourselves solely to tax dispute resolution, representing your best interests. Contact us for a free and confidential consultation on your tax dispute today. We’re here to help.