What Is the $25,000 Limit for the Tax Court of Canada Informal Procedure?
This answer covers Canadian federal tax law, which applies in every province.
The Tax Court of Canada's informal procedure is available when all the amounts in issue add up to $25,000 or less, or the loss in issue is $50,000 or less, and you elect it. The CRA states the limit as federal tax and penalties of $25,000 or less per assessment, or a loss of $50,000 or less per determination. An appeal about interest alone also qualifies.
If the amounts in issue are over $25,000, or the loss is over $50,000, the Court orders the general procedure to apply, unless you elect to limit the appeal to those amounts. If you do, the judgment is deemed to state that the amounts will not be reduced by more than $25,000 or the loss increased by more than $50,000.
In an interest-only case, the Attorney General can apply to move the appeal to the general procedure, and the Court must grant it if the interest in issue exceeds $25,000, leaving out interest that accrues after the notice of assessment. Judgments under the informal procedure are not treated as precedents. Whether to limit your appeal is worth confirming with a lawyer or accountant.
Key takeaways
- The informal procedure applies where the amounts in issue total $25,000 or less, or the loss in issue is $50,000 or less, and you elect it.
- An appeal where the only subject-matter is interest assessed under the Income Tax Act can also use the informal procedure.
- If the amounts or loss are above the limits, the Court orders the general procedure unless you elect to limit the appeal to those amounts.
- An informal procedure judgment is not treated as a precedent for any other case.