Appealing a Tax Court Decision to the Federal Court of Appeal in Canada

A loss at the Tax Court of Canada is disappointing, but it is not always the end. A further appeal to the Federal Court of Appeal may be possible, and the deadline is short enough that you need to act quickly.

This article covers the time limit, the grounds that matter, the special limits for informal procedure cases, and the difference between an appeal and other routes such as judicial review. A lawyer can review your judgment and tell you whether an appeal makes sense.

This article covers Canadian federal tax law, which applies in every province.

The 30-day deadline

A notice of appeal to the Federal Court of Appeal from a Tax Court judgment must be filed within 30 days after the judgment, not counting days in July and August. That July and August rule can stretch the calendar, but you should not rely on counting it yourself without checking.

Interlocutory judgments, meaning rulings made along the way rather than the final decision, have a 10-day limit. If you want to challenge a ruling during the case, the time is even tighter.

Compare this with the first appeal. To reach the Tax Court you had 90 days from the date on the notice of confirmation or reassessment. The window at this stage is much shorter.

What the Federal Court of Appeal looks at

If your case was decided under the informal procedure, the grounds of appeal are limited to those in Federal Courts Act s. 27(1.3). For a general procedure case, which grounds apply and how strong they are depends on your situation, so it is worth confirming with a lawyer. A disagreement with the result alone may not be enough to build an appeal on.

Before deciding, gather the judgment and any reasons, the transcript or notes of the hearing, and the documents that were filed.

Limits on appealing informal procedure decisions

The informal procedure applies to smaller disputes where the amounts in issue are $25,000 or less, or a loss of $50,000 or less, and the taxpayer elects it. It also applies where the only subject-matter is interest.

If your case was decided under the informal procedure, the appeal route is narrower. Those judgments can be appealed to the Federal Court of Appeal only on the limited grounds in Federal Courts Act s. 27(1.3), such as lack of jurisdiction, breach of procedural fairness or an error of law.

• The informal procedure judgment is not treated as a precedent for any other case.
• The Court gives reasons, but written reasons are required only where the Court considers it advisable.
• If the Minister appeals an informal procedure judgment, the Crown pays your reasonable and proper costs of the appeal.

Costs, settlement and other routes

Appeals carry cost risk. In the general procedure the Court can order either party to pay some of the other party's legal costs, and a written settlement offer can affect the result. Costs at the Federal Court of Appeal level are a matter to ask your lawyer about.

For a Tax Court appeal that is still pending, the Minister may, with your written consent, reassess at any time to dispose of the appeal. Whether and how a settlement could work after a Tax Court judgment depends on your situation, so it is worth confirming with a lawyer.

The Minister may waive or cancel penalties or interest under ITA s. 220(3.1) up to ten calendar years after the end of the taxation year, but this is an administrative relief decision. If a relief request is refused, the CRA offers a second administrative review, and a taxpayer who thinks the CRA was not fair and reasonable can apply to the Federal Court for judicial review within 30 calendar days of receiving the decision. A Federal Court judge may allow a further period.

What to do next

• Write down the date of the Tax Court judgment today.
• Work out whether the judgment was under the informal or general procedure.
• Ask whether the ruling you want to challenge is interlocutory, because that deadline is 10 days.
• Get the written judgment and reasons, if any.
• See a lawyer promptly to assess grounds, risk and cost.
• Ask whether settlement is possible before filing.

Frequently asked questions