Preparing Witnesses and Evidence for a Tax Court of Canada Appeal

Most tax appeals turn on proof. The CRA made an assessment based on what it believed, and you need records and testimony that show something different.

This article explains how the process treats documents and witnesses, and how to get organized. Because evidence rules are technical, a lawyer can confirm how they apply to your situation.

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

Start with your records

Begin with whatever supports each item in dispute: receipts, invoices, bank and card statements, contracts, mileage logs, emails and anything created at the time. Records made at the time of the event are generally more convincing than explanations written afterwards.

• List each issue in the assessment separately.
• Match every issue to the documents that prove it.
• Note any gaps and who might fill them, such as a supplier or bank.
• Keep originals safe and work from copies.

How documents are exchanged

In the general procedure, each party files and serves a list of documents within thirty days following the closing of the pleadings. A party may apply for an order requiring a full list of relevant documents. The reply sets out facts admitted and denied and the issues to be decided.

The Crown must file its reply within 60 days after service of the notice of appeal, and any answer to the reply is filed within thirty days after service of the reply. Allegations of fact in the notice of appeal that are not denied in the reply are deemed admitted. Read the reply carefully, since it shows the assumptions the Crown relies on.

Witnesses and testimony

You will usually be your own main witness. Others who dealt with the transactions, such as a bookkeeper, a business partner or a family member, may help. Talk with each witness beforehand about what they personally saw and did, without telling them what to say. Testimony is most useful when it is first-hand, specific and consistent with the paper records.

In the general procedure, a person examined for discovery must answer proper questions relevant to a matter in issue. If an earlier answer was wrong or incomplete, the person must notify the other parties. A party may read the adverse party's discovery evidence into its own case at the hearing. Prepare carefully, because what you say earlier can be used later.

Hearsay and the informal procedure

Hearsay generally means a statement made by someone who is not in the room, offered to prove that it is true. Courts are often cautious about it, which is why witnesses who saw events first-hand matter.

Under the informal procedure, the Court is not bound by legal or technical rules of evidence. The notice of appeal sets out reasons and facts in general terms. The general procedure is more formal, so whether a particular document or statement is allowed there can be a question for a lawyer.

What to do next

• Build an index of documents by issue and number each page.
• Redact social insurance numbers, business numbers and full birth dates before filing.
• Identify first-hand witnesses and confirm they are available.
• Rehearse your own account against the documents to find inconsistencies.
• Consider a lawyer's advice on which evidence is admissible, especially in the general procedure.

Frequently asked questions