Tax Court Informal Procedure vs General Procedure in Canada

When you appeal to the Tax Court of Canada, you may have to choose between two tracks: the informal procedure and the general procedure. They differ in how formal the process is, how evidence is handled, who pays costs and what happens if you want to appeal further.

This article walks through those differences in plain language. The right choice depends on your facts, so treat it as a starting point for a conversation with a lawyer or accountant.

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

Who can use the informal procedure

The informal procedure applies where the aggregate of all amounts in issue is $25,000 or less, or the loss in issue under ITA s. 152(1.1) is $50,000 or less, and you elect it. The CRA describes the limit as federal tax and penalties of $25,000 or less per assessment, or a loss of $50,000 or less per determination.

It also applies where the only subject matter of the appeal is interest assessed under the Income Tax Act.

If the amounts exceed those figures, the Court orders the general procedure to apply, unless you elect to limit the appeal. In that case 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 informal appeal, the Attorney General may apply to move the case to the general procedure, and the Court must grant it if the interest in issue exceeds $25,000; interest accruing after the notice of assessment is excluded from that calculation.

How the informal procedure works

• Representation: all parties may appear in person or be represented by counsel or an agent.
• Evidence: the Court is not bound by legal or technical rules of evidence.
• Notice of appeal: it sets out reasons and facts in general terms.
• Reply: the Minister files a reply within sixty days after the notice of appeal is transmitted, and the Court fixes the hearing date.
• Judgment: it must be rendered not later than ninety days after the hearing concludes, except in exceptional circumstances.
• Reasons: the Court gives reasons, but written reasons are required only where the Court considers it advisable.

How the general procedure works

The general procedure is more structured. A notice of appeal is started by filing an originating document in the Registry. The Crown must file its reply within 60 days after service of the notice of appeal, and allegations of fact in your notice of appeal that are not denied in the reply are deemed admitted. Any answer to the reply is filed within thirty days after service of the reply.

After the pleadings, each party files and serves a list of documents within thirty days following the closing of the pleadings, and a party may apply for an order requiring a full list of relevant documents. Examinations for discovery follow: a person examined must answer proper questions relevant to a matter in issue, must notify the other parties if an earlier answer was wrong or incomplete, and the other side may read your discovery evidence into its case at the hearing. An individual may appear in person or be represented by counsel.

Costs, precedent and further appeals compared

On general procedure costs, the Court considers factors including the result, the amounts in issue, the importance and complexity of the issues, written settlement offers and conduct that lengthened the proceeding. A written settlement offer can increase recovery to substantial indemnity costs (80% of solicitor-and-client costs) after the offer date if the judgment is as favourable. The offer must be served at least 30 days after pleadings close and at least 90 days before the hearing, and not withdrawn.

One exception applies in informal cases: if the Minister appeals an informal procedure judgment, your reasonable and proper costs of the appeal are paid by the Crown.

What to do next

• Add up the amounts in issue for each assessment, including penalties, and compare them with the limits.
• Note whether the dispute is only about interest.
• Decide how comfortable you are with the extra steps of the general procedure, such as lists of documents and examinations for discovery.
• Think about whether a judgment that is not a precedent, and limited further appeal rights, suit your goals.
• Confirm your appeal deadline, since it runs separately from your choice of procedure.
• Speak with a lawyer or accountant before electing or limiting your appeal.

Frequently asked questions