What Happens After You File a Tax Court of Canada Appeal

Once your notice of appeal is filed, the next stage is the Crown's response. Knowing what the reply is, and what you can do with it, helps you plan.

Which steps apply depends on whether your appeal is under the general procedure or the informal procedure. This page walks through both, then looks at costs, settlement and what can happen after judgment.

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

Starting the appeal

A general procedure appeal is started by filing an originating document in the Registry. The Court may extend or shorten any time in the Rules on just terms.

The Crown's reply in the general procedure

The Crown must file its reply within 60 days after service of the notice of appeal. The reply sets out, among other things, the facts admitted and denied and the issues to be decided.

Pay attention to what the reply does not deny. Allegations of fact in your notice of appeal that are not denied in the reply are deemed admitted. The Crown's assumptions are also set out in the reply.

Your answer and the next steps

Any answer to the reply is filed within thirty days after service of the reply. After the pleadings close, each party files and serves a list of documents within thirty days. A party may also apply for an order requiring a full list of relevant documents.

Examinations for discovery are part of the general procedure. A person examined must answer proper questions relevant to a matter in issue, and must notify the other parties if an earlier answer was wrong or incomplete. A party may read the adverse party's discovery evidence into its own case at the hearing.

• Crown reply: 60 days after service of the notice of appeal.
• Your answer to the reply: thirty days after service of the reply.
• Lists of documents: thirty days after the pleadings close.

How the informal procedure differs

The informal procedure applies where you elect it and the amounts in issue are $25,000 or less, or the loss in issue is $50,000 or less. Interest-only appeals can also qualify.

The notice of appeal sets out reasons and facts in general terms. The Minister files a reply within sixty days after the notice of appeal is transmitted, and the Court fixes the hearing date. Judgment must be rendered not later than ninety days after the hearing concludes, except in exceptional circumstances. You may appear in person or be represented by counsel or an agent.

The Court is not bound by legal or technical rules of evidence in this procedure. An informal procedure judgment is not treated as a precedent for any other case.

Costs, settlement and what comes after judgment

In the general procedure the Court can order either party to pay some of the other party's legal costs. Under Rule 147(3) it 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 offer of settlement can increase costs recovery to substantial indemnity costs, which is 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.

In the informal procedure the Court may award costs to the appellant if the judgment reduces the aggregate of amounts in issue, and the CRA says you will not pay the Minister's costs unless you unduly delay the appeal. If the Minister appeals an informal procedure judgment, your reasonable and proper costs of the appeal are paid by the Crown.

A hearing may be held in camera on a party's application if the circumstances justify it. A confidentiality order may be sought by motion under Rule 16.1, and filers must redact SINs, business numbers and full birth dates.

A Tax Court judgment can be appealed to the Federal Court of Appeal. The notice of appeal must be filed within 30 days, not counting days in July and August, after the judgment, and interlocutory judgments have a 10-day limit. Informal procedure judgments can be appealed only on limited grounds, such as lack of jurisdiction, breach of procedural fairness or an error of law.

What to do next

• Note the date the reply is served and calendar the 30-day answer period.
• Read each paragraph of the reply against your notice of appeal for denied and undenied facts.
• Start collecting documents you will need to list.
• Ask a tax lawyer whether to answer the reply and whether settlement offers make sense.

Frequently asked questions