What Happens at a Tax Court of Canada Hearing? A Plain Guide

If you have filed an appeal with the Tax Court of Canada, the hearing can feel like the big unknown. Most people have never been in a courtroom, and the idea of explaining your tax situation to a judge while a government lawyer asks you questions is stressful.

This article walks through what usually happens, from the paperwork that comes first to the opening, testimony, cross-examination and decision. The details depend on whether your case runs under the informal or general procedure, and a lawyer or accountant can tell you how this applies to your file.

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

How a case reaches the hearing

A hearing is the last step of a longer process. After you serve a notice of objection and the Minister confirms the assessment or reassesses, you may appeal to the Tax Court of Canada. The Court must receive your notice of appeal within 90 days of the date on the notice of confirmation or reassessment.

In the general procedure, an appeal starts by filing an originating document in the Registry. The Crown must file its reply within 60 days after service of the notice of appeal. Allegations of fact in your notice of appeal that the reply does not deny are deemed admitted. Any answer to the reply is filed within thirty days after service of the reply.

In the informal procedure, the Minister also files a reply within sixty days after the notice of appeal is transmitted, and the Court then fixes the hearing date.

Informal procedure and general procedure

Which track you are on shapes what the hearing looks like. The informal procedure is meant for smaller disputes and is less formal.

Documents and discovery before the hearing

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.

Examination for discovery is a question-and-answer session before the hearing. A person examined must answer proper questions relevant to a matter in issue, and must tell the other parties if an earlier answer turns out to be wrong or incomplete. At the hearing, a party may read the adverse party's discovery evidence into its own case. This is why careful, accurate answers matter long before you see a judge.

What the day itself generally looks like

Hearings follow a familiar pattern, though a judge controls the details and the order can vary. Expect the following in broad terms.

• Introductions and any preliminary matters, such as timing or documents to be filed.
• Opening remarks, where each side briefly says what the appeal is about and what it wants the Court to decide.
• Testimony, where witnesses, often including you, give evidence about the facts and identify documents.
• Cross-examination, where the other side asks questions to test that evidence. Answer only what is asked, calmly and truthfully.
• Closing arguments, where each side ties the evidence to the law and explains why it should succeed.
• The judge usually then takes the matter under consideration and decides later.

In an informal procedure case the Court is not bound by legal or technical rules of evidence, and you may speak for yourself or have counsel or an agent appear. A hearing may also be held in camera, meaning closed to the public, if a party applies and the circumstances justify it.

After the hearing and what to do next

In an informal procedure case, judgment must be rendered not later than ninety days after the hearing concludes, except in exceptional circumstances. The Court gives reasons, but written reasons are required only where the Court considers it advisable. An informal procedure judgment is not treated as a precedent for any other case.

Costs are handled differently on each track. In the informal procedure the Court may award costs to the appellant if the judgment reduces the amounts in issue, and the CRA says you will not pay the Minister's costs unless you unduly delay the appeal. In the general procedure the Court can order either party to pay some of the other's legal costs, weighing factors such as the result and written settlement offers.

A filed appeal can still settle. With your written consent the Minister may reassess at any time to dispose of an appeal. If you lose, a Federal Court of Appeal notice of appeal from a Tax Court judgment must generally be filed within 30 days, not counting days in July and August, but an informal procedure judgment can be appealed only on limited grounds such as lack of jurisdiction, breach of procedural fairness or an error of law.

• Keep your assessment, objection and Court documents in one folder.
• Mark which procedure applies to your case.
• List your witnesses and the documents that support each fact.
• Practise answering questions plainly and only what is asked.
• Speak to a lawyer or accountant about your own facts before the hearing.

Frequently asked questions