For those who’re going to take your
, as a primary step, you had higher be certain you find yourself in the appropriate court docket or the decide may have no selection however to dismiss your enchantment with out even supplying you with an opportunity to argue the deserves of your case.
For instance, final yr I wrote a few
who appealed his TFSA overcontribution tax to the
, which can appear logical sufficient. However the Tax Court docket dismissed the case because it has no jurisdiction to cancel the tax. As a substitute,
wanted to request aid from the
. If the CRA rejects the request for aid, the choice of the CRA officer can then be appealed to the Federal Court docket, which can determine whether or not the CRA’s resolution was cheap.
The newest instance of a jurisdictional fake pas occurred earlier this month when one other self-represented taxpayer tried to enchantment a case involving provincial residency to the Tax Court docket. Provincial residency instances might change into much more standard sooner or later because the hole between
grows.
Within the present case, the taxpayer reported her tax residence as Nunavut which, for 2025, has a prime federal provincial marginal tax fee of 44.50 per cent. The CRA, nonetheless, believed that the taxpayer’s true provincial residence was in Ontario, which presently has a prime marginal tax fee of 53.53 per cent. Whereas it’s unlikely that many taxpayers will probably be relocating to Nunavut solely for tax functions, the place you reside in Canada can have a fabric influence on the quantity of tax you pay, particularly provided that eight out of 13 provinces and territories have marginal tax charges above 50 per cent in 2025.
So far as what led the CRA to conclude that the taxpayer was an Ontario resident and never a resident of Nunavut we could by no means know because it was not reported. As a substitute, the decide’s quick, three-page resolution centered solely on the jurisdictional challenge, and contained some harsh phrases directed towards the CRA. As he wrote in his opening remark, “I’m publishing these causes as a result of I want to attract consideration to conduct of the Canada Income Company that’s doubtlessly depriving taxpayers of their authorized rights of enchantment and losing this Court docket’s sources.”
The decide went on to clarify that generally taxpayers report a sure province or territory of residence on their tax return and the CRA decides that it was, in truth, a unique province or territory. Consequently, the CRA reassesses the taxpayer, and the taxpayer then information a discover of objection with the CRA to dispute their reassessment. If, nonetheless, the CRA sticks to its assessing place, it then points a discover of affirmation, which is the place the issue arises.
Generally, after receiving a discover of affirmation, a taxpayer can then select to additional dispute the CRA’s affirmation by submitting a discover of enchantment with the Tax Court docket of Canada. The discover of affirmation tells taxpayers how to take action.
However, if the dispute includes whether or not the taxpayer was a resident of 1 province or territory or one other, then the subsequent step will depend upon the legal guidelines of the province or territory the place the CRA believes the taxpayer lives. The Tax Court docket has no jurisdiction to listen to a case regarding provincial tax until the province in query has conferred jurisdiction on the Tax Court docket to take action.
Within the current case, because the CRA thinks that the taxpayer resided in Ontario as an alternative of Nunavut, then the taxpayer is unable to dispute the CRA’s place interesting to the Tax Court docket. As a substitute, they have to enchantment to the
Ontario Superior Court docket of Justice
.
However how is the common self-represented taxpayer imagined to know this? In any case, the notices of affirmation that the CRA points to taxpayers in these circumstances inform the taxpayer to enchantment to the Tax Court docket. Consequently, taxpayers who observe the CRA’s directions find yourself within the unsuitable court docket. In some instances, by the point the Tax Court docket will get round to listening to the taxpayer’s case, and tells them that they’re, in truth, within the unsuitable court docket, it might really be too late for them to enchantment to the proper court docket.
Whereas the attorneys on the Division of Justice, who act for the CRA in Tax Court docket, do draw this to taxpayers’ consideration, usually self-represented taxpayers are uncertain who to take heed to and easily proceed their appeals within the unsuitable court docket.
The decide famous that the present case is the third time in two years that he has personally seen this drawback, noting that “it’s unfair to mislead taxpayers on this method and doubtlessly deprive them of their rights to enchantment. Notices of affirmation ought to include correct data.”
The decide did acknowledge that the taxpayer’s discover of affirmation was issued in July 2023, and that it’s potential that the CRA has already modified its practices. To seek out out, I reached out to the CRA’s media relations crew.
Whereas the CRA’s spokesperson was unable to touch upon the particular particulars of this court docket case given taxpayer confidentiality considerations, she confirmed that “our procedures are clear on the way to direct taxpayers to the suitable court docket. Whereas we endeavour to offer correct data to these availing themselves of recourse providers, we remorse that this was not the case for this taxpayer. Now we have issued communications to our officers to remind them of the significance of guaranteeing clear and correct data.”
Let’s hope that is the final time we see such a problem reported within the unsuitable court docket.
Jamie Golombek,
FCPA, FCA, CFP, CLU, TEP, is the managing director, Tax & Property Planning with CIBC Non-public Wealth in Toronto.
Jamie.Golombek@cibc.com
.
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