In the event you’re going to take your
, as a primary step, you had higher make certain you find yourself in the appropriate courtroom or the choose can have no alternative however to dismiss your enchantment with out even providing you with an opportunity to argue the deserves of your case.
For instance, final 12 months I wrote a couple of
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 resolve whether or not the CRA’s choice was affordable.
The latest 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 may change into much more well-liked 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 price 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 price 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 cloth 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 might by no means know because it was not reported. As a substitute, the choose’s brief, three-page choice targeted solely on the jurisdictional concern, 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 would like 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 assets.”
The choose went on to elucidate that typically taxpayers report a sure province or territory of residence on their tax return and the CRA decides that it was, in reality, 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 entails whether or not the taxpayer was a resident of 1 province or territory or one other, then the subsequent step will rely 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 referring to provincial tax except 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 a substitute 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 alleged 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 flawed courtroom. 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 reality, within the flawed courtroom, it could truly be too late for them to enchantment to the right courtroom.
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 hearken to and easily proceed their appeals within the flawed courtroom.
The choose famous that the present case is the third time in two years that he has personally seen this downside, 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 comprise correct info.”
The choose 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 workforce.
Whereas the CRA’s spokesperson was unable to touch upon the precise particulars of this courtroom case given taxpayer confidentiality issues, she confirmed that “our procedures are clear on how you can direct taxpayers to the suitable courtroom. Whereas we endeavour to supply correct info to these availing themselves of recourse providers, we remorse that this was not the case for this taxpayer. We’ve issued communications to our officers to remind them of the significance of guaranteeing clear and correct info.”
Let’s hope that is the final time we see such a difficulty reported within the flawed courtroom.
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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