Our tax system is complex, with many potential procedural pitfalls that taxpayers need to navigate. One such issue is the jurisdictional boundaries between the Tax Court and the Federal Court for tax disputes. Recent Supreme Court’s companion decisions in Dow Chemical Canada ULC v. Canada (“Dow Chemical”), and Iris Technologies Inc. v. Canada (“Iris”) provide clarifications on this issue. However, these “clarifications” may result in a less streamlined and more costly process and thus may not be good news for taxpayers.
Tax & Trade Blog
Subscribe to this list via RSS
Blog posts tagged in Tax Assessment
Voluntary disclosures (“VDs”) are permitted for Canadian tax purposes under the Canada Revenue Agency’s (the “CRA”) Voluntary Disclosures Program (the “VDP Program”), and their importance is highlighted by a recent case where the CRA reached back into history to assess a taxpayer prior tax exposure.
CRA Power to Reassess Beyond Limitation Periods
Typically, the CRA can reassess a taxpayer within four years for GST/HST matters and three years for income taxes: see paragraph 298(1)(a) of the Excise Tax Act (the “ETA”); see subsection 152(3.1) of the Income Tax Act (the “ITA”).
A recent Federal Court of Appeal (“FCA“) decision in Pillon v. Canada (2024 FCA 24) highlights the difficulties that Tax Debtors will face if trying to avoid GST and income tax debts. Both the Excise Tax Act (“ETA”) and the Income Tax Act (“ITA”) have extremely powerful collections tools allowing the Canada Revenue Agency (“CRA”) to assess certain non-arm’s length persons (think spouses, children, relatives, close friends and associates) that have been transferred a Tax Debtor’s property for less than fair market value (“FMV”). These rules can even apply to corporate shareholders receiving dividends from delinquent corporations.
Tax assessments are difficult to appeal in Canada because the Canada Revenue Agency (“CRA”) is allowed to make factual ‘assumptions’ which the taxpayer must disprove – or lose its case!
Two recent Federal Court of Appeal (FCA) decisions have seemingly expanded these powers to assumptions of “mixed fact and law” – although the second FCA seemingly walks back the first.