In Masa Sushi Japanese Restaurant Inc. v. The Queen, 2017 TCC 239 (“Masa Sushi”), the Tax Court of Canada (“TCC”) confirmed that lawyers are the only representatives that are authorized to represent tax appellants in court under General Procedure tax appeals.
In Masa Sushi, individual taxpayers and the corporate entities of which they were shareholders brought a motion before the TCC for an order authorizing a Chartered Professional Accountant (CPA) to represent them in their General Procedure tax appeals.
Rule 30 of the Tax Court of Canada Rules (General Procedure) (the “Rules”) outlines the general procedure TCC representation rules.
Rule 30(1) states that a party to a proceeding who is an individual may act in person or be represented by counsel.
Based on the wording of Rule 30(1) the TCC quickly found that “Rule 30(1) does not give the Court discretion to allow an agent to represent an individual (Moll v. The Queen). An individual may either represent himself or herself or be represented by counsel.”
Rule 30(2) states that a party to a proceeding that is not an individual (e.g. a corporation), shall be represented by counsel except with leave of the Court and on any conditions that it may determine.
The question that the Corporate Appellants’ motions raised was therefore: Who can represent a corporation under Rule 30(2)? The TCC noted that the answer to this question was not as simple as it first appeared but ultimately concluded “that, notwithstanding the wording of Rule 30(2), in the general procedure corporations may only be represented by counsel.”
In its decision the TCC relied upon the General Procedure appearance rules outlined in section 17.1 of the Tax Court of Canada Act:
- A party to a proceeding in respect of which this section applies may appear in person or be represented by counsel, but where the party wishes to be represented by counsel, only a person who is referred to in subsection (2) shall represent the party.
- Every person who may practise as a barrister, advocate, attorney or solicitor in any of the provinces may so practise in the Court and is an officer of the Court.
Under the clear wording of section 17.1, the TCC concluded that an individual tax appellant has two representation choices: (1) the individual taxpayer can represent itself; or (2) the individual taxpayer can be represented by a lawyer.
On the other hand, since a corporation cannot act “in person”, the TCC concluded that pursuant to section 17.1 a corporate tax appellant really only has one option; it must retain a lawyer to represent it in a tax appeal.
While not discussed in the Masa Sushi decision, the fact that only tax lawyers can represent a tax appellant under General Procedure tax appeals is also supported by the difference between section 17.1 and the corresponding representation provisions for Informal Procedure tax appeals outlined in section 18.14, which unlike section 17.1, explicitly allows a tax appellant to be “represented by counsel or an agent”.
That said, Informal Procedure is often not available to tax appellants as it is generally limited to cases where the amount of tax in dispute for each taxation year, excluding interest, does not exceed $25,000 for Income Tax Act appeals or $50,000 for Excise Tax Act appeals. In fact, if the amount of income tax or GST/HST in dispute exceeds $25,000 or $50,000 respectively, then a tax appellant must agree to limit the amount under appeal to that amount, otherwise the General Procedure rules will apply.
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