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TAX LITIGATION 201: CHOICE OF VENUE

NOT ALL CRA DISCRETIONARY DECISIONS GO TO FEDERAL COURT!

Since the Supreme Court of Canada’s 2024 decisions in Iris Technologies and Dow Chemical, many taxpayers and tax practitioners have become well aware that the Tax Court of Canada is not a ”one-stop shop” for tax disputes. 

The rule of thumb for "jurisdiction" is that most tax cases go to the Tax Court of Canada, but that CRA discretionary decisions must be challenged in the Federal Court.

As we see in the Ingredion case dealt with below, that may not ALWAYS be the case – and it introduced a third possible jurisdiction in some cases:  Provincial Superior Courts!

Ingredion Canada

In Ingredion (2025 FC 1842), the taxpayer filed Notices of Objection for the 2014 and 2015 taxation years while appeals of the 2012 and 2013 Notices of Assessment were pending before the Tax Court.  At the taxpayer’s request, the CRA agreed to hold the 2014–2015 Objections in abeyance.  However, the CRA later dismissed those Objections and confirmed the 2014 and 2015 Assessments.  The taxpayer sought judicial review in the Federal Court, challenging the CRA’s decision to proceed with the 2014 and 2015 Assessments despite the abeyance agreement between the parties.

The Federal Court ultimately dismissed the application for judicial review on two main grounds.  First, it found that the dispute concerned an alleged breach of an abeyance agreement, rather than the CRA’s exercise of a statutory discretion.  Because the CRA’s conduct was contractual in nature, the Court concluded that the proper venue for the claim was a breach-of-contract action in a provincial Superior Court – i.e., yet ANOTHER court!

Second, the Court observed that the taxpayer had already appealed the 2014 and 2015 Assessments to the Tax Court, such that a judicial review of the CRA’s earlier decision at the Objections stage no longer served any practical purpose.  The Court noted that the Tax Court had jurisdiction to grant a stay of those appeal proceedings, which could provide the same relief contemplated by the abeyance agreement.

Practical Implications

Ingredion is an example of just how difficult "jurisdictional questions" can be, and how difficult it is to obtain relief in any judicial review application.

The decision also highlights the Federal Court’s continued insistence that judicial review is a remedy of last resort.  Where an appeal is already before the Tax Court and that Tax Court can provide effective relief—such as a stay—taxpayers should expect the Federal Court to decline intervention.

Takeaways

Tax litigation is a difficult and sometimes complicated process.  Making decisions about when to go to court, and which court to go to, is part of that difficult calculus.  Where a taxpayer’s complaint arises from a contractual commitment, the Federal Court may view the matter as falling outside its judicial review jurisdiction, and properly within the purview of Provincial Superior Courts.

Experienced Tax Litigation Counsel can help navigate these complex questions.

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