INCOME TAX ASSESSMENTS OBJECTIONS AND APPEALS

1
INCOME TAX ASSESSMENTS OBJECTIONS AND APPEALS

• Robert B. Hayhoe
• (416.595.8174)
• CGA Ontario
• Public Practitioners Convention
• Saturday, September 23, 2000

2
REPRESENTATION

• Audit
• Objection
• Tax Court
• Hiring Lawyers

3
TAX TREAMENT OF REPRESENTATION EXPENSES

• ITA s.60(o) makes objection and appeal expenses
  deductible
• ITA s.56(1)(l) includes legal costs awarded by
  court in income

4
WHAT IS APPEALABLE?

• Assessments and determinations
• Nil assessments not appealable
• Loss Determinations
• Interest and Penalties

5
THE NOTICE OF OBJECTION- Time Limit

• For individuals and testamentary trusts, the
  later of
• 90 days from mailing of notice of assessment
• one year from balance due date
• For all other taxpayers
• 90 days from mailing of notice of assessment
• Discretionary permission to late-file

6
THE NOTICE OF OBJECTION- Form Of Notice And
Service

• T400A form suggested
• Registered mail not required but suggested
• Must be signed by individual taxpayer or
  authorized representative

7
THE NOTICE OF OBJECTION- Statement Of Facts And
Reasons

• Substance of the Objection
• Should set out enough facts and analysis to
  support the allowance of the objection
• note potential application of 163.2 penalties

8
THE NOTICE OF OBJECTION- The Ministers Response

• Chief of Appeals
• appeals officer assigned
• Letters and Meetings
• limit client contact
• Tight deadlines on taxpayers
• No deadlines on CCRA
• 90 day appeal to Tax Court of Canada

9
THE NOTICE OF OBJECTION- Late Filed Notices of
Objection

• Discretionary application to CCRA
• Conditions for late filing
• within the time limit, the taxpayer either
  intended to appeal or could not act
• just and equitable
• application as soon as possible (no later than
  one year after ordinary deadline)
• Refusal can be appealed to TCC

10
TCC PROCEDURES

• Informal Procedure
• General Procedure

11
GENERAL PROCEDURE

• Larger cases
• Only lawyers may represent taxpayers
• Right of appeal to FCA
• Higher costs awards

12
TCC INFORMAL PROCEDURE- When it Applies

• Appeals may be brought as Informal if any of the
  following applies
• federal tax and penalties are less than 12,000
• loss of less than 24,000
• interest only
• tax over 12,000 or loss over 24,000 is waived
• Crown may apply to move a case up to general
  procedure

13
TCC INFORMAL PROCEDURE- Representation

• Unrepresented individuals
• Individuals represented by agents
• Individuals represented by lawyers
• Corporations represented by lawyers

14
TCC ONUS OF PROOF

• Taxpayer must prove that assessment is wrong
• Complicated rules on how to meet onus
• For Informal Procedure appeals
• just prove the case!
• Minister bears the onus to justify penalties or
  late assessment

15
POWERS OF THE TCC

• Confirm assessment
• Vacate assessment
• Vary assessment
• No power to increase assessment

16
INSTITUTING A TCC APPEAL

• File Notice of Appeal with TCC
• must be received within 90 days of confirmation
• set out facts and reasons for appeal

17
LATE FILED TCC APPEALS

• May be permitted by application to TCC
• Conditions for late filing
• within the time limit, the taxpayer either
  intended to appeal or could not act
• just and equitable
• application as soon as possible (no later than
  one year after ordinary deadline)
• reasonable grounds for the appeal

18
THE CROWNS TCC REPLY

• Sets out the government position in the appeal
• Basis for settlement discussions

19
TCC EXPERT WITNESSES

• An individual with special expertise who can
  express an opinion to help the court
• complicated rules on how to deal with experts
• hire a lawyer

20
SETTLING TCC APPEALS

• Majority of TCC appeals settle
• Settlement must be based on facts and law
• Crown is not permitted to settle on a saw-off
  basis
• usually possible to agree on facts to support
  settlement

21
TCC DISCOVERY

• There is no examination for discovery in the
  Informal Procedure
• Request all CCRA documents pursuant to Appeals
  Renewal Initiative
• audit notes and report
• appeals notes and report

22
TCC INFORMAL PROCEDURE HEARING

• Set by Court or at request of parties
• Formerly a backlog - now very fast

23
TCC PRESENTATION ORDER

• Ordinary case
• opening statements
• taxpayers evidence
• Crown evidence
• taxpayer argument
• Crown argument
• taxpayer reply
• May be reversed if only issue is penalties

24
TCC INFORMAL PROCEDURE- Judgment and Appeal

• Usually judgment within 90 days
• No appeal right
• Right to Federal Court of Appeal judicial review
• only designed to correct serious and obvious
  errors

25
TCC INFORMAL PROCEDURE COSTS

• CCRA success results in no costs award
• Taxpayer success may result in disbursements and
  legal fees
• Court will not award fees charged by agent

26
INCOME TAX ASSESSMENTS OBJECTIONS AND APPEALS

• Robert B. Hayhoe
• (416.595.8174)
• CGA Ontario
• Public Practitioners Convention
• Saturday, September 23, 2000