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Tax Appeals to the Court Program

Appeals Branch
Program Management Directorate

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Overview & Privacy Impact Assessment (PIA) Initiation 

Government institution

Canada Revenue Agency

Government official responsible for the PIA

Tammy Branch
Assistant Commissioner
Appeals Branch

Head of the government institution or Delegate for section 10 of the Privacy Act

Lia Jackson
Acting Director General
Access to information and Privacy Directorate

Name of program or activity of the government institution

Objections and Appeals

Standard or institution specific class of record:

Income Tax and Charities Objections and Appeals to the Courts - Class of Record (CRA APP 545)
Commodity Taxes Objections, Determinations and Appeals to the Courts - Class of Record (CRA APP 555)

Standard or institution specific personal information bank:

Income Tax and Charity Objections, and Appeals to the Courts - Personal Information Bank (CRA PPU 172)
Commodity Tax Objections, Determinations and Appeals to the Courts - Personal Information Bank (CRA PPU 177)

Legal authority for program or activity

Income Tax Act:

s. 220, Administration and enforcement

s. 237.(1), Definitions

ss. 166.2(1), Extension of time by Tax Court

s. 167(1) Extension of time to appeal

Division J, Appeals to the Tax Court of Canada and the Federal Court of Appeal

s.169, Appeal

s. 171(4), Appeal to Federal Court of Appeal

s. 220(3.1), Waiver of penalty or interest

Excise Tax Act:  

ss. 81.25, Appeals to Tribunal

ss. 81.28, Appeals to Court

ss. 81.32, Extension of Time for Objection or Appeal

ss. 81.33, Purchaser Objections and Appeals

s. 275, Minister’s duty

s. 295(5), Disclosure of personal information

s. 302, Appeal to Tax Court

s. 304, Extension of time by Tax Court

Summary of the project, initiative or change

Overview of the Program or Activity

The Litigation Program Division in the Program Management Directorate of the Appeals Branch strategically manages the low and medium complexity appeals to the Tax Court of Canada, and judicial reviews filed with the Supreme Court of Canada. The management of appeal information within the Litigation Program Division is limited to appeals related to income tax, wherein the Income Tax Act applies, and Goods and Services Tax/Harmonized Sales Tax wherein the Excise Tax Act applies. 

When a taxpayer (individual or business) disagrees with an assessment made by a CRA, such as the amount of personal tax owed for a given tax year, they must first file an objection directly with the CRA. That objection is processed by the Objections Program Division in the Program Management Directorate of the Appeals Branch. The processing of objections is out of scope for this privacy impact assessment. After the objection process is complete, the taxpayer receives one of the following notices from the CRA:

After receiving one of these notices, if the individual remains unsatisfied with the CRA decision, they can file an appeal with the Tax Court of Canada in accordance with instructions and solutions available on the court’s website: Tax Court of Canada - File a Document (tcc-cci.gc.ca), including an online filing solution. For provincial matters the taxpayer can file an appeal with the provincial courts.

In filing a Notice of Appeal with the Tax Court of Canada, the individual can choose the informal procedure or the general procedure which are described below. Generally, the informal procedure does not require the taxpayer to pay a filing fee or hire a lawyer; however, the maximum adjustment the CRA can action in the informal procedure is $25,000; that monetary limit for informal procedures was established by the Tax Court of Canada. Conversely, appeals filed under the general procedure, which have filing fees and require a lawyer, do not have a maximum adjustment. 

When filing a Notice of Appeal, the taxpayer provides personal information about themselves, a description (narrative text) of the reasons for their appeal, and may attach supporting documents. The Tax Court of Canada website asks individuals to avoid including sensitive personal information (e.g., social insurance number, date of birth, medical information, names of minor children, bank account numbers, other) because filings are normally accessible to the public. This is relevant to the Litigation Program Division because, as reflected below, the Notice of Appeal and supporting documents are disclosed by the court to the CRA.

Informal Procedure

Once the Tax Court of Canada receives a Notice of Appeal filing, the Court serves the taxpayer and the CRA with a letter (paper form in the mail) stating the appeal has been filed and provided to the CRA. A court case number, which is uniquely assigned to the taxpayer’s appeal, is included in the letter along with the taxpayer’s name and address, as well as the name of their representative (attorney, accountant, agent), if applicable. The Tax Court of Canada also discloses to the CRA the narrative text describing the reasons for the appeal – as provided by the appellant in their Notice of Appeal. The description (narrative text) may include personal information of the taxpayer, financial information, medical information, and other information the appellant deemed necessary to justify their appeal. The narrative text may also include the personal information of other persons (spouse, children, others). Moreover, the court provides the CRA with any supporting documents submitted by the appellant, which may include financial records, receipts, medical records, bank statements, credit card statements, etc. 

The registry of the Litigation Program Division receives the Notice of Appeal and supporting documents, scans and uploads them to a shared network drive (stored/categorized by using the Tax Court Case Number), as well as creates a case in the dedicated system for objections and appeal information. Because the Notice of Appeal does not require the submission of a social insurance number, the registry is tasked with locating the correct taxpayer and their social insurance number, business number, or other identifying number in CRA systems. Typically, because an objection is a prerequisite to an appeal, the registry staff search the dedicated system for objections and appeals to find the previously filed objection. From there, the registry links the objection and appeal within the system. Subsequently, the registry transfers the case to one of the CRA’s three litigation offices (Montreal, Toronto, and Vancouver) where a Litigation Officer is assigned. The assigned Litigation Officer has 60 days from the time the CRA is served to respond to the appellant. 

Regional office clerks retrieve information from relevant CRA systems and store the relevant documents in a dedicated shared drive for review by the Litigation Officer. Next, the Litigation Officer analyzes the appeal documentation and the retrieved information to determine if the appeal is valid; e.g., taxpayer may not have filed the right type of appeal. If the appeal is not valid, the CRA quashes the appeal with the Tax Court of Canada and the taxpayer is notified of the reasons. Typically, the taxpayer has made a minor error which they subsequently correct and refile their appeal. 

If the appeal is deemed valid, the Litigation Officer assesses the information in the file and determines if they will attempt to settle the appeal with the appellant directly. Litigation Officers may only try to settle a case if it is an informal appeal based on the Income Tax Act. They are not tasked with settling General Procedure cases in income tax or any Goods and Services appeals (Informal and General). If the Litigation Officer cannot reach a settlement, all documents are provided to the Department of Justice. The Department of Justice may try to settle before the hearing.

Settlement discussions between the Litigation Officer and the taxpayer usually occur in writing, but may be supported by telephone calls. Records of communication with the taxpayer are performed by the Litigation Officer in a dedicated system for objections and appeals. Settlement discussions culminate in the creation of final settlement documents which the Litigation Officer files with the Tax Court of Canada. 

When the Department of Justice performs the settlement negotiations, draft settlement documents are sent to the Litigation Officer for review and concurrence with the proposed settlement. 

If there is a consent to judgement or a settlement by minutes of settlement, the documents are compiled, signed, and presented to the court for a judgement. The Tax Court of Canada issues a judgement that is sent to the appellant, CRA, and the Department of Justice. The Litigation Officer requests the necessary changes in the dedicated objections and appeal system and will send the reassessment to the appropriate area within CRA who will record the outcome in applicable systems.

If a settlement cannot be reached by the Litigation Officer within the 60 days, a reply to the notice of appeal is filed electronically on the Tax Court of Canada website, and served on the appellant or representative by registered mail. The Litigation Officer will update the dedicated objections and appeals system. The reply and proof of mail are sent to the Department of Justice. If a settlement is still being negotiated, the CRA may ask for the taxpayer’s and the Tax Court of Canada consent for an extension to the deadline to file a reply.

Hearings at the Tax Court of Canada occur with or without the Litigation Officer being present. Typically, for the informal process the Department of Justice handles the hearing without the assistance of a CRA official being present. 

The judgement is served on the appellant, the CRA and the Department of Justice. The Litigation Officer tasks a business line(s) with making system changes, if required. To ensure the changes are aligned with the judgement, all impacted CRA programs are provided with a copy of the judgment. When the changes are made the CRA all impacted CRA programs sends the Notice of Reassessment to the taxpayer. The Litigation Officer ensures the dedicated objections and appeal system associates the case file with the date of the Notice of Reassessment. 

To support the Department of Justice’s activities of settlement negotiations and representation of the CRA before the Court, a document transfer portal has been created allowing for the secure exchange of records to and from the CRA and Department of Justice. 

General Procedure: 

From a personal information collection, use, disclosure and retention perspective, there is little difference between the informal procedure and the general procedure. The biggest differences are: 

The need for an expert witness or material witness is determined by the Department of Justice while the Litigation Program Division supports the litigation process by overseeing the expert witness and material witness contract management processes. A material witness is someone who can testify about matters having some logical connection with the consequential facts especially if few others, if any, know about them. They are often a former CRA employee who worked on the original file. An expert witness is someone who, by reason of education or specialized experience, possesses excellent knowledge concerning a particular subject. In both cases, the Department of Justice provides the Litigation Program Division with the name of the witness and relevant information.

Other than the above differences, the general procedure also includes settlement efforts (handled by the Department of Justice and reviewed by the Litigation Officer), hearings (when necessary), and a judgement by the Court which prompts system changes/entries by CRA officials and notification to the taxpayer. 

The judgement or Order is sent to the appellant and to the CRA by the Tax Court of Canada.

If the taxpayer is not satisfied with the Tax Court of Canada’s decision, they may file an appeal with the Federal Court of Appeal. If they are unsatisfied with the decision of the Federal Court of Appeal, they may file an appeal to the Supreme Court of Canada. The Litigation Program Division’s tasks in those further appeals are similar in regard to personal information collection, use, and disclosure, which requires continued collaboration with the Department of Justice in settlement negotiations and the hearing and decision processes.

Rectification and Rescission Cases

Rectification is designed to correct errors in the recording of terms in written legal instruments whereas Rescission is deigned to void the contract. The Litigation Officers instruct and support the Department of Justice and act as the contact between the Department of Justice and the CRA. The process for the Litigation Program Division is similar with the Department of Justice continuing to represent the CRA before the court. In these cases, the CRA and provincial authorities generally agree on settlement and positions taken in the court process.

A rectification/rescission order is binding on the parties to the litigation and also on third parties, such as the Minister of National Revenue.

Revenu Québec

The province of Quebec administers the Goods and Services Tax (within Quebec) on behalf of the CRA. As such, they also process all objections related to the Goods and Services Tax for taxpayers located in the province of Quebec. Appeals are filed at the Tax Court of Canada and are served to Revenu Québec as well as the CRA. The CRA then transfers the appeal to Revenu Québec. The Revenu Québec may request documents and information pertaining to the taxpayer. The Litigation Officer is needed to bind the result of the appeal. In binding the result of the appeal to the Tax Court of Canada appeal allows to apply the decision made by Revenu Québec to the GST appeal. This avoids any doubling of the appeal process.   

What’s New

There are no new activities within the Litigation Program Division. The most recent change impacting personal information was the deployment of a portal for the secure (Protected B) sharing of documents with the Department of Justice who represent the CRA before the federal courts on appeal matters. 

Scope of the Privacy Impact Assessment

The scope of this privacy impact assessment is limited to CRA’s process in relation to taxpayer appeals to the Tax Court of Canada, Federal Court and provincial courts. Within those activities are the informal procedure and general procedure of taxpayer appeals; both procedures are in scope for this privacy impact assessment. 

Specifically out of scope for this privacy impact assessment is the following which do not fall under the mandate of the Litigation Program Division: 

Risk identification and categorization

A) Type of program or activity

Administration of Programs / Activity and Services 

Level of risk to privacy: 2

Details:

The Litigation Program is an administrative appeals program allowing taxpayers an avenue of recourse to have their disputes with the CRA heard before a Court. The court process is administrative in nature, but limited to addressing and resolving prior CRA decisions related to a taxpayer’s file with the CRA.

B) Type of personal information involved and context

Sensitive personal information, including detailed profiles, allegations or suspicions, bodily samples and/or the context surrounding the personal information is particularly sensitive. 

Level of risk to privacy: 4

Details:

When taxpayers file their Notices of Appeals with the Tax Court of Canada, Federal Court of Appeal, Superior Court of Canada, CRA is served with the Notice of Appeal. Personal information as well as tax information must be provided to the Department of Justice who act on the Minister’s behalf for cases before the courts. The personal information collected provides support for the Minister’s decision. The types of information collected to support the program is provided by the taxpayer in their Notice of Appeal which includes name and address, a narrative description of their appeal, and supporting documents which may include sensitive financial information, medical information, birth and death information, details of a will, or other information that has a similar level of sensitivity. The information may be about themselves but may include the personal information of others – e.g., spouse, other family members, business partners and business.   

C) Program or activity partners and private sector involvement

With provincial and/or territorial and/or indigenous and/or municipal government(s)

Level of risk to privacy: 3

Details:

The Litigation Program Division works in collaboration with the Department of Justice who represents the CRA before the Courts on tax appeals, judicial review, rectifications and rescissions. Goods and Services Tax appeals filed by taxpayers located in the province of Quebec are sent directly to Revenu Québec as they administer the Goods and Services Tax. The Litigation Program Division will only provide to Revenu Québec information they request - provided it is relevant to the appeal. Litigation Program Division also provides to Revenu Québec a list of appeals received for Revenu Québec to confirm appeal that have been served.

D) Duration of the program or activity

Long-Term Program

Level of risk to privacy: 3

Details:

There is no “sunset” status as the right to appeal to the court is part of the Taxpayer’s Bill of Rights (paragraph 4).

E) Program population

The program affects certain individuals for external administrative purposes.

Level of risk to privacy: 3

Details:

The Litigation Process is available to taxpayers who wish to exercise their right to appeal to the Tax Court of Canada, the Federal Court or the Supreme Court against the Minister’s assessment, reassessment or determinations.

F) Technology & privacy

  1. Does the new or modified program or activity involve the implementation of a new electronic system, software or application program including collaborative software (or groupware) that is implemented to support the program or activity in terms of the creation, collection or handling of personal information?

    Risk to privacy: Yes

  2. Does the new or modified program or activity require any modifications to IT legacy systems and/or services?

    Risk to privacy: No

  3. Does the new or modified program or activity involve the implementation of one or more of the following technologies?

Enhanced identification methods - this includes biometric technology (i.e. facial recognition, gait analysis, iris scan, fingerprint analysis, voice print, radio frequency identification (RFID), etc.) as well as easy pass technology, new identification cards including magnetic stripe cards, "smart cards" (i.e. identification cards that are embedded with either an antenna or a contact pad that is connected to a microprocessor and a memory chip or only a memory chip with non-programmable logic).

Risk to privacy: No

Use of Surveillance - this includes surveillance technologies such as audio/video recording devices, thermal imaging, recognition devices, RFID, surreptitious surveillance/interception, computer aided monitoring including audit trails, satellite surveillance etc.

Risk to privacy: No

Use of automated personal information analysis, personal information matching and knowledge discovery techniques - for the purposes of the Directive on PIA, government institutions are to identify those activities that involve the use of automated technology to analyze, create, compare, identify or extract personal information elements. Such activities would include personal information matching, record linkage, personal information mining, personal information comparison, knowledge discovery, information filtering or analysis. Such activities involve some form of artificial intelligence and/or machine learning to uncover knowledge (intelligence), trends/patterns or to predict behavior.

Risk to privacy: No

G) Personal information transmission

The personal information is transmitted using wireless technologies.  

Level of risk to privacy: 4

Details:

Most information involves the use of closed systems with the CRA. However, the program also uses secure portal for the collection and disclosure of information with the Department of Justice. 

As with most federal institutions, most Appeals staff are remotely working part-time from home which requires the use of wireless technologies to connect to local home-based networks and then to the CRA secure Virtual Private Network (VPN). Regardless of work locations, staff are periodically reminded to adhere to the Agency’s strict protocol on accessing taxpayers’ accounts on a need-to-know basis. The security need-to-know principle is based on the premise that employees view only the information they need to complete their assigned duties. At no time should employees access information without authorization or a legitimate business reason. 

H) Potential risk that in the event of a privacy breach, there will be an impact on the individual or employee

Details:

The sensitivity of personal information collected and used in the litigation process is considered high (Protected B). Unauthorized use or disclosure of this information could result financial harm, reputational harm/embarrassment, and, in some cases, could be used to support identity theft.

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