Income Tax Audit Manual

Compliance Programs Branch (CPB)


This chapter was last updated September 2021.


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Chapter 19.0 Objections and appeals

Table of Contents

19.1.0 Introduction

There are two aspects to the appeal process if a taxpayer cannot resolve issues prior to assessment/reassessment. There is the objection process and the appeal process.

Generally, the onus is on the taxpayer to prove that the assessment/reassessment is incorrect. However, the onus for proof of penalties assessed under sections 163 or 163.2 of the Income Tax Act (ITA) is on the CRA.

19.2.0 Objections

If the taxpayer disagrees with an assessment or reassessment, the taxpayer may file a notice of objection. They can do so by filing an e-objection by selecting “Register my formal dispute” through My Account/My Business Account/Represent a Client. They can also file a Notice of Objection addressed to the Chief of Appeals and send it to one of the two Appeals Intake Centres.

The objection must state in writing the reasons for the objection and include all relevant facts.

19.2.1 Time period to file an objection

Objections must be filed within:

Extension of time
An extension of the time to file an objection may be granted either by the minister or by the Tax Court.

Application for extension of time to the minister
If an objection was not filed within the required time, a taxpayer may apply to the minister to extend the time for serving a notice of objection if all of these conditions are met:

Application for an extension of time to the Tax Court of Canada
A taxpayer that has made an application for an extension of time to the minister may apply to the Tax Court of Canada (TCC) to have the application granted after either:

Under these provisions, no application may be made after 90 days after the day on which notification of the decision was mailed to the taxpayer in the case of an income tax assessment.

19.2.3 Review process

An Appeals officer reviews the issues as stated by the taxpayer on an impartial basis, discusses the objection with the taxpayer and recommends a course of action. After considering the reasons for the objection and all the relevant facts, the chief of Appeals or a delegated official makes the final decision concerning the assessment. The taxpayer is notified of the decision under subsection 165(3).

The ITA does not include any provision that allows for the withdrawal of an objection. The minister must confirm the assessment.

If additional information is received during the review process, the Appeals Division may make a referral back to the Audit Division as per Communiqué AD-15-03, Changes resulting from the Revised Protocol between the Appeals Branch (Appeals) and the Compliance Programs Branch (Audit) of the Canada Revenue Agency.

For more information, go to 10.11.18 and RC4067, Protocol – Between the Compliance Programs Branch and the Appeals Branch of the Canada Revenue Agency.

19.2.4 Restrictions

Taxpayers are subject to certain restrictions of their objection rights:

19.2.5 Further recourse

Appeals officers will advise taxpayers of their right to appeal to the TCC, which is the first level of the court process. This advice is given only when the taxpayer does not agree with the disposition of the issues at the objection stage.

19.3.0 Appeals

19.3.1 Introduction

Taxpayers that disagree with the decision of the minister with respect to an objection may appeal to the TCC. This is the first level in the appeal process. At the higher levels of the court system (Federal Court of Appeal or the Supreme Court of Canada) the appeal process is a formal process. In general, taxpayers cannot skip levels of the Court in the appeal process.

19.3.2 Tax Court of Canada

The TCC is independent of the CRA. It has the exclusive jurisdiction to hear and determine references and appeals under the ITA, Excise Tax Act, and other designated acts.

The ITA allows the taxpayer to bypass the Appeals Division and appeal directly to the TCC only if Appeals has not dealt with the objection within 90 days from the time the objection was filed and the minister has not issued a decision.

The onus is on the appellant to show that the assessment was incorrect. However, the burden of proof is on the CRA for assessment of penalties such as gross negligence under subsection 163(2).

For more information, go to Tax Court of Canada.

Time limitation to appeal

A taxpayer may appeal to the TCC by either the informal or general appeal procedure within:

Extension of time limitation to appeal

Where an appeal has not been instituted by a taxpayer within the time limit for doing so, the taxpayer may apply to the TCC for an order extending the time within which to appeal, but no order shall be made unless:

Informal procedure

Section 18 of the Tax Court of Canada Act and the Tax Court of Canada Rules (Informal Procedure) includes the rules for the informal procedure. A filing fee applies.

The appeal must be submitted in writing and include the relevant facts and reasons for the appeal. If the taxpayer does not elect the informal appeal procedure the general procedures apply. The taxpayer must clearly indicate on the notice of appeal that the informal procedure has been chosen.

Under subsection 171(1) of the ITA, TCC appeals can be disposed of by any of the following means:

The TCC may order the unsuccessful party to compensate the other party for legal costs incurred under this procedure.

Income tax

For ITA appeals, a taxpayer can elect to follow the informal appeal procedures of the TCC, as long as the issues meet these criteria:

Advantages of the informal appeal process

Some of the advantages of the informal appeal process to the TCC include:

General procedure

Taxpayers will follow the general court procedure by default unless the taxpayer qualifies and chooses the informal procedure.

The Tax Court of Canada Act and the Tax Court of Canada Rules (General Procedure) include these criteria and other rules for the general procedure:

The TCC may order the unsuccessful party to compensate the other party for legal costs incurred under this procedure.

19.3.3 Federal Court of Appeal

The second level of appeal for a taxpayer in the legal system is to the Federal Court of Appeal (FCA).

Either the taxpayer or the CRA can appeal a decision from the TCC to the FCA. Appeals to general procedure judgements must be filed within 30 days from the date of the TCC judgement, but the months of July and August are not included in the 30-day calculation.

Subsections 27(2) and 28(2) of the Federal Court Act govern time limits for appeals or reviews from the Tax Court judgement. Extensions of time to appeal under the Federal Court Rules may be granted by the FCA or fixed by an order.

Regardless of whether the TCC decision was reached using the informal or general procedure, the FCA reviews the issues to determine if the lower court’s decision was correct.

For more information, go to Federal Court.

19.3.4 Federal Court Judicial Review

A taxpayer can apply for a judicial review of a Taxpayer Relief (discretionary decision by the minister or authorized designate) to the Federal Court. In this case, the Court may refer the decision back to the minister for further consideration.

19.3.5 Supreme Court of Canada

The highest court in the appeal process is the Supreme Court of Canada (SCC). The SCC hears cases involving individuals or governments. Its jurisdiction includes Quebec civil law as well as the common law of the other provinces and territories.

An appeal can be made to the SCC only if the Court authorizes the appeal by granting permission or leave to hear the case under paragraph 58(1)(a) and subsection 58(2) of the Supreme Court of Canada Act.

Applications for leave to appeal must be filed within 60 days after the judgement date from the FCA. The month of July is not counted in calculating this deadline.

An extension of time to appeal may be granted where a motion is brought before the Court explaining the reasons for the delay. The motion for an extension of time will be considered together with the leave application.

The SCC normally addresses questions of legal interpretation but in certain situations, questions of fact may also be considered.

For more information, go to Supreme Court of Canada.

19.3.6 Other references and related topics

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