Category Archives: 165(1.1)

Correct Forum – Tax Court vs Court of Appeal – Sas Ansari

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Correct Forum – Tax Court vs Court of Appeal

Horseman v Canada, 2016  FCA 252

Knowing what court to resort to can be confusing in tax matters.  Depending on the issue, either the Tax Court of Canada, the Federal Court, or a provincial superior court may be the correct forum.  Taxpayers and their counsel sometimes resort to the wrong court, wasting judicial resources as well as their own.

The jurisdictional divide between the Federal Court and the Tax Court of Canada was identified by the Federal Court of Appeal in Canada (Minister of National Revenue) v JP Morgan Asset Management (Canada) Inc., 2013 FCA 250.

The Federal Court, pursuant to section 18.5 of the Federal Courts Act, has NO jurisdiction where an Act of Parliament expressly contemplates a right to appeal to the Tax Court of Canada.  A number of statutes grant rights of appeal to the Tax Court of Canada, depriving the Federal Court of jurisdiction.

The correctness or validity of an assessment, reassessment or additional assessment falls withing the exclusive purview of the Tax Court of Canada. For Income Tax matters, sections 165 to 169 constitute a complete appeal procedure for challenging the correctness of assessments under the Income Tax Act.  The same applies to questions in relation to assessments under the Excise Tax Act – Johnson v Canada, 2015 FCA 51.

A court, when faced with a question of jurisdiction, must characterize the substance of an appellant’s claim.  The court has to “satisfy itself that the claim is not a disguised attempt to do indirectly what can be done directly in another, more appropriate forum: Canada v Roitman, 2006 FCA 266, at para 16″ (parar 5).  Where the claim is in substance an attack on the validity of a tax assessment, where its essential character, determined holistically and practically by looking beyond the words to the remedy sought, the matter is for the TCC to determine. (para 5).

In this case, the claim is dressed in garbs of a damage claim. However, the only damages flow from the correctness of the assessment as the claimant was seeking repayment of monies used to satisfy that assessment (para 6).

The Tax Court of Canada has jurisdiction to determine constitutional questions in relation to a tax appeal (Section 19.2 of the Tax Court of Canada ActGuindon v Canada, 2015 SCC 41Grenon v Canada, 2016 FCA 4), as well as matters under section 87 of the Indian Act (Bastien (Succession de) v R, 2011 SCC 38Pictou v R, 2003 FCA 9).  The FCA stated that:

many of the cases cited by the appellant confirm that questions related to the validity of tax assessments must be adjudicated by the Tax Court, irrespective of how the claim is framed. Indeed, the Supreme Court has noted the importance of maintaining the integrity and efficacy of the system of tax assessments and appeals, as well as Parliament’s intent to set up a complex structure to deal with a multitude of tax-related claims whose structure relies on an independent and specialized court: see Canada v Addison & Leyen Ltd., 2007 SCC 33, at para 11).

Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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Lytle v The Queen, 2012 TCC 368

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Res Judicata In relation to Right to Object to a Reassessment

Lytle v The Queen, 2012 TCC 368

The taxpayer brought a motion to extend the time to file a Notice of Appeal.  The Crown argued that the issues were res judicata due to a previous appeal of that tax year.

The Court held that in this case it was satisfied that the issues being raise related to matters before the Court previously, and there was no evidence or special circumstances to warrant overriding the principle of res judicata.


The tax years (2001 and 2002) to which the motion related were previously successfully appealed, and the taxpayer wanted to extend the time to file Notices of Appeal against the reassessments issues in 2010.  The MNR reassessed to include unreported income and gross negligence penalties on the basis of a net worth assessment, and the previous appeal resulted in the removal of a large poriton but not all of the amounts under consideration.

The MNR claims to have reassessed on the basis of the judgment and sent manual notices of reassessment, which the taxpayer claims to have never received.  The taxpayer filed many letter communications with CRA attempting to obtain the notices of reassessment.


The Crown relied on res judicata, subsection 165(1.1) and subsection 169(2).

The Court stated that subsection 165(1.1) is meant to prevent taxpayers from using certain assessments or determinations issues for special purposes to object to unrelated matters not previously objected to.  The FCA in Chevron Canada Resources Ltd v The Queen, [1999] 3 CTC 140 (FCA), where the limitation in subsection 165(1.1) were determined to include issues that were reasonably related to the matter related to the reassessment and conclusively determined by a court – “by virtue of the principle of res judicata, a judgment of a court conclusively determined all undecided and related issues subject to litigation, including those that could have been raised at the time”.

The Court here held that the issues being raised by the applicant were related to the matters previously before the court, and thus all matters including undecided and related matters, have been conclusively determined.  There was nothing before the Court to indicate that it wasn’t possible for the applicant to raise these issues in the previous appeal, and no evidence of special circumstances that would warrant overruling the principle of res judicata. 

The Court said that even if the taxpayer were not barred from filing notices, she did so out of time.

– Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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