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 Act; Guindon v Canada, 2015 SCC 41; Grenon v Canada, 2016 FCA 4), as well as matters under section 87 of the Indian Act (Bastien (Succession de) v R, 2011 SCC 38; Pictou 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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