Insights
Nov 28, 2025
Mackisen
Tax Court of Canada: When and How to Take Your Tax Dispute to Court – A Complete Guide by a Montreal CPA Firm Near You
Introduction
Most tax disputes with the Canada Revenue Agency (CRA) are resolved through audits, objections, or appeals within CRA. However, when CRA refuses to reverse an incorrect reassessment or insists on unfair penalties, taxpayers have a final, powerful option: the Tax Court of Canada. Taking a dispute to Tax Court can overturn CRA decisions, reduce tax assessed, eliminate penalties, and protect your rights. But the process is legal, technical, and strict on deadlines. This guide explains when to appeal to Tax Court, how the process works, and what you must prepare to win your case.
Legal and Regulatory Framework
The Tax Court of Canada (TCC) is an independent federal court that hears appeals related to the Income Tax Act, Excise Tax Act (GST/HST), Employment Insurance Act, CPP/QPP, and related statutes. A taxpayer may appeal to Tax Court only after CRA issues a Notice of Confirmation or if 90 days pass without a decision after filing a Notice of Objection. There are two types of appeals:
Informal Procedure – simpler, for disputes under $25,000 per tax year.
General Procedure – complex cases with higher amounts, legal arguments, and expert witnesses.
Tax Court judges are independent of CRA and evaluate cases based on law, evidence, facts, and credibility.
Key Court Decisions
In Hickman Motors v. Canada, the Supreme Court reinforced that Tax Court must independently review CRA reassessments. In Barejo v. Canada, complex financial transactions were reinterpreted, showing the Court’s authority to correct CRA’s tax positions. In Lehigh Cement v. Canada, Tax Court overturned CRA’s aggressive interpretation of deductions. These cases confirm that Tax Court protects taxpayers when CRA overreaches or misapplies tax law.
When You Should Take a CRA Dispute to Tax Court
You should consider Tax Court when: CRA denies valid business expenses, capital gains are treated as business income, the principal residence exemption is denied, GST/HST ITCs are wrongly disallowed, gross negligence penalties are imposed without justification, assessments are based on CRA assumptions, CRA refuses to recognize medical or tuition credits, or CRA ignores complete evidence submitted during objections. If CRA is wrong, Tax Court may be your best recourse.
Tax Court Appeal Deadlines
You must file your Notice of Appeal:
Within 90 days of CRA issuing a Notice of Confirmation, or
If CRA does not respond to your objection within 90 days, you may appeal directly.
Missing these deadlines may require a formal extension request, but late appeals are difficult to win.
Informal Procedure vs General Procedure
Informal Procedure
Ideal for individuals and small businesses. Faster, less formal, no strict rules of evidence, lower cost, no need for legal representation, maximum disputed amount: $25,000 per tax year.
General Procedure
Used for large or complex cases. Full legal rules apply, requires pleadings, discovery, expert reports, and representation by a CPA or tax lawyer. Suitable for six-figure reassessments, GST/HST cases, or penalty disputes.
What You Need to Prepare for Tax Court
Notice of Appeal
All supporting documents: receipts, contracts, bank statements, logs
Audit reports and objection file
Witness testimony (if needed)
Clear factual narrative
Legal arguments based on tax law and jurisprudence
Strong preparation is critical—Tax Court decisions rely heavily on evidence.
What to Expect at Tax Court
Informal Procedure
A single hearing with a judge, where both sides present evidence. The judge issues a written decision later.
General Procedure
Pleadings → Discovery → Pre-trial Conferences → Trial → Judgment.
CRA will have legal counsel; taxpayers should have strong representation.
Possible Outcomes of a Tax Court Appeal
The Court may:
Vacate (cancel) the reassessment
Vary (modify) the reassessment
Confirm the reassessment
Refer the matter back to CRA for reconsideration
Reduce or remove penalties
Court decisions are binding on CRA.
Costs and Legal Fees
Informal Procedure cases are lower cost. General Procedure may involve significant legal fees, but high reassessments and penalties often justify the investment. Tax Court may award costs in some cases.
Advantages of Appealing to Tax Court
Independent decision-maker, CRA cannot ignore evidence, ability to challenge assumptions, judges knowledgeable about tax law, opportunity to remove penalties, and final resolution without CRA bias.
When You Should NOT Go to Tax Court
If you are missing documentation, cannot defend your position, or CRA’s reassessment is clearly correct. In those cases, negotiation or settlement through CRA Appeals is usually better.
Mackisen Strategy
At Mackisen CPA Montreal, we analyze whether Tax Court is the best option. We prepare compelling Notices of Appeal, build evidence packages, write legal briefs, collaborate with tax lawyers, challenge CRA assumptions, present financial analysis, and represent clients during disputes. Our detailed preparation dramatically increases success rates.
Real Client Experience
A Montreal real estate investor won a Tax Court case after CRA incorrectly classified capital gains as business income. A contractor avoided a five-figure GST penalty through an informal procedure appeal. A corporation had payroll reassessments reduced after we disproved CRA assumptions. A crypto investor overturned an excessive audit-based reassessment with our evidence package.
Common Questions
Do I need a lawyer for Tax Court? Recommended for General Procedure. Can CRA retaliate after losing? No—Tax Court decisions are final. Can I settle before trial? Yes—many cases settle. Does Tax Court pause collections? Yes—once the appeal is filed.
Why Mackisen
With more than 35 years of combined CPA experience, Mackisen CPA Montreal prepares strong, evidence-backed Tax Court appeals to protect taxpayers from unfair CRA reassessments. We fight aggressively to ensure your rights are respected and your tax burden is fair and lawful.
