When facing a tax dispute with the Canada Revenue Agency (CRA), the idea of taking the matter to the Tax Court of Canada might seem daunting. However, for smaller disputes, the Tax Court offers an informal procedure that is simpler, faster, and more cost-effective than regular proceedings.
What is the Informal Procedure?
The informal procedure is designed for taxpayers disputing amounts under $25,000 per assessment. Or the amount in dispute is a loss not greater than $50,000 per determination or the taxpayer is only disputing the interest on federal tax and penalties. It offers a more accessible alternative to the general procedure, with relaxed rules of evidence and less formal requirements. Taxpayers can often represent themselves.
Key Features of the Informal Procedure?
- Cost-Effective: There is no filing fee in the informal procedure.
- Simplicity: The rules of evidence and procedural requirements are less strict. This makes it easier for self-represented individuals to present their cases.
- Timeliness: Cases under the informal procedure typically resolve faster, as the process is streamlined compared to general Tax Court hearings.
- Accessible Representation: While legal representation is not mandatory, consulting a tax lawyer ensures that your arguments are framed effectively and backed by relevant legal precedents.
Is it Worth Filing?
The informal procedure is often worth considering in the following scenarios:
Disputed Amounts Are Small: For amounts under $25,000, and losses $50,000 and under, the informal process minimizes legal and filing costs.
Clear Case of CRA Error: If you have strong evidence that the CRA made an error, the informal procedure allows you to present your case effectively without complex legal processes.
Time Constraints: The faster resolution times can be appealing if a quick outcome is important to you.
Costs: if you ae not successful with your appeal the costs that may be awarded against you are very low.
How to File under the Informal Procedure?
- Prepare a Notice of Appeal stating your case and the relief you seek.
- Indicate that you are electing the informal procedure.
- Submit your appeal within 90 days of receiving the CRA’s Notice of Confirmation or Reassessment.
Conclusion
The informal procedure of the Tax Court of Canada offers an accessible and efficient way to resolve smaller disputes with the CRA. While the process is less formal, preparing a strong case is still essential. If you’re unsure about how to proceed, consulting a tax lawyer can provide clarity and enhance your chances of success.
If you need any assistance, contact us. We will review your facts and outline the steps necessary to resolve your tax problem.
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Disclaimer
Each article/blog post is only meant to provide general information. It is posted on a specific date. Laws and rules change. Please know that it may be out of date. It is not meant to provide legal advice, and it does not provide legal advice. It cannot be relied on. Every tax situation is unique, and that may mean situations differ from this article/blog. If you have legal questions, please consult a lawyer.