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Strategies for advancing Canadian tax disputes


Taxpayers should familiarise themselves with the different options for overcoming the backlog of cases in the Canada Revenue Agency and Tax Court of Canada, by Carrie Aiken and Dan Jankovic of Blake, Cassels & Graydon

Increasingly, taxpayers are experiencing significant delays and expenses advancing and resolving Canadian tax disputes. Compounding the issue is the fact that the Canadian tax authorities are pursuing more aggressive positions in their assessments of tax, and there is a backlog of cases in both the internal appeals processes of the Canada Revenue Agency and appeals within the Tax Court of Canada. However, there are options available to advance tax disputes more efficiently.

Often, an assessment raises several independent issues on which the Minister of National Revenue is relying to reassess tax. In such a case, defending the multiple issues at the same time may cause additional delays or dilute the main issue. Provided the taxpayer and the Minister consent, subsection 171(2) of the Income Tax Act (Canada) permits the parties to request a hearing of only specific issues as opposed to all the issues at once. This permits tax litigants to be more strategic with their tax disputes. For example, a tax dispute may become less contentious if one of the issues is decided first. This option may also be attractive where one of the issues has larger financial implications. If the Tax Court of Canada disposes of the issue in favour of the taxpayer, the Minister must give effect to its decision (subject to its rights of appeal) on the decided issue without having to wait for the disposition of the other issues.

Questions of law and fact

Section 173 of the Income Tax Act permits the Minister and the taxpayer to put a question of law, a mixed question of law and fact, or a question of fact before the Tax Court of Canada for determination, provided both parties consent to the process. This provision allows a question to be advanced and a determination to be made by the Court at any stage of the tax dispute, including at the audit stage. The strategy is to avoid a full appeal of the issue or a drawn-out process by trying to get a specific matter resolved expeditiously.

Another option is to proceed under rule 58 of the Tax Court of Canada Rules. An application under this rule may be appropriate where one of the parties does not consent to a hearing under section 173 of the Income Tax Act. Under rule 58, the Tax Court of Canada has the power to grant an order that a question of law, fact, or mixed law and fact raised in a pleading be determined before hearing the appeal. This option may be advantageous (and is only available) where the determination of the question may have the result of disposing of all or part of the appeal, substantially shortening the hearing or decreasing costs.

Carrie Aiken ( is a partner and
Dan Jankovic ( is an associate in the Calgary office of Blake Cassels & Graydon, the principal Canadian correspondents for the Tax Disputes channel of

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