M I L L E R T H O M S O N LLP

INCOME TAX ASSESSMENTS OBJECTIONS AND APPEALS

Robert B. Hayhoe

(416.595.8174)

CGA Ontario

Public Practitioners’ Convention

Saturday, September 23, 2000

M I L L E R T H O M S O N LLP

REPRESENTATION

Audit Objection Tax Court Hiring Lawyers

M I L L E R T H O M S O N LLP

TAX TREAMENT OF REPRESENTATION EXPENSES

ITA s.60(o) makes objection and appeal expenses deductible

ITA s.56(1)(l) includes legal costs awarded by court in income

M I L L E R T H O M S O N LLP

WHAT IS APPEALABLE?

Assessments and determinations Nil assessments not appealable Loss Determinations Interest and Penalties

M I L L E R T H O M S O N LLP

THE NOTICE OF OBJECTION- Time Limit

For individuals and testamentary trusts, the later of: 90 days from mailing of notice of assessment one year from balance due date

For all other taxpayers: 90 days from mailing of notice of assessment

Discretionary permission to late-file

M I L L E R T H O M S O N LLP

THE NOTICE OF OBJECTION- Form Of Notice And Service

T400A form suggested Registered mail not required but suggested Must be signed by individual taxpayer or

authorized representative

M I L L E R T H O M S O N LLP

THE NOTICE OF OBJECTION- Statement Of Facts And Reasons

Substance of the Objection Should set out enough facts and analysis

to support the allowance of the objection note potential application of 163.2 penalties

M I L L E R T H O M S O N LLP

THE NOTICE OF OBJECTION- The Minister’s Response

Chief of Appeals appeals officer assigned

Letters and Meetings limit client contact

Tight deadlines on taxpayers No deadlines on CCRA

90 day appeal to Tax Court of Canada

M I L L E R T H O M S O N LLP

THE NOTICE OF OBJECTION- Late Filed Notices of Objection

Discretionary application to CCRA Conditions for late filing:

within the time limit, the taxpayer either intended to appeal or could not act

just and equitable application as soon as possible (no later than

one year after ordinary deadline) Refusal can be appealed to TCC

M I L L E R T H O M S O N LLP

TCC PROCEDURES

Informal Procedure

General Procedure

M I L L E R T H O M S O N LLP

GENERAL PROCEDURE

Larger cases Only lawyers may represent taxpayers Right of appeal to FCA Higher costs awards

M I L L E R T H O M S O N LLP

TCC INFORMAL PROCEDURE- When it Applies

Appeals may be brought as Informal if any of the following applies: federal tax and penalties are less than $12,000 loss of less than $24,000 interest only tax over $12,000 or loss over $24,000 is waived

Crown may apply to move a case up to general procedure

M I L L E R T H O M S O N LLP

TCC INFORMAL PROCEDURE- Representation

Unrepresented individuals Individuals represented by agents Individuals represented by lawyers Corporations represented by lawyers

M I L L E R T H O M S O N LLP

TCC ONUS OF PROOF

Taxpayer must prove that assessment is wrong

Complicated rules on how to meet onus For Informal Procedure appeals:

just prove the case! Minister bears the onus to justify penalties

or late assessment

M I L L E R T H O M S O N LLP

POWERS OF THE TCC

Confirm assessment Vacate assessment Vary assessment No power to increase assessment

M I L L E R T H O M S O N LLP

INSTITUTING A TCC APPEAL

File Notice of Appeal with TCC must be received within 90 days of

confirmation set out facts and reasons for appeal

M I L L E R T H O M S O N LLP

LATE FILED TCC APPEALS

May be permitted by application to TCC Conditions for late filing:

within the time limit, the taxpayer either intended to appeal or could not act

just and equitable application as soon as possible (no later than

one year after ordinary deadline) reasonable grounds for the appeal

M I L L E R T H O M S O N LLP

THE CROWN’S TCC REPLY

Sets out the government position in the appeal

Basis for settlement discussions

M I L L E R T H O M S O N LLP

TCC EXPERT WITNESSES

An individual with special expertise who can express an opinion to help the court complicated rules on how to deal with experts

– hire a lawyer

M I L L E R T H O M S O N LLP

SETTLING TCC APPEALS

Majority of TCC appeals settle Settlement must be based on facts and law Crown is not permitted to settle on a “saw-

off” basis usually possible to agree on facts to support

settlement

M I L L E R T H O M S O N LLP

TCC DISCOVERY

There is no examination for discovery in the Informal Procedure

Request all CCRA documents pursuant to “Appeals Renewal Initiative” audit notes and report appeals notes and report

M I L L E R T H O M S O N LLP

TCC INFORMAL PROCEDURE HEARING

Set by Court or at request of parties Formerly a backlog - now very fast

M I L L E R T H O M S O N LLP

TCC PRESENTATION ORDER

Ordinary case: opening statements taxpayer’s evidence Crown evidence taxpayer argument Crown argument taxpayer reply

May be reversed if only issue is penalties

M I L L E R T H O M S O N LLP

TCC INFORMAL PROCEDURE- Judgment and Appeal

Usually judgment within 90 days No appeal right Right to Federal Court of Appeal judicial

review only designed to correct serious and obvious

errors

M I L L E R T H O M S O N LLP

TCC INFORMAL PROCEDURE COSTS

CCRA success results in no costs award Taxpayer success may result in

disbursements and legal fees Court will not award fees charged by agent

M I L L E R T H O M S O N LLP

INCOME TAX ASSESSMENTS OBJECTIONS AND APPEALS

Robert B. Hayhoe

(416.595.8174)

CGA Ontario

Public Practitioners’ Convention

Saturday, September 23, 2000