If you’re going to take your
, as a first step, you had better be sure you end up in the right court or the judge will have no choice but to dismiss your appeal without even giving you a chance to argue the merits of your case.
For example, last year I wrote about a
who appealed his TFSA overcontribution tax to the
, which may seem logical enough. But the Tax Court dismissed the case as it has no jurisdiction to cancel the tax. Instead,
needed to request relief from the
. If the CRA rejects the request for relief, the decision of the CRA officer can then be appealed to the Federal Court, which will decide whether the CRA’s decision was reasonable.
The most recent example of a jurisdictional faux pas occurred earlier this month when another self-represented taxpayer attempted to appeal a case involving provincial residency to the Tax Court. Provincial residency cases could become even more popular in the future as the gap between
grows.
In the current case, the taxpayer reported her tax residence as Nunavut which, for 2025, has a top federal provincial marginal tax rate of 44.50 per cent. The CRA, however, believed that the taxpayer’s true provincial residence was in Ontario, which currently has a top marginal tax rate of 53.53 per cent. While it is unlikely that many taxpayers will be relocating to Nunavut solely for tax purposes, where you live in Canada can have a material impact on the amount of tax you pay, especially given that eight out of 13 provinces and territories have marginal tax rates above 50 per cent in 2025.
As far as what led the CRA to conclude that the taxpayer was an Ontario resident and not a resident of Nunavut we may never know as it was not reported. Instead, the judge’s short, three-page decision focused solely on the jurisdictional issue, and contained some harsh words directed toward the CRA. As he wrote in his opening comment, “I am publishing these reasons because I need to draw attention to conduct of the Canada Revenue Agency that is potentially depriving taxpayers of their legal rights of appeal and wasting this Court’s resources.”
The judge went on to explain that sometimes taxpayers report a certain province or territory of residence on their tax return and the CRA decides that it was, in fact, a different province or territory. As a result, the CRA reassesses the taxpayer, and the taxpayer then files a notice of objection with the CRA to dispute their reassessment. If, however, the CRA sticks to its assessing position, it then issues a notice of confirmation, which is where the problem arises.
In most cases, after receiving a notice of confirmation, a taxpayer can then choose to further dispute the CRA’s confirmation by filing a notice of appeal with the Tax Court of Canada. The notice of confirmation tells taxpayers how to do so.
But, if the dispute involves whether the taxpayer was a resident of one province or territory or another, then the next step will depend on the laws of the province or territory where the CRA believes the taxpayer lives. The Tax Court has no jurisdiction to hear a case relating to provincial tax unless the province in question has conferred jurisdiction on the Tax Court to do so.
In the present case, since the CRA thinks that the taxpayer resided in Ontario instead of Nunavut, then the taxpayer is unable to dispute the CRA’s position appealing to the Tax Court. Instead, they must appeal to the
Ontario Superior Court of Justice
.
But how is the average self-represented taxpayer supposed to know this? After all, the notices of confirmation that the CRA issues to taxpayers in these circumstances tell the taxpayer to appeal to the Tax Court. As a result, taxpayers who follow the CRA’s instructions end up in the wrong court. In some cases, by the time the Tax Court gets around to hearing the taxpayer’s case, and tells them that they are, in fact, in the wrong court, it may actually be too late for them to appeal to the correct court.
While the lawyers at the Department of Justice, who act for the CRA in Tax Court, do draw this to taxpayers’ attention, often self-represented taxpayers are unsure who to listen to and simply continue their appeals in the wrong court.
The judge noted that the current case is the third time in two years that he has personally seen this problem, noting that “it is unfair to mislead taxpayers in this manner and potentially deprive them of their rights to appeal. Notices of confirmation should contain accurate information.”
The judge did acknowledge that the taxpayer’s notice of confirmation was issued in July 2023, and that it is possible that the CRA has already changed its practices. To find out, I reached out to the CRA’s media relations team.
While the CRA’s spokesperson was unable to comment on the specific details of this court case given taxpayer confidentiality concerns, she confirmed that “our procedures are clear on how to direct taxpayers to the appropriate court. While we endeavour to provide accurate information to those availing themselves of recourse services, we regret that this was not the case for this taxpayer. We have issued communications to our officers to remind them of the importance of ensuring clear and accurate information.”
Let’s hope this is the last time we see such an issue reported in the wrong court.
Jamie Golombek,
FCPA, FCA, CFP, CLU, TEP, is the managing director, Tax & Estate Planning with CIBC Private Wealth in Toronto.
Jamie.Golombek@cibc.com
.
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