M I L L E R T H O M S O N LLP INCOME TAX ASSESSMENTS OBJECTIONS AND APPEALS Robert B. Hayhoe ( ) CGA Ontario Public Practitioners’ Convention Saturday, September 23, 2000

M I L L E R T H O M S O N LLP REPRESENTATION l Audit l Objection l Tax Court l Hiring Lawyers

M I L L E R T H O M S O N LLP TAX TREAMENT OF REPRESENTATION EXPENSES l ITA s.60(o) makes objection and appeal expenses deductible l 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? l Assessments and determinations l Nil assessments not appealable l Loss Determinations l Interest and Penalties

M I L L E R T H O M S O N LLP THE NOTICE OF OBJECTION - Time Limit l For individuals and testamentary trusts, the later of: u 90 days from mailing of notice of assessment u one year from balance due date l For all other taxpayers: u 90 days from mailing of notice of assessment l 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 l T400A form suggested l Registered mail not required but suggested l 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 l Substance of the Objection l Should set out enough facts and analysis to support the allowance of the objection u note potential application of penalties

M I L L E R T H O M S O N LLP THE NOTICE OF OBJECTION - The Minister’s Response l Chief of Appeals u appeals officer assigned l Letters and Meetings u limit client contact l Tight deadlines on taxpayers l No deadlines on CCRA u 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 l Discretionary application to CCRA l Conditions for late filing: u within the time limit, the taxpayer either intended to appeal or could not act u just and equitable u application as soon as possible (no later than one year after ordinary deadline) l 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 l Larger cases l Only lawyers may represent taxpayers l Right of appeal to FCA l Higher costs awards

M I L L E R T H O M S O N LLP TCC INFORMAL PROCEDURE - When it Applies l Appeals may be brought as Informal if any of the following applies: u federal tax and penalties are less than $12,000 u loss of less than $24,000 u interest only u tax over $12,000 or loss over $24,000 is waived l 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 l Unrepresented individuals l Individuals represented by agents l Individuals represented by lawyers l Corporations represented by lawyers

M I L L E R T H O M S O N LLP TCC ONUS OF PROOF l Taxpayer must prove that assessment is wrong l Complicated rules on how to meet onus l For Informal Procedure appeals: u just prove the case! l 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 l Confirm assessment l Vacate assessment l Vary assessment l No power to increase assessment

M I L L E R T H O M S O N LLP INSTITUTING A TCC APPEAL l File Notice of Appeal with TCC u must be received within 90 days of confirmation u 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 l May be permitted by application to TCC l Conditions for late filing: u within the time limit, the taxpayer either intended to appeal or could not act u just and equitable u application as soon as possible (no later than one year after ordinary deadline) u reasonable grounds for the appeal

M I L L E R T H O M S O N LLP THE CROWN’S TCC REPLY l Sets out the government position in the appeal l Basis for settlement discussions

M I L L E R T H O M S O N LLP TCC EXPERT WITNESSES l An individual with special expertise who can express an opinion to help the court u 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 l Majority of TCC appeals settle l Settlement must be based on facts and law l Crown is not permitted to settle on a “saw- off” basis u 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 l There is no examination for discovery in the Informal Procedure l Request all CCRA documents pursuant to “Appeals Renewal Initiative” u audit notes and report u appeals notes and report

M I L L E R T H O M S O N LLP TCC INFORMAL PROCEDURE HEARING l Set by Court or at request of parties l Formerly a backlog - now very fast

M I L L E R T H O M S O N LLP TCC PRESENTATION ORDER l Ordinary case: u opening statements u taxpayer’s evidence u Crown evidence u taxpayer argument u Crown argument u taxpayer reply l 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 l Usually judgment within 90 days l No appeal right l Right to Federal Court of Appeal judicial review u 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 l CCRA success results in no costs award l Taxpayer success may result in disbursements and legal fees u 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 ( ) CGA Ontario Public Practitioners’ Convention Saturday, September 23, 2000