1

Tax Court of Canada

Cour canadienne de l’impôt

MEMORANDUM

TO: Chief Special Trial Judge Panuthos, United States Tax Court

FROM: Associate Chief Justice Lamarre and Isida Ranxi,

Tax Court of Canada

DATE: July 17, 2015

ASSIGNMENT: Notes re: Washington, DC Presentation of November 18-19,

2015.

1. Purpose of the Memorandum ................................................................................................. 1 2. Answers to Your Outline Questions ...................................................................................... 1

4. Thoughts on the Proposal ..................................................................................................... 10 5. Links to Share with Other Panel Members ........................................................................ 12

1. Purpose of the Memorandum

This memorandum outlines my answers to your proposed questions, provides some thoughts

on the panel’s discussion, suggests that an additional section be added to the proposal, and provides

links to materials that may be of interest to the members of the panel, specifically as they pertain to

information regarding the Tax Court of Canada and the Canadian legal system.

2. Answers to Your Outline Questions

You have proposed an outline that addresses the following questions and my responses to

them are the following.

(A) Independence of the Judiciary

a) What is the appointment process, and tenure of your Court?

2

In Canada, the appointment and administration of judges is governed by Part VII of the

Constitution Acts of 18671 and 1982

2 and the Judges Act

3. The federal government appoints judges

to our Court through the Governor General on the advice of the federal Cabinet.4 A

recommendation for appointment is made to Cabinet by the Minister of Justice (the “Minister”)

with respect to the appointment of puisne judges, and by the Prime Minister with respect to the

appointment of Chief Justices and Associate Chief Justices. The recommendation to Cabinet is

made from amongst the names which have been previously reported by committees to the Minister.5

Before recommending an appointment to Cabinet, the Minister may consult with members

of the judiciary and the bar, with his or her appropriate provincial or territorial counterparts, as well

as with members of the public.6 The Minister also welcomes the advice of any group or individuals

on the considerations which should be taken into account.7

The Commissioner for Federal Judicial Affairs Canada (the “Commissioner”) is responsible

for the administration of the appointments process on behalf of the Minister.8 He must carry out his

responsibilities, directly or by his delegate, in a way that ensures the system treats all candidates for

judicial office fairly and equally. As part of his duties, the Commissioner administers the advisory

committees, which assess the qualifications of the lawyers who apply for federal judicial

appointments.9

Persons who wish to be considered for appointment as a judge of our Court must apply to

the Commissioner.10

Members of the legal community and all other interested persons and

organizations may also nominate persons they consider qualified for judicial office; the

Commissioner then contacts the nominees to find out whether they wish to be considered for a

judicial appointment.11

The qualifications for appointment are set out in the Tax Court of Canada Act (the

“TCCA”)12

, and read as follows:

4. (3) Subject to subsection (4), any person may be appointed a judge of the Court

who

(a) is or has been a judge of a superior court in Canada;

(b) is or has been a barrister or advocate of at least ten years standing at the bar

of any province, or

(c) has, for an aggregate of at least ten years,

1 Constitution Act, 1867 (UK), 30 & 31 Vict, c 3, reprinted in RSC 1985, App II, No 5.

2 Constitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982, c 11.

3 RSC, 1985, c J-1.

4 Department of Justice Canada, The Judiciary (7 May 2015), online: <http://www.justice.gc.ca/eng/csj-sjc/ccs-

ajc/05.html> [Justice Canada, The Judiciary]. 5 Ibid.

6 Ibid.

7 Ibid.

8 Department of Justice Canada, How Does Canada’s Court System Work? (7 May 2015), online:

<http://www.justice.gc.ca/eng/csj-sjc/ccs-ajc/01.html> [Justice Canada, Court System]. 9 Ibid.

10 Ibid.

11 Ibid.

12 RSC 1985, c T-2 [TCCA].

3

(i) been a barrister or advocate at the bar of any province, and

(ii) after becoming a barrister or advocate at the bar of any province,

exercised powers and performed duties and functions of a judicial nature

on a full-time basis in respect of a position held pursuant to a law of

Canada or a province.

Independent judicial advisory committees constitute the heart of the appointments process.

The committees assess the qualifications for appointment of the lawyers who apply.13

The Minister,

with the assistance of the Commissioner, selects persons to serve on each committee who reflect

factors appropriate to the jurisdiction, including geography, gender, language and multiculturalism.

Committee members are then appointed by the Minister to serve a three-year term, with the

possibility of a single renewal. The Minister meets periodically with the Chairs of all the

committees for an exchange of views concerning the operation of the process.14

All committee

proceedings and consultations take place on a confidential basis.15

The Committee for our Court is made up of 5 members: one judicial nominee designated by

the Chief Justice of our Court and four nominees of the Minister appointed to reflect Canada's

linguistic and geographic diversity. There must be at least one member from each of the following

regions: Maritimes, Quebec, Ontario and Western Canada. The committee undertakes extensive

consultations in both the legal and non-legal community for each applicant.16

The primary qualifications of judges are professional competence and overall merit.17

Committee members are provided with Assessment Criteria for evaluating fitness for the bench,

which relate to professional competence and experience, personal characteristics, and potential

impediments to appointment. Committees are encouraged to respect diversity and to give due

consideration to all legal experience, including that outside a mainstream legal practice.18

Judges of the Tax Court of Canada are required to cease holding office when they turn 75

years of age.19

Subject to the age limit, judges may hold office during good behaviour, and are

removable by the Government General on address of the Senate and House of commons.20

b) What is the relationship of your Tax Court with other parts of government, the executive

and the legislative branches?

Canada’s judiciary is one branch of our system of government, along with the legislature

and the executive.21

The judiciary resolves disputes according to law. The legislature (Parliament)

has the power to make, alter and repeal laws. The executive branch (in particular, the prime minister

and ministers, the public service, as well as a variety of agencies, boards, and commissions) are

responsible for administering and enforcing the laws in place.22

13

Ibid. 14

Ibid. 15

Ibid. 16

Ibid. 17

Ibid. 18

Ibid. 19

TCCA, supra, s 7(2). 20

Ibid, s 7(1). 21

Justice Canada, Court System, supra. 22

Ibid.

4

Judicial independence is a cornerstone of the Canadian judicial system.23

For this reason,

under the Constitution, the judiciary is separate from and independent of the other two branches of

government, the executive and legislature. Judicial independence guarantees that judges will be able

to make decisions free of influence and based solely on fact and law.24

c) In particular are there pressures from the tax enforcement agency or from the public?

The Tax Court is independent of the Canada Revenue Agency (the “CRA”) and all other

government departments.25

To the Canadian government, the principle of judicial independence has

three components: security of tenure; financial security; and administrative independence.26

As part of Canada’s commitment to administrative independence, no one can interfere with

how courts manage the legal process and exercise their judicial functions.27

For instance, only the

chief justice can choose how cases are assigned to the judges of his or her court.28

Several institutions have been established to support judicial independence, which include

the Canadian Judicial Council, the Commissioner for Federal Judicial Affairs, the National Judicial

Institute and the Courts Administration Service. These institutions help keep the government and

the judiciary separate in areas like discipline, pay and benefits, and continuing education for

judges.29

d) How does your Court fit within the general Court system in your country? How does

your Court respond to reviewing higher Courts?

The federal government of Canada has created specialized courts to deal more effectively

with certain areas of the law.30

These courts have been created by statute and can only decide

matters that fall within the jurisdiction given to them by those statutes. These specialized courts

include the Tax Court of Canada, which deals with tax matters defined under the TCCA31

. Our

Court is a superior court that determines cases and appeals about matters that arise under federal tax

and revenue legislation. It hears disputes between the federal government and taxpayers after the

taxpayer has pursued all other avenues provided for by the Income Tax Act (the “ITA”)32

.

Appeals from our Court are heard by the Federal Court of Appeal. The latter court’s

decisions can only be appealed to the Supreme Court of Canada. The Supreme Court hears most

legal matters under federal jurisdiction or that involve the federal government. Two of its basic

roles are to ensure that federal law is applied consistently throughout Canada; and to provide an

avenue of appeal from decisions of the Tax Court of Canada and the Federal Court.33

23

Justice Canada, The Judiciary, supra. 24

Ibid. 25

Department of Justice Canada, Courts and Other Bodies Under Federal Jurisdiction (7 May 2015), online:

<http://www.justice.gc.ca/eng/csj-sjc/ccs-ajc/03.html> [Justice Canada, Courts]. 26

Justice Canada, The Judiciary, supra. 27

Ibid. 28

Ibid. 29

Ibid. 30

Justice Canada, Courts, supra. 31

RSC 1985, c. T-2. 32

RSC 1985, c 1 (5th Supp). 33

Justice Canada, Courts, supra.

5

The Supreme Court of Canada is the final court of appeal from all other Canadian courts. It

has jurisdiction over disputes in all areas of the law.34

These include constitutional

law, administrative law, criminal law, and civil law. The Court does not hold trials, but hears

appeals from all other Canadian appeal courts.35

The Supreme Court of Canada only hears cases that it considers to be of public importance

and to have national significance.36

That could mean a case that raises an important issue of law,

or mixed law and fact, or if the matter is, for any other reason, significant enough to be considered

by the country’s highest court. In limited instances, there may also be an appeal as of right.

e) Does the current system provide sufficient independence for your Tax Court? Do you

believe there need to be changes to further independence?

I believe the setup of the current system provides sufficient independence for our Court as

sufficient measures have been put in place to ensure there is a separation between the court and the

other government and private organizations.

One of the increasing challenges for the future will be the continuing education of the judges

in a way that remains independent, in order to keep up with rapid changes in and the increased

complexity of tax legislation and transactions.

There is some commentary that some changes could be made toward improvement, such as

having more transparency in the judicial appointment process through the announcement of

potential vacancies, through providing more guidance on the process of appointment and through

encouraging applications from individuals of diverse backgrounds to ensure the Court is

representative of the Canadian population. However, there is no perfect system and I believe that,

on the whole, we have a fair judicial system and that the public benefits from the judicial

independence of our Court’s judges.

(B) Protecting Taxpayer Rights and Promoting voluntary compliance:

a) Given the great number of self-represented taxpayers who appear before the tribunal what

steps has your Court taken to accommodate taxpayers?

Our Court has a number of measures in place to accommodate self-represented taxpayers.

In its website, the Court has an informational section for self-represented litigants and counsel.37

In

this section, the Court has posted a document specifically for self-represented litigants in text and

video format entitled “Your Day In Court”, which explains how the litigant might get ready for

court; who the participants of the hearing are; when to arrive for a hearing; how to behave during

the hearing; the process of the hearing; and the cost consequences of case disposition.38

In that

page, the Court also provides a checklist for the litigant with all the steps involved.39

34

Ibid. 35

Ibid. 36

Ibid. 37

Tax Court of Canada, Self-Represented Litigants and Counsel (21 July 2012), online: <http://cas-ncr-nter03.cas-

satj.gc.ca/portal/page/portal/tcc-cci_Eng/Litigants> [TCC, Self-Represented Litigants]. 38

Tax Court of Canada, Your Day in Court (21 July 2012), online: <http://cas-ncr-nter03.cas-

satj.gc.ca/portal/page/portal/tcc-cci_Eng/Process/Your_day>. 39

Ibid.

6

In the self-represented litigant and counsel section, the Court has also made available links

to information that includes deadlines and procedure to request an extension of time to file an

appeal; procedures depending on the nature of the appeal; information about the Court’s Registry

and services; links to relevant statues; practice notes to assist on the application of the Court’s

Rules; and court forms.40

The Court also has an informal procedure, which is intended to enhance access to the court

for taxpayers where the amounts at issue are relatively small.41

The informal procedure has its own

set of rules,42

which are designed to create a flexible, efficient and expeditious process.43

In

conducting a hearing under the informal procedure, the Court is not bound by any technical or legal

rules of evidence, and must proceed informally and expeditiously as the circumstances and

considerations of fairness allow.44

Unlike judgments rendered under the general procedure, the

judgments rendered under the informal procedure have no precedential value. 45

Appeals of decisions of our Court under the informal procedure lie to the Federal Court of

Appeal but under limited grounds, primarily based on an alleged violation of the rules of natural

justice.46

The TCCA further provides that, subject to the rules of the court, any judge may sit and act

at any time and at any place in Canada, and constitute the court wherever the judge so sits or acts.47

This provision permits informal procedure hearings to take place in very informal settings and in

remote areas of the country.48

As noted by former Chief Justice Alban Garon, this flexibility

improves access to justice:

[O]ne of the priorities for the Tax Court of Canada is that it be accessible to all

Canadians. As evidence in support of this statement, the court currently sits in 68

Canadian cities. The court sits in all kinds of places: courthouses (of course),

hotels, conference rooms, rectories, etc. The court has even sat in a taxpayer’s

kitchen when the taxpayer could not otherwise attend the hearing.49

40

TCC, Self-Represented Litigants, supra. 41

Ian MacGregor et al, “The Development of the Tax Court of Canada: Status, Jurisdiction, and Stature” (2010) 58

(Supp) Can Tax J 87; Subsection 18(1) of the TCCA provides that the informal procedure is available where the

aggregate of all amounts at issue is equal to or less than $25,000 or where the amount of the loss determined under

subsection 152(1.1) of the ITA is equal to or less than $50,000, and the taxpayer elects in its notice of appeal or at a later

time as permitted under the rules to proceed under the informal procedure. 42

Tax Court of Canada Rules (Informal Procedure), SOR/90-688b. 43

MacGregor et al, supra at 95. 44

TCCA, s 18.15(3). 45

TCCA, ss 18.22(1) and 18.28. 46

Federal Courts Act, RSC 1985, c. F-7, as amended. Subsection 27(1.3) provides that the only ground for appeal from

an informal procedure decision is that our Court (1) acted without or beyond its jurisdiction, or refused to exercise its

jurisdiction; (2) failed to observe a principle of natural justice, procedural fairness, or other mandatory procedure;

(3) erred in law in making a decision or an order (whether or not the error appears on the face of the record); (4) based

its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for

the materials before it; (5) acted, or failed to act, by reason of fraud or perjured evidence; or (6) acted in any other way

that was contrary to law. 47

TCCA, s 14(1). 48

MacGregor et al, supra at 96. 49

“Tax Court of Canada 20th Anniversary Symposium” (2005) vol. 53, no 1 Canadian Tax Journal 135-75, at 135-39.

7

b) Is there a conflict if and when a Judge eases the rules or tries to assist a self-represented

taxpayer? Can the Judge remain impartial and still assist the self-represented taxpayer?

The most important concern of judges when intervening is to uphold the duty of neutrality

and to avoid an apprehension of bias.50

Judges must be neutral and be seen to be neutral when

presiding over a dispute between two parties, particularly in the case of private parties.51

The main

reason for ensuring the appearance of neutrality when two private parties are involved can be

framed as follows: in a free and democratic society, fairness and the appearance of fairness are

necessary to maintain faith in the judicial system.52

However, since this sense of fairness can, in

theory, only be experienced by individuals, in tax cases it should not matter whether “pure”

neutrality is compromised in favour of the taxpayer (particularly a self-represented taxpayer),

provided judges apply the law without being influenced by anything other than legal arguments.53

Justice Strayer has provided the following guidance in relation to the potential of crossing

the line in interventions:

[T]he test of impartiality should not be based on how the represented party or his

counsel perceive the matter, but how an objective, disinterested knowledgeable

person sitting in the courtroom would assess it. The judge is committed to fairness

to all parties, and he must be alert to the potential unfairness of having one party

represented by counsel and the other unrepresented, handicapped by lack of

knowledge of rules of evidence, procedure, and substantive law. To my mind, the

question is not whether the judge may and should assist the unrepresented party, but

how this may be done in a way which is minimally intrusive on the case of the

represented party and which does not involve, nor appear to involve, any

prejudgment of the merits.

It is perhaps unnecessary to add that such an assisting role for the judge is normally

not called for in cases of true vexatious litigants. There is no need for a judge to

help, and thereby encourage, a party who obviously has no claim of substance and

whose motives are typically those of publicity or attracting attention to himself. It

also needs to be said that the appearance of fairness has another aspect—that is,

how the proceedings appear to the unrepresented party. To be consistent one must

say that here too the test of fairness should be how the proceedings would appear to

an objective bystander. But this does not absolve the judge or court officer from the

duty of explaining to an SRL [self-represented litigant] why a decision has been

taken that might appear to the untutored lay party as being special treatment for

lawyers and their clients. We have evidence from many sources that nothing is

more harmful to an unrepresented party’s sense of fairness than the appearance that

the rules are not being applied equally to both sides.54

50

André Gallant, “The Tax Court’s Informal Procedure and Self-Represented Litigants: Problems and Solutions” (2005)

53:2 Can Tax J 333 at 359. 51

Ibid. 52

Ibid at 356-60. 53

Ibid at 360. 54

Address to the Tax Court of Canada Education Seminar held by the National Judicial Institute in Mont Tremblant,

Quebec, May 22-24, 2003 (unpublished) as cited in Gallant, supra.

8

As long as the Crown may question witnesses and intervene during the judge’s questioning,

there should not be a sense of “unfairness.”55

In theory, the Crown’s objective is not to win at all

costs. The objective is, instead, like the judge’s, to arrive at the truth and to determine whether the

assessment or reassessment is correct according to the law.56

However, that does not mean that it

would be appropriate for Tax Court judges to ask all the questions.57

For this reason, judges should

encourage relevant questions from both parties.58

Some Tax Court judges do intervene in the questioning of witnesses.59

For instance, when a

taxpayer lacks credibility, the judge can ask him or her more questions.60

However, in such cases,

the judge must be cautious to only intervene at the end of the witness’s examination and cross-

examination. The judge must then offer the parties the opportunity to ask any questions to the

witness on the particular points raised by the judge. In specific cases where the taxpayer and his or

her witness are credible but there is doubt as to why the minister assessed, more questions can be

posed to counsel and witnesses for the Crown.61

c) What steps can or should the courts take to provide counsel to self-represented

petitioners?

With respect to the challenges self-represented litigants face, Chief Justice McLachlin of the

Supreme Court of Canada has remarked as follows:

29 Once in the courtroom, self-represented litigants come up against additional

barriers to justice. Judges, who expect to play the traditional role of passive arbiter in

the litigation process, operate on the assumption that lawyers will adequately

represent the parties. In order to maintain judicial impartiality in appearance and in

fact, an individual judge may be unable to devote the necessary time to explain fully

the litigation process, and may feel constrained from advising a litigant. As a result,

basic information, such as the necessary elements of the cause of action or defence

raised, might remain known only to judges and lawyers.62

A practice has developed in our Court in which it is accepted that both the judge and the

Crown owe a special duty to taxpayers who are not represented by legal counsel.63

For instance, in

Poulton v R, Justice Bowman, as he then was, stated, “I cannot emphasize too strongly that it is of

consummate importance that the court in the informal procedure be vigilant to ensure that the

unrepresented taxpayer not be deprived of procedural fairness.”64

d) At what point does the Judicial Code of Ethics limit the ability of the Judge to assist the

self-represented?

55

Gallant, supra at 361. 56

Ibid. 57

Ibid. 58

Ibid. 59

Ibid. 60

Ibid. 61

Ibid. 62

The Rt Hon Beverley McLachlin, “Preserving Public Confidence in the Courts and the Legal Profession” (2003) 29:3

Manitoba Law Journal 277-87 at 283. 63

MacGregor et al, supra at 96. 64

[2002] 2 CTC 2405, at para 17 (TCC), cited with approval by the Federal Court of Appeal in Burton v The Queen,

2006 DTC 6133, at paras 12-13.

9

In Canada, federally appointed judges receive ethical guidance from the Ethical Principles

for Judges of the Canadian Judicial Council (the “Principles”).65

The ethical limitation in assisting

the self-represented is the principle of impartiality, expressed in the Principles as follows: “Judges

must be and should appear to be impartial with respect to their decisions and decision making.”66

In

its commentary, the Canadian Judicial Council made the following remarks:

A.2 While judicial impartiality and independence are distinct concepts, they are

closely related. This relationship was explored recently by Gonthier, J. on behalf of

the majority of the Supreme Court of Canada in Ruffo v. Conseil de la

Magistrature. The court noted that the right to be tried by an independent and

impartial tribunal is an integral part of the principles of fundamental justice

protected by s.7 of the Canadian Charter and reaffirmed the following statement by

Le Dain, J. in R. v. Valente:

Although there is obviously a close relationship between

independence and impartiality, they are never the less (sic)

separate and distinct values and requirements. Impartiality refers to

a state of mind or attitude of the tribunal in relation to the issues

and the parties in a particular case. The word

“impartial”...connotes absence of bias, actual or perceived

…

Both independence and impartiality are fundamental, not only to

the capacity to do justice in a particular case but also to individual

and public confidence in the administration of justice. Without that

confidence the system cannot command the respect and acceptance

that are essential to its effective operation. It is, therefore,

important that a tribunal should be perceived as independent, as

well as impartial...

Lamer C.J.C. put it this way in R. v. Lippé: The overall objective of guaranteeing

judicial independence is to ensure a reasonable perception of impartiality; judicial

independence is but a “means” to this “end.” If judges could be perceived as

“impartial” without judicial “independence” the requirement of “independence”

would be unnecessary. However, judicial independence is critical to the public’s

perception of impartiality. Independence is the cornerstone, a necessary prerequisite

for judicial impartiality.

A.3 Impartiality is not only concerned with perception, but more fundamentally

with the actual absence of bias and prejudgment. This dual aspect of impartiality is

captured in the often repeated words that justice must not only be done, but

manifestly be seen to have been done. As de Grandpre, J. put it in Committee for

Justice and Liberty v. National Energy Board, the test is whether “an informed

person, viewing the matter realistically and practically — and having thought the

matter through —” would apprehend a lack of impartiality in the decision maker.

65

Canadian Judicial Council, Ethical Principles for Judges (Ottawa: Canadian Judicial Council), online:

<https://www.cjc-ccm.gc.ca/cmslib/general/news_pub_judicialconduct_Principles_en.pdf> 66

Ibid at 27.

10

Whether there is a reasonable apprehension of bias is to be assessed from the point

of view of a reasonable, fair minded and informed person.67

e) What steps does your Court take to promote voluntary compliance?

I am not aware of any steps the Court takes to promote voluntary compliance and I do not

think it is the Court’s role to do so.

The CRA has a Voluntary Disclosure Program (“VDP”), under which individuals may

correct inaccurate or incomplete information.68

VDP allows individuals to make a voluntary

disclosure to protect against significant penalties or, in extreme cases, prosecution that may result if

the errors or omissions are detected by the tax authorities first.69

It also allows individuals to rectify

prior omissions in a manageable way.70

Under VDP, where an individual makes a valid disclosure, he or she will remain liable for

the taxes owing and related interest, but will not be subject to penalties or prosecution.71

The CRA

has legislative authority to waive or cancel penalties or interest.72

Based on current legislation, the

ability to grant relief is limited to the 10 taxation years before the calendar year in which the

submission is filed.73

For the disclosure to be valid, the disclosure must:

Be voluntary;

Be substantially complete;

Involve at least one penalty provision; and

Include information that is at least one year overdue or, if the information is less than one

year overdue, the disclosure must not be made solely to avoid late-filing or instalment

penalties.74

An individual may request the director of the Tax Centre where the original decision was made to

review and reconsider the decision.75

It is also possible to seek a Federal Court judicial review of

the VDP officer’s initial decision or the decision of the director.76

4. Thoughts on the Proposal

I believe that the general focus of our panel’s discussion should be to outline practical

jurisdictional differences in the way that the different countries handle taxpayer rights and voluntary

compliance. This would be useful for the exchange of ideas in order to learn from each country

67

Ibid at 30-31. 68

Canada Revenue Agency, Voluntary Disclosures Program (7 October 2014), online: <http://www.cra-

arc.gc.ca/voluntarydisclosures/>; Bob Neale, Voluntary Disclosures (May 2013), online: EY

<http://www.ey.com/CA/en/Services/Tax/TaxMatters-May2013-Voluntary-Disclosures>. 69

Neale, ibid. 70

Ibid. 71

Ibid. 72

Ibid. 73

Ibid; ITA, s 220(3.1). 74

Ibid. 75

Ibid. 76

Ibid.

11

what works and what does not, and to learn about the interplay between measures in place and the

practical ramifications of those measures.

To this end, I believe that the current proposal provides very good questions that should be

addressed to provide a comprehensive overview of taxpayer rights in the context of tax appeals in

our jurisdiction. I believe the focus of questions on the independence of the judiciary, on protecting

self-represented taxpayers before tribunals, and on promoting voluntary compliance is reasonable as

these represent live issues that are important to consider in ensuring there is a proper administration

of justice and protection of taxpayer rights.

However, I believe that an additional section should be added to the questions on the source

of taxpayer rights in the respective jurisdictions so as to understand the jurisdictional differences

between the countries in the panel, to place the work of the courts under discussion in the larger

context, and to link the independence of the judiciary and protecting taxpayer rights back to the

source of the taxpayer rights.

I outline that the proposed question be added as the first question under the section,

“Protecting Taxpayer Rights and Promoting Voluntary Compliance”. I outline the proposed

question and answer below.

Q: What are the sources of taxpayer rights in your country?

The sources of taxpayer rights in Canada are the Canadian Charter of Rights and Freedoms

of the Constitution Act of 1982 (the “Charter”), the ITA, other statutes, and the common law.77

The Canadian Charter of Rights and Freedoms of the Constitution Act of is the supreme law

of Canada.78

It was enacted to guarantee fundamental rights to individuals and contains some

important rights for taxpayers.79

Provisions of the ITA have been challenged under the Charter,

which has resulted in some legislative changes. Some Charter rights that have been invoked in tax

cases include the right to freedom of conscience and religion; the right to life, liberty and security of

the person; the right against unlawful search and seizure; and equality rights.80

The Charter has also caused changes in the relationship between taxpayers and the CRA.81

The Declaration of Taxpayer Rights was CRA’s response to the Charter.82

It has no legal status but

has had the practical effect of shaping the CRA’s attitude in dealing with taxpayers.83

It is widely

circulated and appears in every income tax annual filing manual.84

The Declaration states that, in their dealings with the CRA on income tax matters, taxpayers

are entitled to complete and accurate information about the ITA; to courteous and considerate

treatment; to a presumption of honesty, unless there is evidence to the contrary; and to fair handling

of a complaint. It further states that taxpayers may arrange their affairs to pay the least amount of

tax allowed by law and that the CRA is committed to applying to law in a consistent and fair

manner and it will be firm with those who evade tax.

77

Jinyan Li, “Taxpayers’ Rights in Canada” (1997) 7:1 Rev Law J 83 at 84. 78

Constitution Act, 1982, s 52(1). 79

Ibid at 84-85. 80

Li, supra at 85. 81

Ibid at 86. 82

Ibid. 83

Ibid. 84

Ibid.

12

Canada does not have a separate federal tax administration or management statute but

administrative provisions and some taxpayer rights are found in the ITA. For example, a part of the

ITA governs returns, assessments and appeals,85

while another deals with the administration and

collection of taxes and offences.86

The ITA has always recognized the basic right of taxpayers to privacy, to confidentiality and

to appeal the decisions of the administration.87

In 1985, the Revenue Canada, now CRA, released

the Declaration of Taxpayer Rights aimed at improving the department’s credibility and taxpayer’s

perception of fairness in the tax system. In 1991, fairness legislation was introduced to provide the

Minister discretionary powers to waive interest and penalties and to extend the assessment period in

certain circumstances.88

Taxpayer rights that are recognized in the ITA include the following:

The right to confidentiality;89

The right to appeal against the decision of the CRA;90

The right against unlawful search and seizure;91

Solicitor-client privilege;92

and

The right to withhold disputed amounts, to the extent allowed by law, until the dispute is

resolved.93

The Access to Information Act94

and the Privacy Act95

provide the right to access

information from the government and protect individual privacy, respectively. They generally

allow taxpayers to obtain all information from the CRA in connection with a tax assessment

including the CRA’s interpretation of the law.96

Other rights, developed in the common law, include the right to certainty, the right to be

informed by the tax administration, the right to be treated fairly, and the right to arrange affairs to

minimize tax liability.97

In the province of Québec, the Act respecting access to documents held by

public bodies and the protection of personal information98

and the Tax administration act99

grant

taxpayers the right to be informed of any information concerning them in their tax file, to receive

communication of and consult any document with such information, and to request that corrections

be made.

5. Links to Share with Other Panel Members

85

ITA, Part I (Division I and J). 86

ITA, Part XV. 87

Jinyan Li, “Taxpayers’ Rights in Canada” (1997) 7:1 Rev Law J 83 at 84. 88

Ibid at 85. 89

ITA, s 241. 90

ITA, ss 169, 175. 91

ITA, ss 231.1, 231.2(2). 92

ITA, s 232. 93

ITA, s 179.1. 94

RSC 1985, c A-1. 95

RSC 1985, c P-21. 96

Li, supra at 87. 97

Ibid. 98

CQLR c P-39.1. 99

RSQ c A-6.002.

13

Below are the links to some materials that may be interesting for the other panel members to

read, with information specific to Canada.

- Ian MacGregor et al, “The Development of the Tax Court of Canada: Status, Jurisdiction,

and Stature”, Canadian Tax Journal (2010):

https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&

ved=0CB0QFjAA&url=https%3A%2F%2Fwww.ctf.ca%2Fctfweb%2FCMDownload.aspx

%3FContentKey%3Dcbf9cdc7-b180-4055-a437-

0fc9ca26e44b%26ContentItemKey%3Dee44031a-e3e0-4f05-a749-

7feeb3e68c01&ei=RSOjVbu6HYKryASXxon4DQ&usg=AFQjCNG-

NhVlH8ezZFLRGMGVAs4HMzOsig&sig2=Bs99Jey1hQAokyGVpzjT5Q&bvm=bv.97653

015,d.aWw

- Canadian Judicial Council, Ethical Principles for Judges: https://www.cjc-

ccm.gc.ca/cmslib/general/news_pub_judicialconduct_Principles_en.pdf

- André Gallant, “The Tax Court’s Informal Procedure and Self-Represented Litigants:

Problems and Solutions”, Canadian Tax Journal (2005):

https://www.ctf.ca/ctfweb/Documents/PDF/2005ctj/05ctj2-Gallant.pdf

- Jinyan Li, “Taxpayer Rights in Canada”, Revenue Law Journal (1997):

https://apps.osgoode.yorku.ca/osgmedia.nsf/0/050BF0D2051569A7852571CE005852BF/$F

ILE/Taxpayers-rights-in-Canada.pdf