Written by Steven Climenhaga
In Martinez Cedeno v The King[1], Justice Graham of the Tax Court of Canada highlights the importance of commencing appeals of decisions from the Canada Revenue Agency (“CRA”) in the correct court. The decision also draws attention to the CRA’s ongoing failures to provide taxpayers with accurate information and the possible consequences to taxpayers that rely on the CRA.
Not All Roads Lead to the Tax Court
A common misconception is that all tax disputes are appealed to the Tax Court of Canada. However, the court’s jurisdiction is significantly more limited. Justice Graham's decision underscores that the correct forum depends on the issue at hand.
In the appellant's case, the dispute was over her province of residence for tax purposes. She filed as a resident of Nunavut, but the CRA reassessed on the basis that she was a resident of Ontario. Under Ontario law, an appeal on a determination of residency must be made to the Ontario Superior Court of Justice, not the Tax Court of Canada.[2] The Tax Court has no jurisdiction over provincial tax matters unless the specific province has granted it that authority.[3] Other types of CRA decisions must be challenged through a judicial review application to the Federal Court.
Tax Court Rebukes the CRA but Credits Department of Justice
Justice Graham expressed significant concern over the CRA's practice of sending Notices of Confirmation that contain incorrect appeal instructions.[4] He noted that the notice sent to the taxpayer wrongly instructed her to appeal to the Tax Court. By following these instructions, she ended up in the wrong court, and by the time the issue made it before Justice Graham, it was too late to appeal to the correct court.
After seeing the issue for the third time in two years, Justice Graham decided to publish a written decision on the issue, writing that it is unfair for the CRA to “mislead taxpayers in this manner and potentially deprive them of their rights to appeal”.[5]
Notably, Justice Graham credited the professionalism of Department of Justice lawyers who often attempt to guide taxpayers to the correct court, potentially saving the right to appeal of many taxpayers in similar situations.[6] However, self-represented individuals may be skeptical of guidance from opposing counsel, and properly so, especially in the face of clear directions in a notice of confirmation from the CRA about how to appeal the decision.
Taxpayers can not Rely on the CRA's Advice
This case serves as a crucial reminder: taxpayers should not blindly rely on information provided by the CRA. While the taxpayer in this case dutifully followed the CRA's instructions, doing so led to the dismissal of her appeal because she was in the wrong court.
This is just one example of a taxpayer being burned by relying on information they receive from the CRA. The CRA is not bound by the information it provides and there is little recourse available to taxpayers that rely on information from the CRA to their detriment.
Appealing a CRA decision is a complex legal process with strict deadlines and jurisdictional rules. The Martinez Cedeno decision clearly illustrates the value of seeking professional legal advice upon receiving a Notice of Confirmation. A qualified tax lawyer can identify the correct legal venue for an appeal, ensuring that a taxpayer's rights are protected and that their case is heard by the proper court. Forgoing professional advice can, as seen here, lead to a procedural dismissal without the case ever being heard on its merits.
Contact a tax lawyer for advice you can rely on.
1 2025 TCC 142 [Martinez Cedeno].
2 Ibid at para 4.
3 Tax Court of Canada Act, RSC 1985, c T-2, s 12; Canada v Quigley, 2009 FCA 287 at para 5.
4 Martinez Cedeno, supra, at para 5.
5 Ibid, at para 7.
6 Ibid, at para 6.