OTTAWA & TORONTO ONTARIO TAX DISPUTE LAWYERS
How We Help with Tax Law
We provide litigation and negotiation for individuals and organizations on all aspects of tax disputes involving the Income Tax Act, Excise Tax Act (HST/GST), Excise Act and provincial tax legislation, including Indigenous and international tax law issues.
Most of our tax work comes from referrals from accountants & lawyers. We offer creative, engaging and resolute problem solving with government agencies.
We can offer you timely and effective tax law services, including dealing with:
- Unfiled Returns
- Unreported Income
- Undeclared Foreign Income or Assets
- The General Anti-Avoidance Rule (GAAR)
- Unpaid Tax Debts and the Negotiation of Payment Plans
- Fairness and Taxpayer Relief Applications to Reduce or Eliminate Interest & Penalties
- Provincial tax disputs including Tobacco, Sales and Fuel taxes
- Voluntary Disclosure Applications
- Tax investigations response: Information Demands, Search & Seizure, & Inquiries
- Advocacy before the courts involving tax hearings, appeals and judicial reviews, including Tax Court of Canada, Federal Court, Federal Court of Appeal, Supreme Court of Canada and provincial courts
WE TENACIOUSLY DEFEND AGAINST FEDERAL & PROVINCIAL TAX CHARGES
- Defence in provincial and superior courts throughout Canada of offence allegations involving:
- Tax Evasion
- Failure to Respond to a Demand or Provide Information
- Failure to File Returns
- Failure to Remit Required Amounts
WE'RE TAX RESULTS FOCUSSED
- Cancellation or reduction of tax interest and penalties
- Elimination or reduction of taxes assessed or reassessed
- Unfreezing of bank accounts frozen for tax reasons
- Lifting of tax liens on homes or businesses
- Return of money or goods seized for tax reasons
- Avoidance of charges being laid or successful defence of criminal prosecutions for tax offences
How We Proactively Deal with Enforcement Actions & Voluntary Disclosures
We collaborate with accountants and taxpayers in being proactive when faced with enforcement actions by the Canada Revenue Agency. The serving of information requirements, execution of search warrants, and holding of inquiries are all highly intrusive measures available to the CRA that need to be guarded against to the greatest degree possible. But in our experience they are never measures of first result for the CRA, but rather of last resort.
Because we've worked closely with the inside of all levels of the Canada Revenue Agency, up to the level of the Deputy Minister, we understand CRA culture. You can reason with the CRA. There are deals to be had. But you must be proactive and utilize the right approach.
Contrary to what some claim, the CRA is not the "tax police." Rather, it is a regulatory arm of government whose primarily goal is the administration and enforcement of the Income Tax Act, including verification of taxable income and collection of payable taxes. Regulatory compliance, rather than punishment, is the CRA's end goal. It's thus possible to get out ahead of potential enforcement action and directly engage the CRA to forestall such action, while at the same time protecting developing information that is being created.
1. PROTECTING TAXPAYER INFORMATION THROUGH SOLICITOR-CLIENT PRIVILEGE
Solicitor-client privilege can at times have magical qualities in the tax world in protecting from the CRA information created for the giving or seeking of legal advice, as well as communications between solicitor and client in the course of that advice. Both the Income Tax Act and the Criminal Code, as well as the Common Law, explicitly recognize the sanctity of solicitor-client privilege. The CRA can't force your lawyer to talk. However, the same is not true with your accountant, or even yourself!
Even though they perhaps should benefit from professional privilege, accountants (and even doctors) are only subject to duties of confidentiality, are are not legally insulated from the government prying information from them about their clients. All their work product could be seized by the government, and they could even be forced to personally answer questions about their clients. But this result can be avoided if a lawyer has retained them for a client to work under the lawyer's direction as an expert for the preparation of legal advice or litigation.
A tax lawyer might retain your existing accountants on your behalf, or might suggest a new accounting firm to assist solely with a CRA enforcement matter. The reason new accountants might be needed is that your existing accountants' workproduct that was created by them for you prior to your tax lawyer's involvement is not suddenly completely cloaked with privilege just because a lawyer has become involved. Thus there could be later disputes over what constitutes new privileged information versus old unprivileged information.
2. ENGAGING WITH THE CRA
Once you've protected as much ongoing taxpayer information as possible, it's time to reach out to the CRA as part of a carefully crafted engagement strategy to negotiate: (a) time delays; (b) information sharing; (c) tax calculation.
Because the CRA aren't the tax police, it rarely is in a huge rush to do things. It doesn't kick down doors (at least we've not seen it happen, although we have seen a couple of safe's be drilled). So the CRA will usually provide a reasonable time delay period in which to organize documents and compile numbers prior to taking intrusive information compulsion action, or will extend the deadline on an information demand if it has already been issued.
During the time delay available, it's important to pin down exactly what kind of information the CRA is seeking. It's often far more limited than you might think. Because the CRA risks becoming overwhelmed with irrelevant information from the many millions of taxpayers it regulates, it tends to be very targeted in only requesting the information it needs. However, when it resorts to using highly intrusively enforcement powers like a search warrant to get information because it is not otherwise getting a response, the taxpayer risks having far more information exposed that was not originally of interest to the CRA because of its co-location with the relevant information. Thus avoiding the CRA taking a look itself for records is vital to protecting privacy.
The last part of the engagement involves tax calculation. If you're behind in your tax return filings, this part of the process will result in those returns being filed. If the CRA was asking for more information to substantiate your earlier filings, this part of the process could eventually result in the CRA issuing a notice of reassessment but that won't happen if you can proactively engage with it to justify your return through supporting documents. And even if there is a reassessment at this stage, you can contest it through filing an Objection, and later a Notice of Appeal to the Tax Court of Canada.
How We Help at the Tax Court of Canada
Only lawyers are permitted to represent others in Tax Court. While individuals can self-rep, corporations are required to be represented by a lawyer unless they receive special permission from the Court.
All appeals of federal tax objection results proceed to the Tax Court of Canada, except for in Quebec where GST matters are dealt with by the Tax Court but Income Tax Act cases proceed before the Cour du Québec, using Quebec Code of Civil Procedure rules.
The tax appeal process is more like a civil trial than an appeal, as there are rules for producing affidavits of documents, oral discoveries of witnesses, and an in-person trial where live witnesses are called to testify before a judge. But like an appeal, there can be tight timelines for filing a Notice of Appeal that can't be missed.
We find out combination of trial experience (we estimate we've run over 500 trials), combined with our appeal experience (no, we haven't done anything close to 500 appeals, but it's still a lot) leads to the best results in Tax Court, given the both factual and legal nature of the process which requires a mastery of both facts and law.
WE MAXIMIZE TAX COURT APPEAL PROSPECTS OF SUCCESS
Approximately 1 in 4 appeals to the Tax Court of Canada succeeds in some respect, but this figure includes the many appeals where appellants are self-represented. Thus prospects of success with a lawyer should be higher, although it's sometimes difficult to precisely predict odds of success. We will give your our frank and detailed opinion, based on decades of experience, on whether investing resources in a tax appeal may be worth it.
Sometimes a cost-benefit analysis if required weighing prospects of success against amount of tax in dispute. As legal fees tend not to significantly rise as the amount of tax in dispute increases, very large amounts of disputed tax may be easier to justify taking to the Tax Court.
Often cases in Tax Court can be settled short of going to trial, given the fresh look the Department of Justice will give to each file, thus expending fees through to the end of an contested trial may not be necessary, but each case is unique and predicting prospects of early settlement is usually not possible until after a Notice of Appeal has been filed and Department of Justice counsel has been appointed.
WE TAKE A TAX COURT APPEAL TEAM APPROACH
We often partner with trusted Certified Professional Accountants (CPA) in our tax appeals practice, with the accountants acting as expert witnesses justifying why a taxpayer is entitled to what s/he is claiming. Lawyer-accountant collaboration means that all of the accountant's work product may be able to be cloaked with solicitor-client privilege, and thus become immune from compulsion and seizure by the CRA. While accountants by themselves take their client duty of confidentiality very seriously, the law has unfortunately not bestowed upon them or other professionals the sanctity of solicitor-client privilege.
How We Help at the Federal Court of Appeal
WE APPLY OUR APPEAL EXPERIENCE TO FEDERAL COURT OF APPEAL TAX CASES
Appeals of unsatisfactory results from the Tax Court of Canada proceed to the Federal Court of Appeal. It's important to note that there is a "right" of appeal. You don't need "leave" to appeal. And you're not stuck attempting to bring a judicial review because of a lack of a viable appeal route.
But don't mistake the Federal Court of Appeal stage as just another kick at the Tax Court can. A shift in strategy is needed to focus almost exclusively on law rather than facts, and specifically on the legal errors the Tax Court of Canada made in its judgment so as to justify the Federal Court of Appeal interfering with that judgment. Appellate deference to trial courts means that the Federal Court of Appeal will only intervene if it can be convinced the Tax Court really got it seriously wrong, in such a major way so as to affect the end result, and perhaps even to have amounted to a miscarriage of justice.
WE MAXIMIZE FEDERAL COURT OF APPEAL PROSPECTS OF SUCCESS
Instead of the one judge deciding a case at the first level of the Tax Court, with the Federal Court of Appeal you'll have three judges sitting on the panel. Therefore different results from the first level Tax Court hearing are definitely possible, since you're more likely to get an "average" take on the law from three learned jurists, than from one who could have outlying views or simply misconstrue the facts.
We find it's easier to provide advance assessments of your prospects of success prior to you filing a Notice of Appeal at the Federal Court of Appeal than is a case with the Tax Court, because before proceeding to the Federal Court of Appeal you'll have a carefully reasoned written Tax Court trial decision to study for error. While we find it's rare that we can't find some objectionable angle on which to base on appeal, clearly some errors are more egregious than others, so we'll be able to give you a frank assessment of your likely success rate. However, as with the Tax Court, where very large amounts of tax are in dispute, an appeal may be more justifiable from a cost-benefit legal fees perspective.
The Federal Court of Appeal might decide a case outright, or might send it back to the TCC for total or partial rehearing based on its directions.
How We Help With Tax Matters Before Provincial Courts
Provincial Courts of Justice and Superior Courts deal with civil and criminal tax disputes initiated by a provincial government, and with criminal tax allegations initiated by the Canada Revenue Agency (the Tax Court and Federal Court don't deal with criminal law). While ciivl tax allegations can wind up costing you a lot of money, criminal or quasi-criminal tax allegations are far more serious in possibly leading to you going to jail, and having huge fines levied against you.
Provincial courts will usually be the ones issuing search warrants and information demands under the Criminal Code. Tax offence allegations can even lead to Criminal Code charges for Fraud against the government, and sometimes the CRA will prefer to proceed with Fraud charges because of the maximum 14 years (!) imprisonment that is possible, rather than the 5 years possible for the offence of Tax Evasion under the Income Tax Act.
Defending either civil or criminal tax allegations is a highly specialized area, where you need someone with experience dealing with provincial and federal tax authorities, as well as explaining tax law to judges (other than those on the Tax Court) who may have very limited experience with tax.
The Tax Law Practice Group
The firm's Managing Lawyer Gordon S. Campbell leads the firm's Tax Law practice. His experience includes:
- successfully litigated tax law cases (Income Tax Act, Excise Tax Act and Excise Act) up to level of Supreme Court of Canada, including at Tax Court of Canada, Federal Court of Canada, Federal Court of Appeal, Ontario Court of Justice, Ontario Superior Court of Justice, Ontario Court of Appeal and La Cour du Québec;
- served as legal counsel and adviser to the Canada Revenue Agency, working closely with auditors, special investigators and senior managers up to the level of the Deputy Minister of National Revenue on Canadian and international tax law and policy issues, including audits, investigations, requirements, search warrants, inquiries, and dispute resolution;
- served as lead Negotiator for Canada in multilateral negotiations with Indigenous peoples involving taxation agreements;
- managed domestic and transnational tax issues arising out of electronic commerce while serving as Canada’s Director of E-Business Development with Industry Canada. including dealing with the Organization for Economic Cooperation and Development (OECD) and G8/G20, and serving as a delegate for Canada to the Asia Pacific Economic Cooperation (APEC) forum;
- author of the The Investigator’s Legal Handbook (Toronto: Thomson Carswell, 2006; 2nd ed 2014), Le manuel juridique de l’enquêteur (Cowansville, QC: Yvon Blais, 2010), articles cited as judicial authority in the field of tax law, and Co-Editor of RegQuest: Regulatory Offences and Compliance Newsletter (Carswell).
Karen Kernisant assists as a lawyer on tax law matters.
Nancy Hamelin is the lead Law Clerk for Tax matters.
They are assisted by a team other in-house and external lawyers, law clerks and accountants, offering clients the expertise they require.