3. Tax Court of Canada Act Amendment (Corporate Representation) – Division 30

Qs & As

Part 4 – Division 30
Tax Court of Canada Act Amendment (Corporate Representation)

Q. What does this amendment do?

This amendment creates the authority for the Tax Court of Canada (TCC) to allow corporations and other taxpayers who are not individuals, such as, unincorporated associations and other entities, to be represented before the TCC, under its General Procedure, by a non-lawyer in special circumstances.

Q. Why is it necessary for a corporation to be represented by a lawyer before the TCC?

Lawyers are the only professionals qualified to represent a client before a court of law and, as such, they play an important role in the efficient administration of justice.

The TCC is a superior court of record and its rules of evidence and procedure are comparable with the rules of other superior courts. That is why the Tax Court of Canada Act provides that, unless a party to a proceeding chooses to appear in person (i.e., as a self-represented litigant), it must be represented by a person licensed to practice as a barrister, attorney or solicitor.

Q. Why should the Tax Court of Canada Act be amended to allow a party that is not an individual to be represented by a director, officer, employee, member or partner?

The costs of legal representation, particularly in the field of tax law, can affect a taxpayer’s choice to challenge a notice of assessment issued by the Minister of National Revenue. Individuals who are unable to afford a lawyer may choose to represent themselves before the TCC. Corporations and other associations or entities who wish to launch an appeal also face financial hardship. However, unlike individuals, these entities cannot appear “in person”. For small family businesses or non-profit organisations, the choice may be between hiring a lawyer or choosing not to challenge their tax assessment before the TCC.

Requiring corporations and other associations or entities to be represented by a lawyer must remain the rule before the TCC to ensure the efficient administration of justice. However, the proposed amendment to the Tax Court of Canada Act would give the Court some discretion to allow a corporation or any party that is not an individual, in special circumstances, to be represented by a director, officer, employee, member or partner, rather than a lawyer. This amendment would bring the TCC’s powers in line with those of the Federal Court and the Federal Court of Appeal, as well as most other superior courts, and strike a balance between access to justice and the efficient administration of proceedings before the TCC.

Q. What is the difference between the General Procedure and the Informal Procedure of the TCC?

The General Procedure is more formal and its rules of evidence and procedure are comparable to the rules of other superior courts across the country. In contrast, the Informal Procedure is comparable to a small claims court. It applies to tax claims of $25,000 or less, and is designed to allow appeals to be heard expeditiously and informally.

Q. Are there currently tax appeals where non-lawyers can represent taxpayers before the TCC?

Yes. When a taxpayer, including a corporation, files an appeal under the TCC’s Informal Procedure, they can choose to be represented by either a lawyer or an agent. An agent does not require any professional qualifications and could be a friend or family member.

Q. Why was the TCC not given the power to authorize corporations to be represented by a non-lawyer, when it was given to the Federal Court and the Federal Court of Appeal?

The current provision of the Tax Court of Canada Act was introduced in 1991 when the TCC was given the exclusive jurisdiction to hear appeals from tax assessments. The current rule, which requires taxpayers to be represented by a lawyer, was introduced to mark the change from the TCC being an informal court to it being a formal court, with rules comparable to other superior courts across the country. However, nothing suggests that Parliament put its mind to the question of whether the TCC should be given the power to make exceptions in special circumstances. The proposed amendment will enhance access to justice and align the powers of the three courts as they relate to legal representation.

Q. If this proposed amendment improves access to justice for corporations, why doesn’t it do the same for individual by allowing them to be represented by non-lawyers, such as accountants?

Only a lawyer is properly qualified to represent a client in an appeal under the TCC’s General Procedure. The purpose of the amendment is to permit corporations and other associations or entities, in special circumstances, to be represented by a member of its organization, which would be the equivalent of an individual representing themselves. The amendment is not meant to permit representation before the TCC by an external accountant or other tax professional.

Q. Who would be permitted to represent the corporation?

Representatives would be non-lawyers within these organisations, being a director, an officer, an employee, a member or a partner who, according to the TCC, can adequately represent the taxpayer before the Court while complying with the TCC Rules.

Q. What are the “special circumstances” where the TCC may grant leave to a corporation to be represented by a non-lawyer?

There are a number of Federal Court decisions that set out factors to be considered in determining whether a corporation should be permitted to be represented by an officer or employee. They include the ability of the corporation to afford legal representation, the complexity of the issues, the competence of the individual employee or officer to represent the corporation, the individual’s capability to deal expeditiously with the procedural issues and whether the individual will be a witness during the proceeding.

Q. What types of organisations would benefit from this amendment?

The corporations and other associations or entities appearing before the TCC who are not individual “flesh and blood” litigants cover a broad spectrum. They may be small private corporations, family businesses, partnerships, sports associations, or non-profit associations.

Q. Once implemented, will this measure require any use of public funds?

No

Overview

Part 4 – Division 30
Tax Court of Canada Act Amendment (Corporate Representation)

Division 30 of Part 4 amends section 17.1 of the Tax Court of Canada Act to:

  1. provide that a party that is not an individual shall be represented by counsel in all proceedings under the General Procedure before the Tax Court of Canada; and
  2. provide that the Tax Court of Canada may, in special circumstances, grant leave to a party that is not an individual to be represented by a director, an officer, an employee, a member or a partner.

Currently, a corporation or other association that cannot afford a lawyer may decide not to pursue a tax dispute before the Tax Court of Canada. This disproportionately affects, for example, small family businesses or non-profit organizations, which may be particularly vulnerable to economic hardship. Allowing such entities to be represented by a director, an officer, an employee, a member or a partner, in special circumstances, will alleviate unfairness and enhance access to justice. It will also bring the Tax Court of Canada’s powers in line with those of the Federal Court and Federal Court of Appeal, both of which have the ability to allow a corporation, a partnership or an unincorporated association to be represented by a non-lawyer in special circumstances.

This measure will help the Government meet its commitment to enhancing tax fairness and public confidence in the tax system, and improve access to justice.

These legislative amendments will come into force on Royal Assent.

Key Messages

Part 4 – Division 30
Tax Court of Canada Act Amendment (Corporate Representation)

Clause-by-Clause

Part 4 – Division 30
Tax Court of Canada Act Amendment (Corporate Representation)

Clause 321

This clause amends section 17.1 of the Tax Court of Canada Act by: