ARTICLE · 13 AUGUST 2026

Cost Awards In Tax Litigation

Millar Kreklewetz

Recent Federal Court of Appeal jurisprudence demonstrates that unsuccessful tax litigants must generally pay the government's legal costs regardless of financial difficulties, while successful litigants may still face cost awards due to procedural rules. Understanding the discretionary nature of cost awards in Tax Court of Canada proceedings is critical, as variables ranging from settlement offers to case complexity can significantly impact who pays legal bills.

CanadaLitigation, Mediation & Arbitration

Robert Kreklewetz

Isaac Thompson

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"Costs" are awarded to successful litigants in tax litigation, as in most forms of litigation, but are not well understood by the public. Indeed, many litigants may head to the Tax Court of Canada (“TCC”) without first understanding the rules behind cost awards and without contemplating how these "costs" awards work when on the losing end of the litigation and/or appreciating that they may well be on the hook for the government’s legal bills when they do lose.

In this Tax Appeals Report, we break down some of the basics of TCC cost awards that prospective tax litigants should know.

The Basics

The TCC has discretion to award costs for matters heard under General Procedure Rules (used in larger cases) or Informal Procedure Rules (used in smaller cases).

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Cost Awards In Tax Litigation

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