Divided Jurisdiction For Tax Disputes

Our tax system is complex, with many potential procedural pitfalls that taxpayers need to navigate. One such issue is the jurisdictional boundaries between the Tax Court and the Federal Court for tax disputes. Recent Supreme Court's companion decisions in Dow Chemical Canada ULC v. Canada ("Dow Chemical"), and Iris Technologies Inc. v. Canada ("Iris") provide clarifications on this issue. However, these "clarifications" may result in a less streamlined and more costly process and thus may not be good news for taxpayers.

Judicial History

Dow Chemical was first argued before the Tax Court of Canada (the "Tax Court"). The Tax Court concluded that an appeal of an assessment can be allowed on the basis that the Minister did not exercise her discretion under subsection 247(10) of the Income Tax Act (the "ITA"). The Tax Court held, in paragraphs 29, that the discretion was "an essential component of the assessment" and therefore was within the exclusive jurisdiction