Proposed Amendments to the Informal Procedure Monetary Thresholds

Via email: Justine.Malone@justice.gc.ca

Justine Malone
Senior General Counsel, Tax Law Services Portfolio
Department of Justice
Ottawa, ON

Dear Ms. Malone:

Re: Proposed Amendments to the Informal Procedure Monetary Thresholds

We are writing on behalf of the Canadian Bar Association (CBA) members of the Tax Court of Canada Bench and Bar Committee (the “Bench and Bar Committee”) in response to your letter dated September 12, 2025 to the Canadian Bar Association, seeking input on proposed legislative amendments to the Tax Court of Canada Act that would increase the monetary thresholds for informal procedure appeals to the Tax Court of Canada (the "Consultation Letter").

The CBA is a national association of over 40,000 members, including lawyers, law students, notaries and academics. Our mandate includes promoting the rule of law, improving access to justice and advocating for effective law reform. The Bench and Bar Committee is composed of members from the National Commodity Tax, Customs and Trade Section and the Taxation Section of the CBA, and serves as the CBA’s liaison with the Tax Court of Canada (“TCC”), bringing together practitioners who regularly appear before the Court to identify and discuss issues arising in tax litigation practice.

We also acknowledge the November 11, 2025 letter submitted by the Joint Committee on Taxation of the Canadian Bar Association and CPA Canada (the "Joint Committee"), which letter generally supports increasing the informal procedure thresholds, and also suggested that the Department of Justice consider undertaking a broader consultation of the tax dispute resolution process to help identify additional procedural or administrative improvements that would further enhance accessibility and efficiency for taxpayers and counsel alike. While we agree with the general direction of the Joint Committee's comments, we are writing to offer additional considerations for the Department of Justice’s review.

We note that Budget 2025 included a statement that the Department of Justice will explore opportunities to review the limits to access the Informal Procedure in income tax and GST appeals to more effectively deliver legal services, promote cost-effective dispute resolution and lower litigation cost for Canadians and Canadian businesses and the federal government.

The proposed amendments described in the Consultation Letter would increase the Informal Procedure monetary thresholds:

• For appeals filed under the Income Tax Act (Canada) (the "ITA"), from $25,000 or less to $50,000 or less for the aggregate amount in issue per year, or $100,000 or less for the amount of a loss in issue; and
• For appeals filed under Part IX of the Excise Tax Act (Canada) (the "ETA") from $50,000 or less to $100,000 or less for the amount in dispute (although not specified, we assume that this threshold would continue to be based on each GST reporting period).

The proposed amendments do not indicate whether there will be changes to the General Procedure thresholds. The General Procedure currently has three classes with corresponding monetary limits, as follows:

• Class A proceedings – where the aggregate of all amounts in issue is less than $50,000, and, where the appeal in which a loss has been determined under the ITA, the amount in issue is less than $100,000;
• Class B proceedings – where the aggregate of all amounts in issue is $50,000 or more but less than $150,000, and, where the appeal in which a loss has been determined under the ITA, the amount in issue is $100,000 or more but less than $300,000; and
• Class C proceedings – where the aggregate of all amounts in issue is $150,000 or more, and where the appeal in which a loss has been determined under the ITA, the amount in issue is $300,000 or more.

Feedback on the Proposed Amendments

For some taxpayers, the increase to the limits of the Informal Procedure monetary threshold is welcome. It will reduce the time to reach the TCC and lower the cost of litigation, as no formal litigation pre-trial steps are required and corporate taxpayers may be represented by agents rather than lawyers.

However, taxpayers who elect into the Informal Procedure may increase the burden on TCC resources as there are fewer pre-trial steps that can assist in resolving matters early and reducing trial time and adjournments. The Bench and Bar Committee submits that these matters could be alleviated by requiring Informal Procedure litigants, before their trial date, to disclose the documents they intend to rely on. This requirement could be introduced without requiring pre-trial oral examinations.

If the monetary thresholds are increased, changes will be also needed to section 17.3 of the Tax Court of Canada Act, to avoid inconsistencies. Currently under section 17.3, no oral examination for discovery is held if the amount at issue in an income tax appeal is $50,000 or less, or the amount of loss at issue in an income tax appeal is $100,000 or less, or the amount at issue in a GST appeal is $50,000 or less. It is unclear whether the proposed amendments would also increase these thresholds as well. It would be inconsistent for a Class A proceeding and an Informal Proceeding to have the same monetary threshold. This suggests that the Class limits in General Procedure also need to be modernized.

Increasing the Informal Procedure monetary threshold may also strain the TCC’s already pressured schedule. Under the Informal Procedure process, the TCC must fix a hearing date within 180 days, or within 365 days of the filing of the reply, if the TCC finds it would be impracticable in the circumstances. Increasing the threshold will presumably substantially expand the number of cases that will need to be heard within the expedited 180-day timeline. With the TCC scheduling and docket already under significant pressure, and without additional resources, the Bench and Bar Committee is concerned the TCC will encounter difficulties meeting the 180-day requirement, potentially undermining timely access to justice. Moreover, in practice, Informal Procedure appeals drive a disproportionate high rate of adjournments. Raising the threshold without additional process improvements could further challenge the TCC’s already strained calendar and backlog.

As a result of the increase, the members of the Bench and Bar Committee anticipate that approximately 20% of General Procedure appeals would likely migrate and become Informal Procedure appeals. Again, the TCC’s capacity to manage a sudden influx of Informal Procedure appeals and hold hearings on a short timeline, may require additional funding to the TCC. Further, consideration should be given as to whether and how existing General Procedure appeals can (at the election of the taxpayer) transition to the Informal Procedure to ensure consistency, efficiency and fairness.

Thus, in the absence of other process improvements, there is a risk the stated objectives in Budget 2025 of increasing the Informal Procedure monetary thresholds may not be met.

As the rationale of the changes appear to be to “ensure that more taxpayers can benefit from informal procedures, which are designed to be more accessible, efficient, and cost-effective”, it also may be appropriate to consider changes to the General Procedure processes to make them more accessible, efficient and cost-effective. This would involve analysis about the actual cost of tax litigation and whether the Informal Procedure monetary thresholds are still too low. For example, if the cost of a TCC trial is on average $500,000, taxpayers will not go to the TCC to appeal an amount over $100,000 but less than $500,000, which would fall under the General Procedure. This has ramifications on access to justice, efficiency and cost-effectiveness.

We consider that it is important to consider all downstream effects and alternative cost-reduction measures as part of a meaningful consultation process.

The CBA members of the Bench and Bar Committee would welcome the opportunity to meet with the Department of Justice and provide any additional input.

Yours truly,

(original letter signed by Yves Faguy for Marie-France Dompierre, Anu Nijhawan and Jesse Waslowski)

Cc: Jade Boucher, Assistant Deputy Minister, Tax Law Services Portfolio
Department of Justice Canada / Government of Canada  jade.boucher@justice.gc.ca