THE STANDING SENATE COMMITTEE ON LEGAL AND CONSTITUTIONAL AFFAIRS
EVIDENCE
OTTAWA, Thursday, October 1, 2026
The Standing Senate Committee on Legal and Constitutional Affairs met with videoconference this day at 10:32 a.m. [ET] to study the subject matter of those elements contained in Division 5 of Part 4 of Bill C-31, A second Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025, and to consider a draft report.
Senator David M. Arnot (Chair) in the chair.
[English]
The Chair: Good morning, honourable senators. I’m David Arnot, a senator from Saskatchewan and chair of this committee.
Before we begin, I would like to ask senators and other in‑person participants to consult the cards on the table for guidelines to prevent audio feedback incidents. Please ensure to keep your earpiece away from all microphones at all times, and please do not touch the microphone. It will be turned on and off by the console operator. Please avoid handling your earpiece while your microphone is on. You may keep it on either your ear or the designated sticker on the desk. Thank you for your cooperation.
I will now ask my Senate colleagues to introduce themselves.
[Translation]
Senator Miville-Dechêne: Julie Miville-Dechêne from Quebec.
Senator Clement: Good morning, colleagues. Bernadette Clement from Ontario.
Senator Dalphond: Good morning, colleagues. Pierre Dalphond from the De Lorimier division in Quebec, replacing Senator Oudar.
[English]
Senator K. Wells: Kristopher Wells, Alberta, Treaty 6 territory.
Senator Simons: Paula Simons, Alberta. I come from Treaty 6 territory as well.
Senator Pate: Hello and welcome. I’m Kim Pate. I live here in the unceded, unsurrendered and unreturned territory of the Algonquin Anishinaabe.
Senator Dhillon: Good morning and welcome. I’m Baltej Dhillon from British Columbia.
The Chair: Colleagues, I have the honour of introducing our new clerk at the committee, Ms. Emily Barrette. Emily has been a clerk with the Senate procedural sector since 2017. She worked for five years in the Chamber Operations and Procedure Office before joining the Committees Directorate, where she was previously assigned to the Standing Senate Committee on Social Affairs, Science and Technology. Many senators know her from that work. She has just returned to work following an 18-month parental leave. She has a Bachelor of Arts from McGill University in history and political science and a Master of Arts from the University of Toronto in European, Russian and Eurasian Studies.
We also have our analyst, Allison Lowenger, with us. She joined last year, and we have two additional analysts joining for a total of three on this committee. Beside me is Laura Blackmore. She has worked in a non-partisan capacity on Parliament Hill for over a decade. Since 2018, she has been with the library’s research team, and for the past few years, she has been assigned to the Standing Senate Committee on Social Affairs, Science and Technology. Again, the senators know her from that work. We’re lucky to have her. She has a master’s degree in history and an undergraduate degree in international studies and modern languages. Julian Walker joined us over the summer. He is not here today. He is a parliamentary analyst and has been a member of the Library of Parliament and research service for over 20 years. He, in fact, has previously served as an analyst on the Standing Senate Committee on Legal and Constitutional Affairs in the past. He is a lawyer and a member of the Ontario bar.
With those introductions, I welcome all the new players to our team. We look forward to working with you, and thank you very much for assisting us in all the work so far.
The steering committee has met all these people in the past, and we’ve worked hard to get to this day, so thank you, Ms. Barrette, for your professionalism.
Honourable senators, we are meeting today to begin our pre‑study of the subject matter of those elements contained in Division 5 of Part 4 of Bill C-31, A second Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025.
For our first panel, we are pleased to welcome, from the Department of Justice, Justine Malone, Senior General Counsel, Assistant Deputy Minister’s Office, Tax Law Services Portfolio, and from the Canada Revenue Agency, Mr. William Wong, Director General, Program Management Directorate, Appeals Branch. Welcome, and thank you both for joining us here today.
We will begin with opening remarks from the Department of Justice followed by questions from the committee members. Ms. Malone will make a five-minute introduction speech, and Mr. Wong is here to assist in answering all questions, as is Ms. Malone.
Ms. Malone, the floor is yours.
Justine Malone, Senior General Counsel, Assistant Deputy Minister’s Office, Tax Law Services Portfolio, Department of Justice Canada: Good morning, chair and honourable senators.
I appreciate your invitation to appear today before the Standing Senate Committee on Legal and Constitutional Affairs to speak to the proposed amendments to the Tax Court of Canada Act, which are set out in Part 4, Division 5 of Bill C-31, and concern the measures to increase the monetary thresholds for the informal procedure in income tax and GST appeals before the Tax Court of Canada.
The Tax Court of Canada Act provides for two types of appeal procedures: the informal procedure and the general procedure. The informal procedure is a simplified appeal process, which is similar to a Small Claims Court process. This enables Canadians to bring their cases to trial more quickly and cost effectively.
Currently, taxpayers can elect to have their income tax appeals heard under the informal procedure, where the tax and penalties in issue are up to a maximum of $25,000 — or, in the case of a tax loss, the amount in issue is up to $50,000 per year. For GST appeals, the current limit for tax and penalties in issue is $50,000.
The monetary thresholds for the informal procedure were last increased in 2013. The current amendments aim to double the existing thresholds to bring them more in line with current realities. Under these amendments, taxpayers would now access the informal procedure where the taxes and penalties at issue total up to a maximum of 50,000 per year or, in the case of a loss, $100,000 per year. And for GST appeals, the tax and penalties in issue would be increased to a maximum of $100,000 per year. This measure will help improve access to justice, as more tax appeals will fall within the informal procedure and monetary thresholds. This will increase the proportion of taxpayers before the Tax Court of Canada who are allowed non‑lawyer representation and will allow more taxpayers to benefit from the cost and time savings of disputing their assessments under a more simplified procedure.
It also reduces the time and resources the Crown would spend to defend and participate in these appeals. This measure supports, in that vein, the government’s priorities to reduce costs for Canadians and to spend less on government operations. Thank you for the opportunity to appear. I will be pleased to answer any questions the committee may have.
The Chair: Thank you for your presentation. We will move to questions from the senators.
Senator Batters: Thank you for being here today and for helping us with this legislation. My first question is for the Department of Justice Canada representative here today. Regarding the higher thresholds you describe that will allow more taxpayers to use that informal procedure, have you assessed the impact of that reform on the workload of the Tax Court of Canada? Will the current complement of judges and registry staff be sufficient? What measures are you planning to prevent potentially longer delays?
Ms. Malone: In the course of reviewing the increase of the amount and the mandate that was given to us, we did not look into the impact on the operations of the court in terms of judges and increased workload —
Senator Batters: You did not?
Ms. Malone: We did not, no
Senator Batters: Why not?
Ms. Malone: The aspect of the increase of the Tax Court’s workload is more within the expertise of the Tax Court. There are a lot of variables that go into whether the increase to access to informal procedures would eventually increase the workload for the judges. An increase in informal procedure appeals will also decrease the work related to general procedure appeals because those appeals have more preliminary pre-trial steps that include the involvement of judges. We did consult the Tax Court in terms of their views on these proposed measures, and the Tax Court was supportive of the increase in the monetary thresholds. The issue of the funding of the Tax Court did not come up in discussions with the court.
Senator Batters: Okay. In a situation where we have court delays that we are constantly hearing about at all levels, that could have been something that I thought the department would actually consider.
For the Canada Revenue Agency representative, according to your estimates, how many additional taxpayers will be able to use the informal procedure each year under these new thresholds, and do you expect this simpler process to encourage taxpayers who otherwise would have given up on challenging your assessments to file an appeal?
William Wong, Director General, Program Management Directorate, Appeals Branch, Canada Revenue Agency: Thank you for the question, senator. We based our analysis on historic information that we have at the CRA. Our best estimate is something like 400 additional taxpayers. We have inventories or intakes of approximately 3,700, so it’s something like 20% that we believe will avail themselves of that service. Of course we don’t know. That is our best estimate at this point.
Senator Batters: Okay. Back to the Department of Justice. There is one clause, 263, that maintains the existing thresholds for appeals where the notice of appeal was filed on or before the date that the provisions will come into force for this legislation. Why not allow taxpayers whose hearings haven’t yet begun to benefit from the new thresholds that you are seeking here, and have you considered giving them that option? What obstacles would you say would justify ruling it out?
Ms. Malone: There was a consideration. Clause 263, in terms of the implementation and taking into effect of the amendments, we considered the impact of having, for example, the increase take place before the coming-into-force provisions. It was determined that it would create complications in terms of appeals that were presently before the court, and complications in terms of appeals that were already filed. If the appeal were to be heard, for example, at a certain date, then they would have to revert to the informal procedure. Basically, it would turn a general procedure into an informal procedure midway. It was determined that, to avoid any confusion on the part of the taxpayers, this coming-into-force provision, as of the date of Royal Assent, would be the most efficient and convenient way of doing it.
Senator Batters: Thank you.
[Translation]
Senator Miville-Dechêne: My question is for Ms. Malone from the Department of Justice.
This reform of the appeal process for the Tax Court of Canada enables appellants to represent themselves. If I understand correctly, this is new for the process. Tell me how this will complicate the task for judges or those around the court, because, historically, when people represent themselves, it can sometimes be quite difficult and prolong the proceedings.
Ms. Malone: The amendment under this division does not aim to change taxpayers’ representation. They have the opportunity to represent themselves regardless of the procedure. An individual can always represent themselves. A provision states that in certain circumstances and at the judge’s discretion, they may be represented by an officer of a corporation, including a senior executive or a president of the company. This means that whether it’s the informal or general procedure, individuals always have the right to represent themselves. In terms of representation, the advantage of the informal procedure is that an individual or a company has the right to be represented by an accountant, a friend or an adviser, unlike the general procedure, which provides that if someone doesn’t represent themselves, they must be represented by a lawyer.
Senator Miville-Dechêne: It’s more flexible, then?
Ms. Malone: Yes. The rules are simply increasing the number of cases in which an individual who chooses to be represented would have the option to be represented by a non-lawyer.
Senator Miville-Dechêne: You don’t feel that this will extend the timelines compared with what takes place now?
Ms. Malone: No. Normally, the purpose of the informal procedure is precisely to reduce timelines, since no procedure can be started before the trial. There is no sharing of documents or questioning beforehand. The process is extremely streamlined, which means that once the person has filed their notice of appeal under the informal procedure, the next step is to go before a judge. That means it’s streamlined in such a way that a person normally wouldn’t need a lawyer to understand the procedure.
Many people will represent themselves in general proceedings. That situation is sometimes what tends to prolong the hearing under the general procedure, since there’s a lack of understanding of the stricter procedural rules for document exchange, examination for discovery and disclosure of evidence. The answer I would give you is that, no, our review of the amendments would not mean that appeals under the informal procedure would take any longer, since individuals generally represent themselves anyway, and they can be represented by a lawyer if they wish. However, the steps would still be to file the notice of appeal and undergo the court hearing. Because it’s an informal proceeding, the rules of evidence are more flexible, and Department of Justice lawyers tend to be quicker to contact taxpayers to explain the process to them because they are not represented.
Senator Miville-Dechêne: I have a sub-question: Who are the appellants?
Since I’m not very familiar with the Tax Court, paint me a picture of the appellants. Are we mainly talking about companies that can defend themselves well with lawyers, or are there a lot of small taxpayers? It isn’t always large amounts of money that are at stake. What are the proportions?
Ms. Malone: These are generally individuals, given the amounts, because these appeals would include amounts for child tax credits or medical tax credits, for example. There’s really a bit of everything, because it’s really the amount that determines who takes advantage of the informal procedure. For example, it may be a family business that earns millions of dollars a year, but in that year, the assessment in question is only $30,000, so it will opt for the informal procedure. It can also use the general procedure if it wishes, since the informal procedure is a choice. Informal proceedings generally involve individuals, but not exclusively. It’s really a bit of everything, but given the amounts in dispute —
Senator Miville-Dechêne: You’re strengthening access to justice, then, but what I want to know is . . . . I calculated that you hadn’t reformed the limits in 33 years, since 1993.
Ms. Malone: The last increase was made in 2013: The amounts were increased from $12,000 to $25,000.
Senator Miville-Dechêne: Okay, so I don’t have the right information. In that case, it has been about —
Ms. Malone: 13 years.
Senator Miville-Dechêne: 13 years. Is that a normal pace for you? Some lawyers say there should be more updates and improvements.
Ms. Malone: It was done twice. The first time, the initial amount was $7,000. It was then raised to $25,000 in 2013, and that was 13 years ago, so I can’t say that there’s a predetermined pace. Now, in 2026, it was decided that it was time to increase the amounts, because it had been 13 years and the amounts were no longer representative of the economic reality.
Senator Miville-Dechêne: All right. Thank you.
[English]
Senator Pate: Welcome again. Further to my two previous colleagues’ questions, I’d like to request anything in writing that was used around that progression and the workload of judges. That would be very helpful.
These proposed tax measures that we’re studying today seem to be in response to the cuts the government requires departments to make to reduce their budgets by 15% over three years. At the same time, we have increasing calls from Canadians who are really struggling with mounting economic instability, poverty, homelessness and the like, and one of the things the government could do to safeguard revenue and ensure that everybody is paying their taxes is to look at the ultra-rich and the tax evasion practices that folks like our colleague Senator Downe has been focused on. I’m curious what steps, if any, the current government took to explore with your departments recuperating some of these other amounts owed by the ultra-rich as a potential source of tax revenue before imposing budget cuts across federal departments and what steps both your departments have taken to assess whether government policies, including the present cost-saving measures, will affect your ability to focus resources on addressing aggressive tax planning by the wealthiest?
Ms. Malone: This is not something that I was prepared to answer today in the course of this presentation. I don’t mean to pass it over to my colleague, but normally, these types of amendments to the tax system, for example, aggressive tax planning — basically, tax policy items are normally reviewed by the Department of Finance Canada in consultation with the Canada Revenue Agency. As an official for the Department of Justice Canada, I think there is little we could say on that issue because we are not typically involved in these discussions. For the purposes of this meeting today, I’m afraid, Senator Pate, I don’t have information to give on that.
Senator Pate: If there is anything in writing you can provide regarding the analysis of the likelihood of achieving greater results by addressing the ultra-rich and tax evasion versus these kinds of measures, I would be interested in that, and if Mr. Wong can provide more details, that would be great.
Mr. Wong: Unfortunately, that area of responsibility is not why I am here. I represent the agency in areas of recourse and relief. Those are not responsibilities in my purview. However, if the Canada Revenue Agency does need to get back to you, perhaps we can.
Senator Pate: Okay. To follow up on recourse and review, in the Pandora, Paradise and Panama Papers, there are people named whom we know owe taxes, and in fact, it would be a way of increasing revenues. Again, as Senator Downe has pointed out, Canada has not pursued those very vigorously. If there is analysis there about the choice to not pursue those particular avenues, I would be interested in receiving those as well, either in writing after this or now if you have the information.
Mr. Wong: Thank you for the question.
Senator Simons: Senator Batters asked the question I had intended to ask, and I would like to add my surprise that there was no thought given to what the downstream consequences of this might be for the system.
I’ve pivoted to ask you a new question. Let’s look at clause 261, which amends section 18.30022. As I understand it, if somebody goes in seeking this informal procedure and, suddenly, it turns out that because of how long things have taken and because interest has built up or for other reasons, it is not $100,000 — maybe it is $110,000 or $130,000 — they can elect to still do the informal procedure stream, but they can only appeal up to $100,000. Is that correct?
Ms. Malone: That’s correct.
Senator Simons: It says that this is to help small businesses still be able to access the system, but would they, then, just have to eat the rest of the loss?
Ms. Malone: This is why this was amended as well. The reason the increase is necessary is because the Tax Court of Canada can only allow an appeal under the informal procedure up to the threshold of $100,000, so the powers of the court are also what is impacted by this limit. This provision provides that if the tax court notices or it becomes apparent that the amount at issue is over the threshold because the tax court does not have the power to grant relief over that, they will ask the taxpayer to either move to the general procedure or, if, for some reason, they prefer to stay in the informal procedure, to agree that they will be limited to $100,000.
I’m trying to think of an example where the taxpayer would want to limit it. If, for example, the amount is $105,000 and there’s —
Senator Simons: It would cost more than $5,000 to hire a lawyer and go through the other process.
Ms. Malone: Maybe. Or they don’t think they’re likely to be successful on that $5,000 because often there are multiple issues in the appeal. The informal procedure remains the choice of the taxpayer. If there is no procedure under which they would be forced to forego an amount, they would have to move to the general procedure if the amount is higher. That has to do with the powers of the court that are limited.
Senator Simons: I understand that. If I’m a judge and it’s $105,000, you would feel silly saying, “Sorry, the limit is $100,000, and if it’s $100,050, then I can’t hear you.” But it does put the taxpayer in the position that they would have to reckon for themselves whether the cost of going through the general procedure is so cost prohibitive that they are better off taking the discount on the $100,000. If they’re appealing $120,000 and it’s going to cost them more than $20,000 in legal fees, then they’ll opt. It seems a little bit that we’re still asking them to forfeit — they may have legitimate grounds to claim that whole amount.
Ms. Malone: I guess that’s what the limit imposes. That’s why we thought it should be increased because at one point, the limit was too low.
Just a note, there is also a provision in the act that if it’s inconsequential, if it’s $100,005, the tax court has the discretion to ignore. That’s one of the amendments.
Senator Simons: Is there a definition of inconsequential?
Ms. Malone: No, it leaves it to the judge’s discretion. In practice, it would be a discussion with the taxpayer in terms of legal fees because the taxpayer is in the general procedure. They do not have to hire a lawyer. They can represent themselves. It’s just that the process is a bit more complex for them. If somebody who is not a lawyer needs to understand what a list of documents is and what an examination for discovery is. Department of Justice counsel are always there to assist them.
Senator Simons: There is duty counsel?
Ms. Malone: The Department of Justice represents the CRA, but it’s their practice to help unrepresented litigants in understanding the process. They don’t help them in the tax appeal.
Senator Simons: Self-represented litigants are a friction in the tax system. It can often cause real delays. Thank you. That’s very helpful.
Ms. Malone: They need help sometimes, yes.
Senator Clement: Good morning. Thank you for being here. I’m having flashbacks. That’s a scary place, even for lawyers — tax courts. I remember when I was a young lawyer, and I appeared there when I thought I was going to have a tax career and then quickly pivoted to legal aid, where my heart and soul were more comfortable. I was in that space, and it was a very intimidating space, even for lawyers.
I have the same reaction to the question from Senator Batters. There’s going to be potentially — you have estimated 400 more — a 20% increase. It’s interesting that the contemplation of what that’s going to mean for resources for the court is not part of this conversation, so I appreciate that.
You did say, in response to Senator Batters, that the tax court was consulted. My first question would be, if you could tell us about what the tax court had to say about this, that would be great.
The second question I have is that in between that Senator Simons was talking about. There’s a simplified procedure, which is great, by the way. Good plan. Then there’s the general procedure, but there’s this in between. It’s my understanding that some tax practitioners have proposed a third simplified procedure for disputes that exceed the informal procedure’s monetary thresholds. In other words, a larger dollar amount doesn’t necessarily mean a more complicated case. The proposal is intended to address cases where the general procedure may impose greater formality than the dispute requires. It could be a larger amount but a pretty standard kind of case. Has that been considered? Another option to bring in larger amounts when the case is relatively straightforward? Please tell us what the tax court had to say when you consulted them.
Ms. Malone: The Tax Court of Canada, when we consulted on this specific measure, was supportive of the measure. The tax court did make other comments, but I don’t know that I can go into the details of the other comments today. I would prefer to make sure that the Tax Court — I can share the other information.
But in terms of —
Senator Clement: Can you check?
Ms. Malone: I can check with the Tax Court whether or not they’re comfortable with me sharing their additional comments. But they were supportive of this measure of the increase of the threshold limits.
In terms of what the CBA proposed, a sort of hybrid, where the amount in issue wouldn’t be the deciding factor, but the complexity of the issue that wasn’t examined in the context of this measure, which was to increase this amount. It needed to be increased.
Proposals that are made to the Department of Justice in terms of the amendments of the act, we are always open to considering other procedures, amendments or proposals. It wasn’t done in the context of this amendment because this was a very targeted amendment.
I would note, though, that there are sometimes extremely complex informal procedure cases that end up going all the way to the Supreme Court of Canada. Then there are some extremely simple general procedure cases that involve expenses. They are already identified as such when the notice of appeal comes in. We know which are the complex and less complex ones.
Senator Clement: — as well from that?
Ms. Malone: We know, going before the court, looking at the Notice of Appeal, that this will be a more complex one than usual. The short answer, in terms of the amendment, we know it was not contemplated, but we’re always open to considering other options.
Senator Clement: Okay. Thank you.
Senator Dhillon: Thank you for being here today. A number of my questions have been answered. With the increase in informal procedure decisions, we know those are not going to be precedent-setting because they’re informal. Have you thought about what the remedies could be when we have more legally important questions that are being resolved in informal decisions and they are non-precedential judgments? How do you reconcile that for taxpayers and for the department itself?
Ms. Malone: I’ll preface my answer by saying that the increase in the threshold, we viewed this as sort of bringing it in line with what was there before, such that there shouldn’t normally be a drastic change in the nature of the files because we’re just following normally. A $25,000 expense case in 2013 would be closer to a $50,000 expense case. We don’t necessarily see this increasing the amount as impacting the legal issues that are raised in the appeal.
Assuming that it would increase the number of legally important issues that are heard in front of the informal procedure and they’re not precedential, it’s still a decision. It impacts, first of all, the taxpayer impacted, and it’s a decision that would inform other parties going forward whether or not it gives guidance to other parties. Just because it’s not precedent setting doesn’t mean it doesn’t exist, and it’s not out there and it’s not informative. In terms of the impact of how it would impact future decisions, it’s extremely hard to predict because I don’t know that there necessarily would be an increase in these legal issues that are determined. As I mentioned, you could have a legal issue in a $5,000 case that’s very important, and you could have a $1 million case that does not have a legal issue. Just to say that was not part of the consideration.
Senator Dhillon: That’s fine. I appreciate that.
I’m glad to hear that it’s part of your consideration. If there are consequential decisions that may impact the department or taxpayers down the way, I’m assuming there are processes currently in place that will benefit taxpayers should bad consequential decisions be decided in an informal setting?
Ms. Malone: Well, it certainly benefits the taxpayer who was successful in the appeal. The same judges that hear informal procedure cases and general procedure cases are different judges. In terms of looking at the informative value of the decision, parties know it’s likely to go before maybe the same judge or a judge that might look at this decision and use it as an informative decision in terms of the outcome. Even though they’re not legally binding, these decisions will often be followed. If they’re not, there’s usually a reason why one or the other party asks the court not to follow them. That rule just means that the court is not obligated to follow the decision, but they can, if they find it persuasive.
Senator Dhillon: From previous iterations of the changes, have you installed — and if you haven’t, are you looking to install — metrics that you will review to determine whether this reform does improve the current situation or the areas that you’re looking to improve, i.e., access?
Ms. Malone: At the Department of Justice, we handle all the litigation before the Tax Court of Canada. We do have in our possession metrics of how many requests for informal procedures were filed in a year. We can see the amount increase or decrease.
In terms of the effect on the increase of litigants that go before the Tax Court, we see the numbers go up and down. Often they’re not linked to this informal procedure aspect. They’re linked to the number of assessments that are raised by the Canada Revenue Agency in a certain year or for a certain group of taxpayers who participated in similar transactions.
Yes, there would be ways of looking at it, but then we would take into account other variables that may have impacted the amount, one way or the other.
Senator Dhillon: Thank you.
Senator Dalphond: I was never really attracted to go to the taxation things, contrary to my colleague. I must admit, when I graduated from law school, it was the Tax Revision Commission. There was no Tax Court, so that shows how old I am.
I understand the Tax Court of Canada has 25 judges, so we’re talking about 400 files a year, and maybe about 20% of another pool of about 3,000 files that you said might be opting to join the system. We’re talking about maybe another 600 files. That would be, overall, about 1,000 files.
I suppose that it’s manageable. It’s probably about 50 files per judge, so one per week, maybe, I assume.
In order to avoid judicial time being wasted, I understand that, in the simplified or informal proceedings, the clerks will have the authority to look at the file and say, “Well, he’s asking for $105,000, so it’s above the ceiling, so we’re going to call the person and ask the person what they are doing, and we don’t wait until it appears before a judge to do the screening.”
Ms. Malone: Yes. Normally, it’s not always apparent from the notice of appeal what the amount in issue is. Especially with a self-represented person, sometimes the notice of appeal just says, “I don’t agree with the CRA’s assessment. I think I should be allowed my deductions. Please allow.”
It’s often when the Crown files the reply that it becomes more apparent what the amount is that is in issue. That’s why, often, it’s done by a judge because the judge will look at the pleadings. The Department of Justice will often call the taxpayer and say, “Oh, I notice that you’re asking for more than.” And it is $100,000 per year, so if they have four appeals, and each has $100,000, they can stay in the informal procedure.
Senator Dalphond: That was my next question. If somebody is reassessed for some type of expense over the last five years, for example, they can easily exceed the $100,000. But in that case, they would be able to file an appeal for every year?
Ms. Malone: Yes, senator.
Senator Dalphond: Even if it’s one decision by the Canada Revenue Agency?
Ms. Malone: Yes, and it’s mentioned in the act that, for an appeal before the Tax Court on income tax, one year is considered to be an appeal. So even if you file a notice of appeal that says, “I contest the assessments for these five years,” they’re technically considered to be five appeals.
That’s why that $100,000 amount for one taxpayer could be much more than $100,000 in that one day if they have multiple appeals.
Just in terms of the numbers, I want to clarify the numbers that my friend gave. If there’s an increase of maybe 200 or 400 informal appeals filed before the Tax Court, it doesn’t necessarily mean that these 400 will be heard by judges.
Senator Dalphond: There will be settlements and —
Ms. Malone: Yes. And, again, often — because sometimes these are very factual issues — these are unrepresented taxpayers, who may not have understood at the time of the audit what the CRA needed. Once a lawyer is involved, and they communicate with the taxpayer, a lot of these are resolved.
I don’t disagree with my friend’s numbers in terms of the increase of the number of appeals, but I would say that it would be incorrect to assume that 100% of those would be before a judge. Many of them are settled.
Senator Dalphond: In Quebec, they have a mediation system for tax things, but it’s not the Tax Court. It’s the Quebec court, the provincial court, that handles that. Is that something that is contemplated for the Tax Court?
Ms. Malone: My understanding is that this, historically, has been considered multiple times in the past few years in terms of if we can install this at the Tax Court. There are other jurisdictions that do it.
Again, my understanding of historically how it was done is that it was decided that, for now, the process works well, that there is a mediation settlement conference possibility in the general procedure before the Tax Court, where the parties can meet before a judge and have it, basically, mediated.
In the informal procedure, because it’s such a quick procedure, you file your notice of appeal, and then you’re in court. Having mediation in between would not make it an expedited process as much, and that’s why, in the informal procedure, there tends to be a lot of back and forth between the Department of Justice counsel and the unrepresented taxpayer — or even a represented taxpayer — to try to resolve. Because these discussions are always ongoing —
Senator Dalphond: It’s an informal process, including an informal mediation?
Ms. Malone: Yes, well, there is a formal one in the general procedure, and that’s at the request of the parties.
In the informal procedure, there is none, because it’s meant, again, to be an informal process.
Senator Dalphond: Thank you.
The Chair: Thank you. This is a tangential question, really. The informal process is designed to decrease the time and give better access. From the notice of appeal to the time of the result, what is the average on the 3,700 cases you took last year?
Ms. Malone: This is something the Tax Court would be best positioned to answer because they track this more than we do.
In general, the time will depend on the city in which it is heard because the Tax Court is a travelling court. If there are some cities in which the court is less likely to go off in a year — maybe in some remote areas — it might take longer. In some other cities, there’s a big backlog in terms of hearings.
My understanding is that the court’s aim is to have every case heard as soon as possible, and they’re working on assigning informal cases, again, as soon as possible. This has to do, again, with the availability of judges in that week.
The Chair: What’s the average time? Is this one year or ten years during this process?
Ms. Malone: Oh, it would be, from my understanding, less than one year for an informal one.
The Chair: What is the percentage of success for the taxpayer?
Ms. Malone: I would be —
The Chair: You might get a quick answer, but it might be the wrong one.
Ms. Malone: I would be guessing. I don’t want to guess.
My general understanding is that it’s fairly balanced, and it can vary year by year because certain years we have certain issues that are recurring. But on balance, the taxpayer would be a bit less successful than the Crown in these appeals. My understanding is that it is because sometimes they go to court not knowing they just don’t have a case.
The Chair: Thank you very much for your testimony here today.
Senator Pate: Just to be clear, if each of your departments could provide an analysis of what other options were provided in terms of these cuts because we’re looking at just what was put in the bill. As you would be well aware, there is an array of options that could have been considered. Please provide in writing what other options were considered and what the variables were in terms of weighing and deciding on these options were; that would be very helpful. Also, what cost impacts are there versus the effectiveness of these kinds of interventions? This information from each of your departments would be very helpful. Thank you.
Ms. Malone: Senator Pate, just to clarify your request, when you talk about “other measures that were considered,” is that in terms of this specific announcement that was made to increase the threshold and reduce —
Senator Pate: No, it’s more in terms of the response and the responsibility of each department to cut by 15%. One of the decisions taken was to cut in this way; what other options were looked at?
Thank you very much for asking for the clarification, Ms. Malone.
The Chair: Thank you, witnesses.
For our second panel, we’re pleased to welcome, from the Canadian Bar Association, Marie-France Dompierre, Chair, Tax Court of Canada Bench and Bar Committee; and Pooja Mihailovich, Member, Tax Court of Canada Bench and Bar Committee. Joining us by video conference, from the Barreau du Québec, Nicolas Le Grand Alary, Lawyer, Secretariat of the Order and Legal Affairs; and Paul Ryan, Member, Taxation Experts Committee. Mr. Ryan has a document that was circulated to everyone to help explain his presentation.
In this regard, we welcome all of the witnesses joining us this afternoon. We will proceed with your opening remarks. We will begin with the Canadian Bar Association, five minutes, please, with Ms. Dompierre.
Marie-France Dompierre, Chair, Tax Court of Canada Bench and Bar Committee, Canadian Bar Association: Thank you, Mr. Chair. Good morning, honourable senators. I’m a tax litigation partner at Davies in Montreal, and I’m also here on behalf of the Canadian Bar Association, or CBA, as chair of the Tax Court Bench and Bar Liaison Committee.
Let me be clear: The CBA supports amendments to increase the thresholds. However, our concern is that, on their own, these amendments will not achieve and deliver on their access to justice objectives. Rather, we fear that they will be creating new bottlenecks instead of eliminating old ones. With this in mind, we ask this committee today to consider three points.
First — and this is our central message — the Tax Court of Canada needs a serious and immediate increase in funding and resources. In 10 months in 2025, the Tax Court received 500 adjournment requests, of which 60% were from informal procedures. That is a strain on both the resources and the time of the Tax Court. This is the baseline we are working with before any amendments are adopted.
Then, if we compound the amendments and compound that pressure, we are looking at approximately 20% of general procedures that will migrate to informal procedures. We are also looking at new penalties that are found elsewhere in Bill C-31, which is going to increase filings at the Tax Court of Canada — namely, in informal procedures — and, as mentioned in the previous session, more informal procedures mean more self‑represented litigants, and self-represented litigants need more support from the Tax Court, not less.
The informal procedure rules require hearings within 180 days of the minister’s reply. They ask for judgment within 90 days. Those are statutory obligations. Without additional court resources, those statutory timelines will collapse, and with them, the very promise these amendments aim to deliver, which is faster and more affordable justice.
Our second point, which I will be very short on, is that the draft legislation is silent on how the existing general procedure rules interact with the informal procedure rules, which is creating uncertainty, and with uncertainty comes a barrier to access to justice. As such, they should be revised at the same time.
[Translation]
That brings me to my third and final point. Despite the higher threshold, there is still a significant gap for taxpayers who won’t be able to benefit from this new threshold, but who will have tax disputes before the Tax Court of Canada under the general procedure without necessarily having the means to proceed in that way. For those taxpayers, including individuals, SMEs, corporations and other entities, there is no suitable avenue for settling tax disputes in Canada. For that reason, we urge this committee to consider and recommend a broader consultation on the process for settling tax disputes across Canada to ensure better access to justice for all.
[English]
In closing, solely raising the informal procedure threshold is like widening a door to an already full room. It is shifting volume and not addressing, or, perhaps solving the underlying issues.
Thank you. I welcome your questions after my colleague speaks.
Pooja Mihailovich, Member, Tax Court of Canada Bench and Bar Committee, Canadian Bar Association: Good morning, honourable senators, Mr. Chair. I’m a partner at Blake, Cassels & Graydon LLP, where I co-lead our Tax Controversy & Litigation group. I’m pleased to be here on behalf of the CBA.
You have already heard from my colleague that the CBA supports the proposed increases to the informal procedure thresholds. I would like to focus on what we think is needed to make those increases work in practice.
As senators this morning have already recognized, this proposal is about more than just changing a few numbers. Increasing the thresholds will expand the number of taxpayers who can access the informal procedure and potentially how their disputes are resolved.
The informal procedure is particularly valuable for individuals, families and small businesses for whom the cost of formal litigation can be disproportionate to the amount in dispute. Expanding access to that procedure is, therefore, an important step toward meaningful access to justice, but we also need to consider what follows from that change. A significant increase in the number of cases proceeding under the informal procedure — any procedure, for that matter — will have broader implications, and those implications need to be carefully considered to ensure that the procedural framework remains sound and workable for disputes coming before the court.
For that reason, we encourage you to view these amendments as one small step in a broader effort to modernize our tax dispute resolution system. Appropriate safeguards need to be put in place, the expanded procedures need to be monitored and adjustments need to be made if experience shows that they are needed.
The informal procedure is a key part of the tax dispute resolution system here in Canada, but it is only one part, and it should not be considered in isolation. There is value in considering how the different parts of the system work together. As our tax administrative landscape evolves, as it has been, the dispute resolution system must also adapt in a coherent and balanced manner.
Ultimately, that is what meaningful access to justice requires. It is not simply about ensuring access to a process or a courtroom. It is about ensuring that, as our dispute resolution system grows and adapts, that it remains fair, effective and proportionate.
Thank you. I would be pleased to answer any questions that the committee may have.
The Chair: Thank you. Now we will hear from the Barreau du Québec, Mr. Le Grand Alary.
[Translation]
Nicolas Le Grand Alary, Lawyer, Secretariat of the Order and Legal Affairs, Barreau du Québec: Good morning. Senators, thank you for having us here today as part of your study of Bill C-31. My name is Nicolas Le Grand Alary, and I am a lawyer at the Secretariat of the Order and Legal Affairs, Barreau du Québec. With me is Paul Ryan, a member of our Taxation Experts Committee.
In general, the Barreau du Québec welcomes the bill’s proposed amendments to increase the monetary thresholds for the informal procedure before the Tax Court of Canada.
The current thresholds no longer adequately reflect the modern economic reality. Their increase will enable more taxpayers to access a process that is faster, less costly and generally better suited to small-litigation disputes.
Indeed, access to justice is one of the essential foundations of our legal system. This principle is particularly important when it comes to the field of taxation, wherein citizens and small businesses must be able to effectively challenge tax administrations’ decisions before an independent court.
For many taxpayers, the Tax Court of Canada is their only opportunity to get an impartial review of a tax assessment or decision, which can sometimes have significant financial consequences. That makes it essential that the mechanisms behind this access remain simple, effective and proportionate.
Our comments are organized into four main themes.
First, we recommend that the monetary thresholds for the informal procedure be subject to a periodic review or adjustment mechanism. A stable and predictable mechanism would ensure that the thresholds remain responsive to economic developments.
Second, we would like to draw your attention to the institutional capacity of the Tax Court of Canada. Increasing the thresholds will likely result in a higher number of cases that use the informal procedure. For that reason, the reform’s success will largely depend on the availability of the judicial, administrative and technological resources needed to maintain or reduce the current timelines. Without sufficient resources, a measure intended to improve access to justice could have the opposite effect.
Third, we are concerned about the frequent imbalance between unrepresented taxpayers and the tax administration. Even under the informal procedure, tax cases can raise complex legal and factual issues. We therefore recommend that the reform be accompanied by information and support tools for people who represent themselves before the Tax Court of Canada.
Finally, we encourage Parliament to consider certain measures that are currently absent from the bill but that could help improve access to justice.
These include establishing a minimum mechanism for the discovery of evidence as well as incorporating a tax mediation process adapted to the informal procedure. These tools would promote settlements, reduce costs and often enable parties to better understand the strengths and weaknesses of their respective positions before the hearing.
We also recommend adopting more flexible transitional rules that allow taxpayers who have already filed an appeal to benefit from the new thresholds, where appropriate.
In closing, the Barreau would like to point out that this reform will fully achieve its objectives if it is accompanied by the necessary measures to preserve procedural fairness, support the court’s institutional capacity and promote the effective settlement of tax disputes. Thank you for listening, and we’re ready to answer your questions.
[English]
The Chair: Thank you, sir. We will now move to questions.
Senator Batters: Thank you to all of you for being here and helping us with this legislation with your significant background in this area. My first question is to Ms. Dompierre. You certainly answered part of it in your opening. The government is proposing to allow more taxpayers to use the informal procedure. Based on your experience, can this reform be reasonably implemented with the Tax Court of Canada’s current staffing levels and budget? From what I heard in your opening remarks, you think that is absolutely a challenge.
As you heard previously, the government does not seem to have looked into whether this will be doable or not. We did ask for somebody from the Tax Court of Canada to come, and they did not accept our invitation to come as a witness, so we cannot hear from them directly about this. If no additional resources are provided by the government, then what practical consequences could taxpayers face?
Ms. Dompierre: Thank you. First of all, the Tax Court of Canada is very strained. There are many adjournments, which are very much at the last minute, and these are putting a considerable strain on dates for hearings and whatnot. Ultimately, we will be facing timelines that are going to be accrued to appear before a judge. Perhaps one of the things that is important to understand is that the hearing date in an informal procedure is set unilaterally by the court, and so a litigant will receive a notice. It used to be 30 days. Now they have moved it to 90 days, and they are doing a pilot project to try to help with the collapse rate. But it is still a very short timeline, and that’s where part of the problem lies — that collapse rate from the informal procedure. That means that we have a significant number of judges who are sitting and have nothing to hear sometimes for weeks on end. That is going to accrue, and across the board it is going to be a significant challenge for the court to manage this without more resources, whether it be clerks or judges.
Senator Batters: To the Barreau du Québec, I was asking earlier about these cases that are using the existing threshold for appeals that have already been filed when the provisions will come into force, whether you would recommend allowing taxpayers whose hearings haven’t yet begun to opt for the new thresholds. I believe I heard you say that yes, you do concur that this should be happening. Could you explain a bit more, in practical terms, about what advantages or difficulties that option would create?
[Translation]
Mr. Le Grand Alary: Thank you for your question. Mr. Ryan will be able to round out our comments, but you are indeed correct. We mentioned that transitional provisions should be in place. I will let Mr. Ryan elaborate on the issues surrounding this mechanism.
Paul Ryan, Member, Taxation Experts Committee, Barreau du Québec: Our brief states that we would agree with applying the new measures to cases that are already under way. However, there may be issues in some cases, because the general procedure involves a whole series of steps. For example, parties submit a list of documents at the outset to disclose their evidence in advance. They then have the opportunity to question the witnesses; a record of the questioning is provided; there are commitments.
If that process has already begun in cases that are already active, it may be more difficult to bring those cases back into an informal procedure, which doesn’t have that kind of prerequisite, if I may put it like that. However, if some cases have been opened more recently or if those steps have not yet been completed, we don’t see why the new procedure couldn’t apply to them.
I think that was the difficulty that Ms. Malone was referring to earlier this morning. These are cases that are further along and have already initiated steps that fall outside of what happens in informal proceedings. It might be more difficult for those cases.
[English]
Senator Batters: There is one further difference. For income tax appeals, they have a lower threshold that is $25,000, currently, and they are going to raise it to $50,000, but for GST appeals, the threshold is already $50,000, and they are going to increase it to $100,000. I don’t really understand. Could anyone tell me what the reason is for the difference in the thresholds? Why wouldn’t they just have all thresholds as the same, whether that is income tax or GST? Perhaps that’s a matter of more of those types of cases and to decrease that. I’m not sure. If someone could answer that, it would be helpful.
[Translation]
Mr. Ryan: I couldn’t tell you why, but that has historically always been the case. When we try to quantify the amounts of income or expenditures at stake, the gap is even wider. For example, the GST is 5%. If you have $100,000 of GST at stake, that can represent a much higher amount of income or expenditures — even exceeding $1 million at stake — at 5% to reach the $5,000 GST threshold. That’s how it has been since the GST was adopted in 1990. Unfortunately, I don’t remember why it became like that in 1991.
For income tax, if you have $50,000 at a maximum rate of about 25% or 30% at the federal rate for an individual, we’re talking about roughly $200,000 of applicable income or expenditures per year. Whereas it’s usually a single assessment when it comes to the GST. Maybe that’s the difference. Even if it isn’t clear in the act, the tax is applied per year. Someone who has $50,000 a year in taxes at stake could end up in informal proceedings with, in reality, $150,000 at stake, because the tax audits often cover three tax years, which are assessed and then appealed.
Senator Miville-Dechêne: Mr. Ryan, I have a question for you, because you weren’t able to make any opening remarks. I would like to note that I know Mr. Ryan personally, but we have never worked together. I’d like to hear your thoughts on a huge difference in assessment: The Department of Justice feels that it will work, since many cases are settled before they get to court. What do you think of that optimism or that reality?
On the contrary, are you being a bit alarmist in saying that it will get in the way, that there will be too many cases, that it won’t get done? I would like to hear you speak to that. Also, is the Tax Court of Canada meeting those deadlines right now? Are there really hearings within 180 days and judgments within the following 90 days?
Mr. Ryan: I agree with what Ms. Dompierre said. The resources of the Tax Court of Canada are already strained. I am also of the opinion that this is a transfer of cases, because these are all appeals to the Tax Court of Canada, and the aim is to move a higher number of informal proceedings that would otherwise end up under general procedure.
The six-month deadline will be met; there will be a notice of hearing, and a hearing will be set within six months under the informal procedure. The problem that Ms. Dompierre identified — I agree with her on this — is that to move so quickly, the court does not have time to reach out to lawyers or accountants to ask them whether they’re available on such and such a date. The court sends us the notice of hearing unilaterally, so when the professional’s schedule is full, that causes postponements. That’s why it was mentioned that 60% are postponed. The Tax Court of Canada indeed manages to schedule hearings within six months in informal procedure cases. However, it moves so fast that it loses 60% of the audit dates that were set aside, as a result of these postponements, which I believe stem from two things.
First, the factor that Ms. Dompierre mentioned: the lack of prior consultation. It cannot be done, since things move too fast.
Second, the reality that must be kept in mind is the power imbalance that we talked about in our brief. Something unusual about taxation is that the government is the claim initiator, but the taxpayer has the burden of proof. If taxpayers are not experienced and represent themselves or are represented by an accountant, they may not be familiar with these realities.
I suspect there is a second factor behind the significant number of postponements. As they get closer to the hearing, talking to people in the Department of Justice and trying to prepare, taxpayers come to realize that the burden of proof is on them and that they have to build a case. However, if they cannot properly build one, taxpayers will want to ask for a postponement because they hadn’t realized.
I refer again to what Mr. Le Grand Alary said about the need to expand the information resources available to improve the procedure. It can go quite far. As was mentioned earlier, $100,000 in GST means more than $1 million in revenue or expenses at stake. Over three years, $50,000 of tax per year means more than $500,000 in income or expenses. It can be a lot of money. We need access to justice, but we also need to help people understand what they’re getting into since the burden of proof is on them in these cases.
Senator Miville-Dechêne: Could other solutions be provided, apart from adding judges? You talked about information resources, but could we constructively find a way forward here?
Mr. Ryan: We mentioned two things. First, the mediation mechanism at Quebec small claims court — I wanted to clarify that in connection with what Senator Dalphond mentioned earlier. For small claims, there is a mechanism in place that seems to be working well. I haven’t tried it personally. This is somewhat the equivalent of small tax claims, what is called the informal procedure at the Tax Court of Canada, even though, as we have seen, quite significant amounts may be at stake.
A mediation system, in our opinion, would be something to consider. It would also help parties become aware of the issues they will face if they end up in court.
Second, there is the issue of evidence disclosure. In formal general jurisdiction, there is a whole series of evidence disclosures and a list of documents. That is not the case for informal jurisdiction. The burden of proof is on taxpayers, but they don’t necessarily have the full government case file. The government initiates the claim, but taxpayers are responsible for dismantling it — that is the word we use when we describe our burden of proof.
There are two basic documents, in the absence of a full disclosure process, because that would increase delays and undermine the purpose of the informal procedure. In my opinion, there are two basic documents that we as lawyers always ask for in a case: the Canada Revenue Agency audit report that led to the issuing of the assessments and the report of the opposition officer who rejected the notice of opposition, which led to the case ending up in court.
If these two documents were systematically made available as part of the informal process, it could help taxpayers better understand what they are facing when they decide to represent themselves in a legal proceeding, either alone or with a professional who is not a lawyer. As another senator said this morning, it’s still an intimidating space, even for lawyers, but even more so for litigants.
Senator Miville-Dechêne: Yes, transparency always pays off.
[English]
Senator Simons: My first question is for Ms. Dompierre. When I asked my question of the earlier panel, I hadn’t even been thinking about duty counsel, which I’m familiar with from other parts of the judicial system. Would something like that be helpful? Self-represented litigants — it is a crisis in this country. People cannot afford to hire lawyers, so they self-represent, and then systems back up and up and up.
Do you see a possible solution in having more in-house staff support people who are not on the other side of the file, but can be objective assistants?
Ms. Dompierre: I mentioned it a little bit earlier. As of May this year, the Tax Court of Canada has implemented a pilot project called the navigator pilot project. It is to deal exactly with this with self-represented litigants, with adjournments that happen at the last minute and collapse a whole week of trials. They have someone from the Tax Court who is answering — first of all, who is calling self-represented litigants in an informal procedure to ask their availability, which is also helpful, but who also answers questions about the process and about everything that is non-legal. This has been showing some very good results, as we understand from the Tax Court from our last bench and bar meeting at the end of May 2026. Right now, it is only implemented in four regions, being Oakville, Montreal, Toronto and Vancouver, because there is not enough staff to do that. That is not exactly a duty counsel, but it is a helpful way of supporting those litigants.
Duty counsel could be something that is quite interesting. I was a former Department of Justice lawyer, just as Ms. Malone is currently. We did provide as much help as we could — and they do — to litigants, but obviously, there is a line where the help —
Senator Simons: Yes. It’s a conflict of interest.
Ms. Dompierre: It could be something that is envisioned. Obviously, it also comes with more funding and resources.
Ultimately, it is something that the Tax Court is already trying to grapple with and trying to implement new ways of dealing with this pressure to try to mitigate the effects.
Senator Simons: I loved your metaphor that we’re making the door wider, but the ballroom — every time someone says “ballroom,” I think about Donald Trump — making the door wider, but the party is already full.
Ms. Dompierre: Yes.
Senator Simons: I was surprised — I never really thought about the Tax Court before, I must confess — when the previous witness said the court travels. I mean, if you are not ready on the day the court arrives in Halifax or Calgary or Fort McMurray — I don’t know how small a community it goes to.
Ms. Dompierre: Small.
Senator Simons: Maybe you and Ms. Mihailovich can tackle this together. What is gumming up the works?
Ms. Dompierre: Ms. Mihailovich can supplement what I will say, but there are a lot of last-minute adjournments and requests and sometimes with self-represented litigants who did not have a chance to really express why they were not available or their understanding of the process. That is one of the things that has been compounding that pressure.
There are also lengthier and lengthier trials in general procedure. There is an increase in complexity in tax disputes, which is also affecting the system. For example, I was on the train coming in from Montreal yesterday, and I saw a Tax Court of Canada judge.
Senator Simons: In the wild.
Ms. Dompierre: In the wild. I asked, “Are you going back to Ottawa,” and the person said yes, but she was supposed to go to Calgary, and everything collapsed at the last minute. This is something that we hear a lot. Every week there is that issue. So that is one of the compounded effects.
Also, the technology at the moment is not completely up to par, so it is difficult — there are some upgrades that are coming.
Senator Simons: Do they have to travel, or —
Ms. Dompierre: They do.
Senator Simons: — they can’t do it on Zoom?
Ms. Dompierre: They have implemented virtual hearings for smaller — for example, motions or status hearings, but an informal procedure — it is perhaps something that could be canvassed, but at the moment, it is an in-person procedure. It is actually mandated in the rules.
Senator Simons: Are the judges all based here and have to —
Ms. Dompierre: Yes, they are all based in Ottawa, and they do travel to small communities across Quebec, Ontario and everywhere in Canada.
Senator Simons: It’s a big country. So there are no regional tax courts in the West or the Maritimes?
Ms. Dompierre: No. There are offices, but there are no regional tax courts.
Senator Simons: I’m learning a lot today.
Senator Pate: Thank you to all of you for being here. My question is particularly for the Canadian Bar Association. You often engage in discussions with the Department of Justice and other departments around the agenda that the government has. I am curious if there were a consultation about what measures in the Department of Justice could be cut when the 15% decision was made. I see you shaking your head.
If you had been consulted — and I recognize your expertise because the choice that was made by the government is tax. If you’re not able to comment, could you send in writing if there had been any other areas that the Canadian Bar Association would have suggested ought to be cut at the Department of Justice Canada, as well as the CRA and the Department of Finance Canada, other than these cuts? In particular, I’m interested in both the areas of tax, a wealth tax or a more equitable tax distribution model being one.
The CBA took some very strong positions around the recent resurrection of more mandatory minimum penalties. The Department of Justice’s own research estimates that relitigating the constitutionality of a dozen or more mandatory minimums is going to cost anywhere between $50,000 to $100 million per Charter challenge. Was any of that looked at? Also, is there any more information you can provide?
I saw you shake your head that you weren’t consulted. If you have anything to share on that now — if not, and you would like to go away and send something in writing from the CBA, that would be helpful.
Ms. Dompierre: We were not prepared to address that today, but we will be providing something in writing, so we will take it under advisement at this time.
Senator Pate: That is much appreciated. Thank you.
[Translation]
Senator Clement: Good morning to all, and thank you for your careers and your testimony as legal experts this morning.
I would like to speak with Mr. Le Grand Alary.
You said that there should be periodic reviews of thresholds. Can you tell us more about what those reviews would look like and how often they would occur?
You also suggested getting unrepresented people more information. What would these tools look like? Does the Barreau du Québec have broad experience with this? I believe it does.
When we talk about access to justice, we are talking about people who have barriers to accessing information, who have disabilities. Can you tell us more about these tools?
Could you then talk about people in specific situations, such as Indigenous people who also go before this court under the Indian Act? How do we manage all those interests by providing tools that could help unrepresented people?
Mr. Le Grand Alary: Thank you for the question, senator.
Quickly, a note on the issue of thresholds. It is explained in our brief, but it would be either to have a review mechanism, that is to say to have an agreement or to put a provision in the act stating that the amount must be reviewed. Otherwise there could be an automatic method. This is something we have at the Quebec Code of Civil Procedure in terms of the jurisdiction of certain courts. There would be a mechanism whereby, when a certain level of inflation is achieved in the Consumer Price Index — the difference in amount would be selected depending on the court’s jurisdiction — the threshold would then be automatically indexed on January 1 of the following year. A mechanism was introduced in the Code of Civil Procedure in 2015. We’ll see the first indexations soon, hence the increase. The same thing could be done here.
In terms of access to justice and tools in general, you are right, the Barreau du Québec has always been concerned about access to justice. Access is not just about having a court date. You may have one and have to ask for a postponement the day before, because you are alone and unprepared. We recognize that the solution is not to have lawyers in all cases, including for informal proceedings. I think there can be a balance. Tools can take different forms. For some clients, it could be a video that explains more than a written text. Some people prefer to read a document. We have clients who may have reading difficulties. You have to have different tools in different forms.
You mentioned, of course, that the tools need to be adapted to people who may have a disability, whether visual or auditory. There’s all that. When you talked about the clientele served, there are Indigenous or racialized communities that may have different priorities or issues than another group of people that appears before a court.
We have to consider all that. It’s not just up to the Tax Court of Canada to produce these tools and review them. It has to be a collective review with the other stakeholders in the system. We, the Barreau du Québec, are always ready to help or support with this.
[English]
Senator Clement: I have a similar question for the Canadian Bar Association around the types of tools — that was an interesting answer from Mr. Le Grand Alary about collaboration around tools. The government might need some inspiration from other organizations on how to communicate and how to effectively support litigants who are not represented.
Ms. Mihailovich: One thing we’ve heard this morning — and at least one of the questions that was raised — was about almost about two ships passing in the night. We have heard a version of events from the Department of Justice and the CRA about how this is going to be feasible because, ultimately, many of these matters never proceed to a hearing. You’ve heard from us about how, actually, in practice, many of these matters do not proceed to a hearing, but people only find out about that the night before the hearing. In that sense, the relief is illusory.
We come to this question: What’s the path forward? Is there a path forward, and, if so, what does that look like?
You’re raising the question about information and tools. Does that make it easier?
Sitting one step removed, as we are today in hearing all of this, that takes us to the idea that we need a broader consultation. That’s really where we need to go. Speaking to you transparently about how much can be achieved in this room or how much can be achieved, as we single down on certain aspects of this — I think we are all moving in the right direction to be focusing on this, because not much focus has been placed on this in a long time; it’s overdue, in that sense.
However, this is not something that can be solved in a piecemeal fashion where a tweak here will address the issue, and we will all be fine for the next decade. A lot is going on in the system already. We are generally aware of the investments that have been made in the Canada Revenue Agency over the last five years or the decade. That has obviously generated downstream effects. There is more in the system, more assessments are being generated and there’s more focus being placed throughout the system.
Concurrently, we have seen what those impacts are, especially for the Tax Court of Canada, but it’s not limited to the court alone. This is a more macro-level discussion. Frankly, we are in a good place today in that there is some focus being placed on this. Perhaps this is a healthy dialogue. However, it can’t remain confined to this room in the sense that I think more needs to be done; a more coherent framework needs to be established before we can zone in on the details, if I can put it that way.
To answer your question about very specific tools that we can think about, I’m sure the CBA can put forward — we can certainly follow up in writing — as to what we would propose to be looked at. Again, though, even that is us proposing a Band‑Aid fix on the one issue we’ve identified, as opposed to taking a more holistic view of what is being proposed here.
Senator Clement: The points are well made by all of you, as I would have expected. Thank you.
The Chair: Senators, there being no other questions, I thank all the witnesses for coming here today and taking the time out of their busy schedules to share their experiences with us. Witnesses, your testimony has been very helpful in guiding our discussions and pre-study of the bill.
With respect to additional information, which is really important because, in a pre-study, we’re almost practically restricted to making observations. I’ve heard observations about, basically, review and reform of the tax court, funding for the tax court, et cetera. We are under a very tight deadline that has been imposed by others, not us. I’m asking you to provide your material to us by the end of the day tomorrow if that’s possible. The analysts are working on a draft right now. However, your information will be very informative with respect to observations that we might be able to make. If you could keep that in mind, it would be very helpful. Sorry for this tight deadline, but it’s not of our making. However, it’s very important. From what you’ve said, it’s quite clear this is a big issue, a lot more issues than just this changing of the thresholds. We can lay a foundation for that, perhaps in observations.
Thank you very much to all the witnesses who have come, both in person and on video conference. At this time, I’m going to ask the witnesses to leave the table, and we will now proceed to the last part of the meeting here, which is to discuss the report and provide the drafting instructions to the analysts who are here. Thank you very much.
Colleagues, as I’ve mentioned, we are mandated to report to the Senate no later than next week, Friday, October 9. As such, the report will need to be very succinct, tightly focused and probably not much more than two pages.
Analysts have done a draft of the start of the report and the introduction of the report, both in French and English, if there are comments about that. We need to hear from the senators about the category of observations or the quality of the observations they would like to see addressed in our report.
As you know, we’ll be meeting on October 7 for a one-hour period to receive the draft, discuss the draft and finalize the draft in order to comply with the timelines that we have to finish it on Wednesday in that one-hour period.
[Translation]
Senator Miville-Dechêne: I have one question. Are you asking us, if we feel the need, to write down observations, or are you going to write a report with the most interesting thoughts from the witnesses?
[English]
The Chair: Our tradition would be that the analysts are making notes. I think they’ve heard some of the highlights. If you would like to add a highlight, they’ll be taking your instructions on the areas. If you are available to make exact proposals, there’s no restriction.
[Translation]
Senator Miville-Dechêne: In Paul Ryan’s testimony, we heard a suggestion about evidence disclosure that seems worthwhile to me for transparency purposes. Especially if the appellants are not lawyers themselves or don’t have lawyers working for them, that’s a worthwhile suggestion. If we can’t make amendments, we should at least mention that.
Senator Clement: Mr. Ryan looked like a Star Wars character.
Senator Miville-Dechêne: He is a renowned lawyer in this area. That’s why I asked him to speak about it.
Senator Clement: It was two specific documents, which was great.
[English]
Senator Batters: That gives me an opportunity to talk about the spaceship that blasted off an hour ago and the Canadian astronaut who blasted off into space with a pocket watch that his Ukrainian grandfather brought across the ocean from Ukraine a hundred years ago, which is now in space, along with some Saskatchewan beef jerky, which is very appropriate. I had to say that because I thought it was so cool. It also happened while we were in this committee learning about interesting tax laws.
I will have a more thorough review of this document that’s provided with some draft introductory text. For the most part, this will be what we provide, but also some succinct indications of highlights, not lengthy. Obviously, we don’t have the time to get into a lengthy recitation of a summary of evidence or anything like that, but that type of comment that Senator Miville-Dechêne proposed about the disclosure element and these types of probably a comment about the likely lack of resources that could make things much more difficult for the Tax Court of Canada. I am sorry to say we’ll probably be very prescient about that when difficulties result with these types of very succinct reports, but those types of points I think are relative to have. It needs to be kept very succinct to adhere to our deadline.
The Chair: A review and a reform of the tax court. It seems that was one of the key messages.
Senator Clement: Sorry for jumping in there. Thank you, Senator Batters, for that update. I was just thinking Mr. Ryan seemed like Obi-Wan — that’s the Star Wars reference. He seemed really wise about that and experienced. Those two documents would be very interesting.
I agree with what Senator Batters just said about the resources because that came up a lot. Those last comments from the two lawyers saying this merits a broader consultation. It feels like things have been left for too long and that we need to hear from the many experts outside of the government that people in this area of law. A comment along those lines might, I think, be appropriate as well.
The Chair: I think there’s a real consensus on that point. Thank you very much, Senator Clement.
Senator Pate: Thank you very much. I think we, at this committee, have several times raised concerns about the speed with which we’re asked to look at issues, as well as the omnibus nature of bills. I think it’s important that, given there’s been the issue around a lack of consultation, also what the lack of transparency about how and why the government chose to make these revisions and not others that could be necessary and could be both more cost-effective and better for Canadians overall.
The Chair: The analysts will take notes on those comments, and I think there is a consensus on that advice from Senator Pate.
Senator Dalphond: I agree with the previous comments about the need to always have proper consultations when so many stakeholders are involved in certain mechanisms, and the input of these stakeholders should be critical. I think we should recommend that there be consultations on certain aspects of the process, including having a mediation option in the informal track and having automatic disclosure by the tax department of two reports, which I think are the key elements of it. It was the report of the auditor that went to check the tax reports of the taxpayers and the response or the report about the contestation filed by the taxpayer. Somebody at CRA has reviewed it and put in writing something to explain why it was dismissed.
The Chair: Thank you, Senator Dalphond. Are there any other comments or instructions for the analysts? The analysts are advising that they hope to be able to give us a draft of the report by Tuesday night at the latest for discussion on Wednesday morning. On Wednesday, October 7, we’ll have to take one hour to finalize the report in order to be in compliance with the expectations of the Senate.
Thank you very much, colleagues.
(The committee adjourned.)