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In the recent decision of Martinez Cedeno v. The King,1 Justice Graham of the Tax Court of Canada (the "Tax Court") deplored the practice of the Canada Revenue Agency (the "CRA") of misdirecting taxpayers to file appeals in the Tax Court in disputes over provincial residency—a practice that is, according to Justice Graham, "potentially depriving taxpayers of their legal rights of appeal and wasting this Court's resources".2
In conjunction with assessing federal income tax under the Income Tax Act (Canada),3 the CRA assesses provincial and territorial income tax payable by individual residents of all provinces and territories except Quebec. In the case of Martinez Cedeno, the taxpayer filed her tax return on the basis that she resided in Nunavut. The CRA, however, took the position that she resided in Ontario and assessed Ontario income tax accordingly.4 The CRA's notice of confirmation advised the taxpayer that she could file an appeal with the Tax Court. However, the Tax Court has no jurisdiction to hear appeals relating to provincial income tax unless the province has conferred jurisdiction on the Court.5 To dispute having to pay the Ontario income tax, the taxpayer needed instead to file an appeal in the Ontario Superior Court of Justice.
Given that the taxpayer had pursued the wrong appeal route, Justice Graham had no choice but to dismiss her appeal. Justice Graham also remarked that the taxpayer's appeal was the third time he had seen the problem in two years,6 and called on the CRA to "make the effort to correctly point taxpayers to the court or courts where they need to file their appeal or appeals".7
The fracturing of jurisdiction between the Tax Court, Superior Courts, and Federal Court over income tax disputes is a longstanding source of difficulty for taxpayers,8 who all-too-often find out the hard way that their matter cannot be resolved in the Tax Court. In addition to provincial income tax matters, other perennial sources of such disappointment include disputes over (1) interest relief, (2) whether amounts in issue have been paid (either directly or via employer withholdings), (3) tax balances (such as tuition credits or losses) that affect other taxation years, (4) remedies for when the CRA has induced a taxpayer into error with respect to his, her, or its fiscal obligations, and (5) remedies for when the CRA has engaged in improper, abusive, or unlawful conduct.
Before appealing a notice of confirmation issued by the CRA, taxpayers are well-advised to promptly confirm the proper appeal route(s) and applicable timelines with a professional. Doing so may save them time and money and, importantly, ensure that they pursue the correct route before any applicable limitation period expires.
Footnotes
1. 2025 TCC 142 ("Martinez Cedeno").
2. Ibid. at para 1.
3. R.S.C., 1985, c. 1 (5th Supp.).
5. Supra note 1, at para 3 citing Quigley v. The Queen, 2009 FCA 287 at para 5.
8. Michael H. Lubetsky, "The Fractured Jurisdiction of the Courts in Income Tax Disputes," in Pooja Mihailovich and John Sorensen, eds., Tax Disputes in Canada: The Path Forward (Toronto: Canadian Tax Foundation, 2022), 3: 63-115.
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2025
