What Does "Due Dispatch" Mean?

In every federal tax act in Canada there is a provision that refers to the requirement for the Minister (CRA) to consider an assessment, objection, appeal, etc, with “due dispatch”. This phrase has no legislative definition but it’s generally understood to be within a year or so. However, this recent Federal Court of Appeal case explains that where the CRA doesn’t act with “due dispatch” it isn’t a reason to reassess in the taxpayer’s favour or to otherwise vacate an assessment:

[6] The appellant had argued that the Minister’s alleged admission of failing to reconsider the appellant’s assessment “with all due dispatch” following a notice of objection (as required by subsection 165(3) of the Income Tax Act, R.S.C. 1985, c. 1 (5^th Supp.)) warranted the assessments being vacated. The Tax Court judge disagreed, relying on applicable case law.

“Sometimes the CRA takes an extraordinary amount of time to consider an appeal or issue a reassessment.”

[7] We agree with this conclusion. As this Court has confirmed, the Minister’s failure to act “with all due dispatch” is not a basis for overturning an assessment; the taxpayer’s remedy is to appeal directly to the Tax Court under paragraph 169(1)(b) of the Income Tax Act: Ford v. Canada, 2014 FCA 257 at para. 19, citing Bolton v. The Queen, [1996] 3 C.T.C 3, 200 N.R. 303.

Sometimes the CRA takes an extraordinary amount of time to consider an appeal or issue a reassessment. This can happen for numerous reasons including the complexity of the issue in dispute. Taxpayers who have filed an appeal always have the right after 180 days to file an appeal directly to the Tax Court and have it heard by a judge. This will certainly add at least another year of waiting for a Tax Court hearing and may involve hiring a lawyer if the amount at issue is more than $25,000 under the Income Tax Act or $50,000 under the Excise Tax Act. If the amount is below those limits a lawyer is not strictly necessary but a knowledgeable agent such as a former CRA officer, paralegal or accountant with legal acumen will certainly help given that the Department of Justice will have sent a well prepared (most of the time) lawyer to argue the CRA’s position. It must be added that the onus is always on the taxpayer to “demolish” the assumptions made by the CRA in the assessment to have any chance of winning. It’s an uphill battle whether one argues their case with appeals or the tax court but it is winnable.

If you’ve been assessed for tax owing and aren’t sure whether you should appeal, get in touch with ZheroTax and a former CRA auditor, appeals, or rulings officer (or other tax professional) will help you determine the probability of success and offer to take the appeal on contingency for a percentage of the tax saved.