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If the amount in dispute is $25,000 or less, you can elect the “informal procedure,” which is a mildly less intimidating route for self-represented individuals who are not trained in the nuances of the judicial system. The advantage of this route is that the entire trial procedure can be completed in less than a year.

If the amount in dispute is more than $25,000, you are stuck with the “general procedures” of the Tax Court, which are steeped in legal formalism and are best left to legal counsel who will represent you. The process is long, adversarial, subject to stringent rules of disclosures, discoveries, and expensive. A complex tax case moving along at a steady clip can last a dozen years, which is another reason to pay the amount of taxes claimed immediately. A debt of $50,000 accumulating interest at five per cent will grow to about $90,000 in 12 years. The $40,000 in accumulated interest will not be deductible for tax purposes.

There are two other rules that taxpayers should be aware of in tax disputes.

First, the CRA’s assessment is presumed to be correct, unless the taxpayer can demolish the agency’s underlying assumptions of fact. The presumption of validity of an assessment is the single most significant rule for taxpayers. The Act deems an assessment to be valid and binding on the taxpayer, even if it contains an error or defect, or the CRA incorrectly calculates or improperly issues it. This is a formidable presumption – a form of reverse onus burden. Hence, it is imperative that the taxpayer maintain full, complete, and detailed records in support of his or her filing position. The CRA does not need to prove anything after it issues its assessment, which gives the agency a considerable advantage in tax litigation. So remember: the CRA can sit on its hands, and the taxpayer must “demolish” the assessment.