Introduction
The Federal Court's recent decision in Spennie Holdings Inc. et al v. Attorney General of Canada (T-1197-25, released August 15, 2025) reaffirms established Canadian tax law. Taxpayers cannot circumvent the statutory appeal process in the Tax Court of Canada by filing judicial review applications in the Federal Court. This ruling underscores the strict limits on judicial review in Canadian income tax disputes and provides clear guidance for taxpayers and their Canadian tax litigation lawyers.
Background on the CRA Objection and Tax Court Appeal Process
Three taxpayers, including Spennie Holdings Inc., were reassessed by the Minister of National Revenue in relation to transactions involving "Gemini Shares." The taxpayers objected to the reassessments, but the CRA confirmed them and issued notices of confirmation.
Instead of appealing to the Tax Court under subsection 169(1) of the Income Tax Act (ITA), the taxpayers applied for judicial review in the Federal Court. They alleged procedural unfairness, including failure by the CRA to provide timely communication, withholding of documents, and improper sub-delegation of authority to Crown counsel in a related Tax Court appeal involving ASLK Inc. The taxpayers argued that the CRA's confirmation process was tainted and should be set aside.
Court Analysis on Judicial Review in Tax Disputes
The Federal Court granted the Crown's motion to strike the applications. It held that whether the taxpayers framed their arguments as challenges to the process or the substance of the confirmations, the relief sought was the same: to quash the confirmation decisions and reopen the objection process.
The Court reaffirmed that it is settled law that judicial review cannot be used as a collateral attack on tax reassessments. Parliament has clearly provided that disputes over assessments belong in the Tax Court, which has exclusive jurisdiction to vacate or vary an assessment.
The Court further held that the pleadings failed to establish facts that could support the allegation of unlawful sub-delegation to Crown counsel. The applications were therefore struck without leave to amend.
Legal Framework: Income Tax Act Provisions
The decision highlights the statutory framework governing objections and appeals:
- Subsection 165(3) – Minister may confirm, vary, or vacate an assessment.
- Subsection 169(1) – Taxpayer has the right to appeal to the Tax Court following confirmation.
- Section 171 – Tax Court may vacate, vary, or confirm assessments.
This framework provides a complete and adequate remedy, making judicial review unnecessary and impermissible.
Implications for Canadian Taxpayers and Advisors
For taxpayers and their experienced Canadian tax litigation lawyers, the case reinforces key lessons:
- Complaints about the CRA's handling of objections must still proceed through a Tax Court appeal.
- Judicial review is not available to challenge reassessments, even when framed as objections to process.
- Allegations of procedural unfairness or sub-delegation must be factually detailed, not speculative.
- The Tax Court is the exclusive venue for substantive disputes over income tax reassessments.
This decision provides further certainty for taxpayers and top Canadian tax litigation lawyers advising clients on the proper path to challenge reassessments.
Pro Tax Tips from a Canadian Tax Litigation Lawyer
- If you receive a notice of confirmation, file an appeal with the Tax Court of Canada within the 90-day deadline. Judicial review is not an option.
- Ensure appeals are supported by clear evidence and legal arguments. Procedural complaints alone will not vacate a reassessment.
- Seek early advice from an expert Canadian tax litigation lawyer to avoid costly procedural missteps and preserve your rights.
FAQs
Can judicial review ever be used in income tax disputes?
Judicial review is only available where no statutory appeal route exists, such as challenges to discretionary relief under the Taxpayer Relief Program. It cannot be used to challenge reassessments.
What happens if a taxpayer files for judicial review instead of a Tax Court appeal?
The Federal Court will likely strike the application, and the taxpayer risks losing their chance to appeal if the 90-day Tax Court filing deadline has passed.
Conclusion
The Federal Court's ruling in Spennie Holdings Inc. v. AGC is a clear reminder that taxpayers cannot bypass the Tax Court of Canada by filing for judicial review. This decision aligns with long-standing jurisprudence and confirms the Tax Court as the sole forum for reassessment disputes. For taxpayers and their advisors, the message is clear: file an appeal, not a judicial review.