Tax Court of Canada Overview

The Honourable Donald G.H. Bowman, former Chief Justice of the Tax Court of Canada (TCC), described the challenges of making a judgement not only in accordance with the law but also exercising common sense and compassion when he spoke at the Tax Court of Canada 20th Anniversary Symposium in 2003:

"Most of them are small cases in the informal procedure where individuals, unrepresented by a lawyer, ignorant of the tax law and of the court procedures, and armed only with a sense of indignation at the injustice that they perceive to have been wrought upon them by unfeeling, arrogant and rapacious tax gatherers, choose to take up arms against the awesome might of the government."

No judge has made a more indelible contribution to the understanding of the legislative intent of the Income Tax Act as Justice Bowman who consistently applied his pragmatic and reasonable approach to DTC determinations while on the bench.

In one of the most important and influential decisions relating to the DTC is Radage v. The Queen, with Justice Bowman providing the following sensible, practical and compassionate interpretation of the legislation:

"The legislative intent appears to be to provide a modest amount of tax relief to persons who fall within a relatively restricted category of markedly physically or mentally impaired persons… The court must, while recognizing the narrowness of the tests enumerated in sections 118.3 and 118.4, construe the provisions liberally, humanely and compassionately and not narrowly and technically."

Although this jurisprudence has guided the decisions of dozens of subsequent TCC rulings, it has had little if any influence in CRA's administration of the DTC.

Even more egregious is the fact that the CRA continues to disregard considerable case law when the courts have ruled against its inflexible 90% guideline as its interpretation of the "all or substantially all of the time" clause in the Income Tax Act. If parliament had intended that a fixed number should govern the statute, it would have said so.

in Watts v. The Queen, Justice Bowman made it clear that the court has no obligation to consider an ambiguous and often irrelevent mathematical administrative directive stating that:

"The 90% rule… has no statutory basis… The 90% rule, even if it had some basis in law, is itself defective because it leaves unanswered the question ''90% of what?'… The word 'substantially' is not defined in dictionaries as a fixed portion of a whole.

"…There are many cases in this Court that have considered the meaning of ''all or substantially all.' They consistently comment on the elasticity and ambiguity of the expression and on the inadvisability of using an arbitrary percentage, such as 90%... The so-called "90% rule" is a rule of thumb that is no doubt convenient to assessors and tax advisors. .. but it is difficult to apply in practice. Aristotle long ago pointed out that the degree of precision that is attainable depends on the subject matter."