Margaret Nixon discusses what's driving the increase in settlements with the CRA

December 6, 2019
Tax partner Margaret Nixon spoke with Law Times on the increasing number of disputes between taxpayers and the Canada Revenue Agency that are being settled outside of court.

Margaret discussed two recent settlements in high-profile cases that exemplify the trend towards more settlements. She also discussed the key drivers behind the trend, including the 2014 changes to the Tax Court Rules. These changes allow the Court to order a settlement conference either by request of the parties or through its own initiative and allow for larger costs awards where a settlement offer has been made.

Margaret explained that before the 2014 rule changes, costs in tax disputes would frequently be awarded “in accordance with the tariff,” which was a problem because “the amounts in the tariffs are very small and do not come close to compensating parties for the actual cost of litigation.”

Margaret also touched on the fact that most taxpayers are willing to settle at the right price. She believes the challenge is that the Crown can only settle tax disputes on a principled basis, which means that the settlement must be in accordance with the law on the facts as the CRA understands them.

“Overall, the tax bar has reacted positively to the trend towards settlement,” she said. “Many practitioners felt that the rule change regarding enhanced cost awards where a settlement offer has been made was long overdue, the tariff was simply inadequate to address the rising cost and complexity of tax disputes.”

Margaret is ranked as a leading lawyer in Litigation: Corporate Tax by The Canadian Legal Lexpert Directory 2019 and was this year named as a Leading Litigation Lawyer in Canada by Lexpert/ROB Special Edition.