Taxpayers score win in capital gains court fight

The Canadian Taxpayers Federation won the first round of its legal battle to stop the Canada Revenue Agency from enforcing unapproved tax hikes after the Federal Court dismissed the Attorney General’s motion to strike the case.

“This decision is a big win for taxpayers and we’re going to keep fighting to make sure unelected bureaucrats can’t impose unapproved tax hikes,” said Devin Drover, CTF General Counsel. “The court made it clear that our case deserves to be heard, and we’re going to keep fighting to set a precedent that tax hikes cannot happen without approval from elected representatives in Parliament.”

The CTF is representing Debbie Vorsteveld, a resident of Mapleton, Ontario, in challenging the CRA’s attempt to administer a capital gains tax increase that was never passed into law.

The government proposed increasing the capital gains inclusion rate in Budget 2024, but Parliament never enacted the legislation. Despite this, the CRA announced it would enforce the higher tax rate.

In its ruling, the Court rejected the federal government’s arguments that the case should be thrown out as premature or outside the Court’s jurisdiction. The Court found that the “true essence” of the case is a challenge to the CRA’s implementation of an unlegislated tax change and not an appeal of any future tax assessment.

“This case is about a basic constitutional principle: No taxation without representation,” Drover said. “Unelected bureaucrats shouldn’t be able to raise taxes without a vote in Parliament.

“If the CRA can get away with this once, it can do it again and that’s why we’re pressing forward in this case.”

The CTF’s challenge will now proceed toward a full hearing on the merits to set a legal precedent that prevents any government from collecting taxes before they are approved by elected representatives.

Canadian Taxpayers Federation