Executive Summary: Key Legal and Evidentiary Issues

• The Appellant challenged the CRA’s redetermination that reduced its CEWS entitlement for 14 qualifying periods from $92,243.50 to nil.

• A motion was filed to transfer the case from the Informal Procedure to the General Procedure due to the total amount in dispute.

• The Court ruled that CEWS determinations are made per qualifying period and must be assessed individually under the $25,000 threshold.

• Since no single period's disputed amount exceeded $25,000, the case remained in the Informal Procedure.

• The Appellant's claim of mistake in electing the Informal Procedure was rejected as insufficient to revoke the election.

• This decision provides guidance for similar benefit appeals under CEWS, CERS, and CRHP involving per-period entitlements.

Background and factual context

Downtown Hockey League Ltd. appealed the Minister of National Revenue’s redetermination of its Canada Emergency Wage Subsidy (CEWS) entitlement, which reduced its cumulative claim of $92,243.50 to nil. The redetermination applied to fourteen qualifying periods (P1 to P14), and the Minister issued related notices on July 22, 2021 (individual determinations), August 3, 2021 (two redetermination documents for P1–P10 and P11–P14), and a revised redetermination on August 11, 2021, to correct clerical errors. The Appellant objected, and the Minister confirmed the redetermination, leading to this appeal. On September 23, 2021, a notice of reassessment imposed penalties totaling $23,072 related to the CEWS applications for the Appellant’s taxation year ending August 31, 2020.

The appeal was originally filed under the Informal Procedure and scheduled for hearing on May 20, 2025. On May 6, 2025, after retaining new counsel, the Appellant brought a motion to transfer the matter to the General Procedure, arguing that the cumulative amount in dispute exceeded the $25,000 limit specified under section 2.1 of the Tax Court of Canada Act.

Court's discussion on policy terms and legal provisions

Justice Sorensen examined whether CEWS determinations and redeterminations are assessed per qualifying period or cumulatively. He confirmed that under section 125.7 of the Income Tax Act and section 152(3.4), CEWS overpayments and eligibility are determined individually for each qualifying period. The Court emphasized that while notices might combine several determinations into a single document, each period remains a distinct legal event.

The Appellant relied on section 18.12(1) of the Tax Court of Canada Act, which allows a transfer to the General Procedure if the “aggregate of all amounts in issue” exceeds $25,000. However, the Court held that this threshold applies per determination. Since each of the 14 CEWS periods involved less than $25,000 individually, the statutory condition for transferring the case was not met.

Justice Sorensen referenced other CEWS cases like Investment Accounting Solutions Inc. v. The King, 2024 TCC 146, noting that such matters have been adjudicated under the Informal Procedure without raising the transfer issue. He also addressed the Appellant’s argument based on Fullum v R, 2017 TCC 140, but distinguished it as applying to discovery rules, not procedural election thresholds.

The Appellant further argued that its prior representative made an honest mistake by selecting the Informal Procedure. The Court rejected this, citing that the Schedule 4 form used to file the appeal clearly indicated the monetary limits and legal references, and that such information should have prompted caution. The record lacked sufficient evidence to support a claim of mistake or grounds for revocation of the election.

Outcome

The Tax Court dismissed the Appellant’s motion to transfer the case to the General Procedure. It found that CEWS entitlements are determined per qualifying period, and since each period's amount in dispute was below $25,000, the Informal Procedure was properly elected and binding.

Justice Sorensen reiterated that the Informal Procedure is intended to be an efficient and accessible mechanism for tax disputes, particularly where the amounts in question fall within statutory thresholds. No costs were awarded. The matter will proceed under the Informal Procedure on September 11, 2025, at 9:30 a.m. or as soon thereafter as practicable.