Executive Summary: Key Legal and Evidentiary Issues

• The Federal Court's jurisdiction to review a nil tax assessment issued by the Minister of National Revenue was the central dispute in both decisions.

• Parliament intentionally divided jurisdiction over tax matters, granting the Tax Court exclusive authority over the correctness of assessments and the Federal Court authority over discretionary ministerial decisions.

• A nil assessment is not technically an "assessment" under the Income Tax Act, meaning it does not trigger statutory rights of objection or appeal to the Tax Court.

• The Tax Court's lack of jurisdiction over nil assessments does not automatically confer jurisdiction on the Federal Court, as confirmed in Verdicchio v Canada.

• Mr. Hughes' argument that the CHRT Tribunal Order should have primacy over the Minister's assessment was found not to raise a cognizable administrative law claim.

• On appeal, Justice Grant noted that Mr. Hughes may still have potential recourse at the Tax Court under the overpayment provisions, citing Canada v 984274 Alberta Inc.

The CHRT award and the tax dispute

In June 2018, the Canadian Human Rights Tribunal issued an order under subsection 53(2) of the Canadian Human Rights Act, awarding Chris Hughes lost wages and interest as against Transport Canada. Mr. Hughes received payment of the award in February 2019, accompanied by a Department of Justice spreadsheet that listed statutory deductions including union dues, income tax, pension contributions, and employment insurance contributions. Years later, in September 2024, Mr. Hughes requested the Minister of National Revenue reassess his 2019 tax year to include the CHRT Award as taxable income. The Minister initially complied in August 2025, issuing a reassessment that acknowledged the amounts as taxable income, which resulted in a tax bill for $308,000.

The nil assessment and the applicant's challenge

However, on September 18, 2025, by letter from Assistant Commissioner Marc Lemieux, the Minister reversed course and replaced the August 2025 reassessment with a nil assessment, determining that no taxes were payable for the 2019 tax year. Dissatisfied with this outcome, Mr. Hughes filed a Notice of Application in the Federal Court on September 23, 2025, seeking an order to quash the nil assessment and to direct the Canada Revenue Agency to make an assessment consistent with the CHRT Tribunal Order and the Department of Justice spreadsheet. The Attorney General of Canada responded by bringing a motion to strike the Notice of Application without leave to amend, arguing the Federal Court lacked jurisdiction to grant the relief sought.

The first decision: Associate Judge Coughlan's ruling

Associate Judge Catherine A. Coughlan heard the motion to strike and, on January 8, 2026, granted it. The Court's analysis turned on the well-established division of jurisdiction between the Federal Court and the Tax Court of Canada. Relying heavily on the Supreme Court of Canada's decision in Dow Chemical Canada ULC v Canada, 2024 SCC 23, Judge Coughlan explained that the Tax Court has exclusive jurisdiction to review the correctness of assessments, while the Federal Court retains jurisdiction only over discretionary decisions of the Minister. Since the Minister's act of issuing an assessment — including a nil assessment — is a non-discretionary application of the Income Tax Act, the Federal Court could not intervene. The Court further found that the essential character of Mr. Hughes' application was a challenge to the correctness of the nil assessment, and even his concession at the hearing to drop the request for a directed verdict did not change this fundamental characterization. Judge Coughlan also rejected Mr. Hughes' arguments that the CRA's actions amounted to an abuse of power or that the primacy of human rights legislation should cause the Tribunal Order to override the Minister's assessment, concluding these did not raise a cognizable administrative law claim. The Notice of Application was struck without leave to amend, and costs of $700 were awarded to the Respondent.

The appeal: Justice Grant's decision

Mr. Hughes appealed the Associate Judge's order under Rule 51 of the Federal Courts Rules. On March 31, 2026, Justice A. Grant of the Federal Court dismissed the appeal. Justice Grant first addressed Mr. Hughes' allegation that Judge Coughlan's decision was "contemptuous" of the CHRT Tribunal Order, firmly rejecting this characterization as having no basis and noting that Mr. Hughes had misunderstood the nature of the jurisdictional proceeding before the Associate Judge. On the substantive question, Justice Grant found no reviewable errors in Judge Coughlan's jurisdictional conclusions and confirmed that a nil assessment is not a discretionary decision but rather a calculation reflecting that no taxes are owed, placing it outside the Federal Court's jurisdiction. The Court also rejected Mr. Hughes' reliance on Milgram Foundation v Canada (Attorney General), 2024 FC 1405, explaining that the case merely reaffirmed the Federal Court's jurisdiction over discretionary ministerial decisions and was therefore inapplicable to the non-discretionary assessment at issue.

Possible alternative avenues and the overall outcome

Notably, Justice Grant offered a measure of guidance by observing that Mr. Hughes may not be entirely without recourse. Citing Canada v 984274 Alberta Inc, 2020 FCA 125, the Court noted that where taxes have been paid and a nil assessment is subsequently issued, the taxpayer may be in an overpayment scenario under subsection 164(7) of the Income Tax Act, and such matters may fall within the Tax Court's jurisdiction. However, this observation was not conclusory, and the Court emphasized that Mr. Hughes had failed to establish that the Federal Court was his only avenue for relief. Both courts noted serious deficiencies in the factual record before them, as key documents referenced in Mr. Hughes' materials — including the CHRT Tribunal Order itself — were never placed before the Court. Ultimately, Mr. Hughes' appeal was dismissed, and costs of $1,260 were awarded to the Respondent, the Attorney General of Canada, bringing the total costs ordered against Mr. Hughes across both decisions to $1,960. No exact monetary award was granted in favour of Mr. Hughes in either proceeding.