Supreme Court of Canada **SUPREME COURT OF CANADA** Appeal Heard: November 9, 2023

Judgment Rendered: June 28, 2024 Docket: 40276 Between: Dow Chemical Canada ULC — Appellant and His Majesty The King — Respondent Coram: Karakatsanis, Côté, Rowe, Martin, Kasirer, Jamal and O'Bonsawin JJ. Reasons for Judgment: (paras. 1 to 122) Kasirer J. (Martin, Jamal and O'Bonsawin JJ. concurring) Dissenting Reasons: (paras. 123 to 224) Côté J. (Karakatsanis and Rowe JJ. concurring) Note: This document is subject to editorial revision before its reproduction in final form in the Canada Supreme Court Reports. --- ## Parties Dow Chemical Canada ULC — Appellant v. His Majesty The King — Respondent Indexed as: Dow Chemical Canada ULC v. Canada 2024 SCC 23 File No.: 40276. 2023: November 9; 2024: June 28. Present: Karakatsanis, Côté, Rowe, Martin, Kasirer, Jamal and O'Bonsawin JJ. on appeal from the federal court of appeal --- ## Headnote Courts — Jurisdiction — Taxation — Income tax — Downward transfer pricing adjustment — Taxpayer reporting taxable income — Taxpayer including income earned and deducting interest expenses incurred under loan agreement with related foreign company — Minister reassessing and applying transfer pricing rules to income earned resulting in increased amount of taxable income — Minister declining to exercise discretion to make downward transfer pricing adjustment in respect of interest expenses — Taxpayer applying to Federal Court for judicial review of Minister's decision denying downward adjustment and appealing reassessment to Tax Court of Canada — Whether decision by Minister exercising discretion to deny taxpayer's request for downward transfer pricing adjustment falls outside exclusive original jurisdiction of Tax Court to determine appeals of assessments — Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.), ss. 169, 247(2), 247(10) — Federal Courts Act, R.S.C. 1985, c. F‑7, ss. 18.1, 18.5. Held (Karakatsanis, Côté and Rowe JJ. dissenting): The appeal should be dismissed. Per Martin, Kasirer, Jamal and O'Bonsawin JJ.: When the Minister has exercised her discretion under s. 247(10) of the ITA to deny a taxpayer's request for a downward pricing adjustment, that decision falls outside of the jurisdiction of the Tax Court in respect of an appeal of the taxpayer's assessment. The Minister's discretionary decision is not part of the assessment. The meaning of "assessment" is settled in law, and the Minister's opinion formed under s. 247(10) is qualitatively distinct from that concept. This Court's settled interpretation of "assessment" aligns with the internal context of the statute, which distinguishes between the Minister's discretionary decisions and the non-discretionary determinations that comprise an assessment. Both the Federal Court and the Tax Court are creatures of statute. The Federal Court has exclusive statutory jurisdiction to grant relief in relation to federal ministerial decisions under s. 18(1) of the Federal Courts Act. Section 18.5 of that Act allows for this jurisdiction to be ousted where a federal statute expressly provides for an appeal to another body, including the Tax Court. Pursuant to settled principles, the definition of "assessment" should not be expanded to include by necessary implication the Minister's discretionary decisions under s. 247(10). Unlike the non‑discretionary determinations that make up an assessment, the ITA empowers the Minister to exercise discretion in some matters, including over whether to issue downward transfer pricing adjustments under s. 247(10). These discretionary decisions are not assessments nor are they part of assessments. Section 247(10) empowers the Minister to base her decision on policy considerations rather than requiring a strict application of the law to the facts. As a matter of statutory interpretation, s. 247(10) does not make the Minister's exercise of discretion a precondition for the issuance of a correct assessment. The definition of "assessment" should not be expanded to include discretionary decisions said to be directly affected by or inextricably linked to assessments. The Minister's conduct is not at issue in an assessment and taxpayers cannot object to the underlying process or motivations for the issuing of an assessment before the Tax Court. Reviews of conduct by the executive proceed by way of judicial review and must therefore be heard by the Federal Court. Holding that assessments may include decisions of the Minister pursuant to provisions like s. 247(10) by necessary implication would be inconsistent with distinct routes of appeal to the Tax Court from other decisions that are set out expressly in the ITA. Where Parliament provides for recourse from a ministerial decision to the Tax Court, it has created an express right to appeal; this shows that ministerial decisions are understood as distinct from the tax assessment even where they may directly affect it. To depart from the settled meaning of "assessment" also has potential implications beyond the matter in issue. Moreover, adopting Dow's theory would unsettle the Court's jurisprudence on the standard of review set forth in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653. When a taxpayer challenges an assessment, the Tax Court will conduct a de novo review of that assessment. Dow's theory cannot be reconciled with reasonableness review — the Tax Court cannot apply a deferential standard of review to part of an assessment, since a de novo review requires all aspects of the assessment to be scrutinized for correctness. Moreover, treating the Minister's decision under s. 247(10) as part of an assessment for the purposes of an appeal to the Tax Court would result in bifurcated streams of review and give rise to issues regarding the Federal Court's jurisdiction. A decision under s. 247(10) can be made without an assessment being issued or after the time limit for objections and appeal. This might result in challenges being precluded. Only the Federal Court can grant an appropriate remedy for a challenge to the s. 247(10) decision. If the Tax Court determines that an assessment is incorrect, it may vacate the assessment, vary it, or refer it back to the Minister for reconsideration and reassessment. If the Tax Court issues an order for reconsideration and reassessment, the Minister will simply be required to issue a reassessment that is consistent with her original s. 247(10) decision, which, unlike assessments, the Tax Court has no power to quash. Only the Federal Court can quash a Minister's decision and require her to reconsider it. Parliament intentionally divided jurisdiction over tax matters between the Federal Court and the Tax Court. The Tax Court has never been a single forum for all tax litigation. Parliament has set up a complex structure to deal with a multitude of tax‑related claims. Making a change to that complex structure without a thoughtful, comprehensive reform that can only be achieved by Parliament would be ill-advised. Deciding that the Tax Court has jurisdiction to review decisions under s. 247(10) will not enhance access to justice. This provision is relevant mainly to multinational corporate taxpayers carrying out non‑arm's length transactions with related entities. If the Tax Court were to have jurisdiction to review the Minister's exercise of discretion pursuant to s. 247(10), the Federal Court's ability to review other exercises of ministerial discretion — including those under other taxation statutes — could be called into question. Per Karakatsanis, Côté and Rowe JJ. (dissenting): The appeal should be allowed and Dow's challenge regarding the Minister's discretionary decision to deny downward transfer pricing adjustments under s. 247(10) of the ITA should proceed before the Tax Court. Unlike other discretionary powers in the ITA, the power that the Minister has under s. 247(10) is not permissive. The Minister is obliged to exercise this power in order to determine a taxpayer's liability. Parliament has ensured that the correctness or validity of a taxpayer's assessment falls squarely within the jurisdiction of the Tax Court, to the exclusion of the Federal Court's supervisory jurisdiction. Judicial review should not be used to develop a new form of incidental litigation designed to circumvent the system of tax assessments and appeals established by Parliament. Because it goes directly to the correctness of a taxpayer's assessment, a decision by the Minister to deny a downward transfer pricing adjustment under s. 247(10) is within the scope of the Tax Court's appellate jurisdiction. Such a decision is inextricably linked to the assessment because it directly impacts the amount of a taxpayer's income and taxable income and it necessarily precedes the determination of the ultimate amount of tax owing. This conclusion is consistent with the comprehensive legislative schemes establishing the respective jurisdiction of the Federal Court and the Tax Court and with the important objectives of avoiding a multiplicity of proceedings and of promoting efficiency and access to justice. Statutory courts such as the Federal Court and the Tax Court derive their existence, jurisdiction, and powers solely from their enabling statutes. Section 18(1) of the Federal Courts Act grants the Federal Court supervisory jurisdiction over decisions of a federal board, commission or other tribunal. However, s. 18.5 of the Federal Courts Act ousts the Federal Court's jurisdiction to grant such relief where a federal statute expressly provides for an appeal to another body. Pursuant to s. 169 of the ITA, any person who has served a notice of objection to an assessment may appeal to the Tax Court. The Minister's decision to either allow or deny a downward transfer pricing adjustment under s. 247(10) is based on whether, in her opinion, the circumstances are such that it would be appropriate that the adjustment be made. Section 247(10) does not define those circumstances or provide any guidance as to what they may be. The Minister is given wide discretion to make her decision, based on her opinion of those circumstances. The settled meaning of an "assessment" for the purposes of s. 169 of the ITA is not in dispute. At issue on appeal from an assessment is the amount of tax owed by the taxpayer. In this case, the question is whether a decision that the Minister must make before the amount of tax liability can be determined is within the scope of an appeal from an assessment provided for in s. 169. The Minister's exercise of discretion under s. 247(10) is a mandatory precondition to the issuance of a correct assessment. It is not merely an internal process by which the Minister arrives at the assessment, but rather a decision that the Minister is required to make before the amount of tax owed by a taxpayer can be correctly determined. For all of these reasons, a decision made by the Minister under s. 247(10) is within the scope of an appeal of an assessment and falls squarely within the Tax Court's exclusive appellate jurisdiction under s. 169 of the ITA. The Tax Court's remedial powers under s. 171 of the ITA allow it to deal with discretionary decisions going to the correctness of an assessment. Section 171(1)(b)(iii) sets out that the Tax Court may refer the assessment back to the Minister for reconsideration and reassessment. These words imply that the Tax Court may, in referring the assessment back for reconsideration and reassessment, remit to the Minister any aspect of the assessment for which a fresh exercise of discretion is required. A deferential standard of appellate review applies when the Tax Court is dealing with the Minister's discretionary decisions under s. 247(10). This is because the Tax Court cannot substitute its opinion for that of the Minister or prevent her from arriving at the same decision upon reconsideration, following a proper exercise of her discretion. It is clear from the language in s. 247(10) that Parliament conferred upon the Minister a broad discretion. --- ## Cases Cited ### By Kasirer J. Applied: Okalta Oils Ltd. v. Minister of National Revenue, [1955] S.C.R. 824; referred to: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653; Main Rehabilitation Co. v. Canada, 2004 FCA 403, 247 D.L.R. (4th) 597; Canada v. Anchor Pointe Energy Ltd., 2007 FCA 188; JP Morgan Asset Management (Canada) Inc. v. Canada (National Revenue), 2013 FCA 250, [2014] 2 F.C.R. 557; Canada v. Addison & Leyen Ltd., 2006 FCA 107, [2006] 4 F.C.R. 532, aff'd 2007 SCC 33, [2007] 2 S.C.R. 793; Iris Technologies Inc. v. Canada (Attorney General), 2024 SCC 24; Canada (National Revenue) v. ConocoPhillips Canada Resources Corp., 2017 FCA 243, 2017 DTC 5135; Interior Savings Credit Union v. R., 2007 FCA 151, [2007] 4 C.T.C. 55; Bozzer v. Canada (National Revenue), 2011 FCA 186, [2013] 1 F.C.R. 242; Jewett v. Canada (Attorney General), 2020 FCA 187, [2021] 4 C.T.C. 1; Shaw Estate v. Canada (Attorney General), 2021 FC 576; Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; Sifto Canada Corp. v. Minister of National Revenue, 2014 FCA 140, 461 N.R. 184; Maverick Oilfield Services Ltd. v. Canada (Attorney General), 2023 FC 1728, [2024] 2 C.T.C. 67; Pure Spring Co. v. Minister of National Revenue, [1946] Ex. C.R. 471; Pioneer Laundry and Dry Cleaners Ltd. v. Minister of National Revenue, [1940] A.C. 127 (P.C.); Wrights' Canadian Ropes Ltd. v. Minister of National Revenue, [1947] A.C. 109 (P.C.); Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190; Minister of National Revenue v. Parsons, [1984] 2 F.C. 331 (C.A.). ### By Côté J. (dissenting) Canada v. Addison & Leyen Ltd., 2007 SCC 33, [2007] 2 S.C.R. 793; Canada (Attorney General) v. Collins Family Trust, 2022 SCC 26; Minister of National Revenue v. General Electric Capital Canada Inc., 2010 FCA 344, 414 N.R. 304; Canada v. Cameco Corporation, 2020 FCA 112, [2020] 4 F.C.R. 104; Roncarelli v. Duplessis, [1959] S.C.R. 121; Pure Spring Co. v. Minister of National Revenue, [1946] Ex. C.R. 471; Pioneer Laundry and Dry Cleaners Ltd. v. Minister of National Revenue, [1940] A.C. 127 (P.C.); Wrights' Canadian Ropes Ltd. v. Minister of National Revenue, [1947] A.C. 109 (P.C.); Okalta Oils Ltd. v. Minister of National Revenue, [1955] S.C.R. 824; Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653. --- ## Statutes and Regulations Cited - Constitution Act, 1867, s. 101.

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• Vincent, François, and Michel Ranger. Transfer Pricing in Canada. Toronto: Thomson Reuters, 2018. --- ## Appeal APPEAL from a judgment of the Federal Court of Appeal (Webb, Rennie and Locke JJ.A.), 2022 FCA 70, [2022] 5 C.T.C. 1, 2022 DTC 5050, [2022] F.C.J. No. 565 (Lexis), 2022 CarswellNat 1109 (WL), setting aside a decision of Monaghan J., 2020 TCC 139, [2021] 2 C.T.C. 2063, 2021 DTC 1001, [2020] T.C.J. No. 114 (Lexis), 2020 CarswellNat 5538 (WL). Appeal dismissed, Karakatsanis, Côté and Rowe JJ. dissenting. Daniel Sandler, Osnat Nemetz and Laura Jochimski, for the appellant. Daniel Bourgeois, Christa Akey and Justine Malone, for the respondent. --- ## Reasons for Judgment The judgment of Martin, Kasirer, Jamal and O'Bonsawin JJ. was delivered by Kasirer J. — ### I. Overview [ 1 ] This appeal concerns the jurisdiction of the Tax Court of Canada, sitting in appeal of a taxpayer's assessment, to review the Minister of National Revenue's decisions under s. 247(10) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) ("ITA"). Section 247(10) provides that downward transfer pricing adjustments shall not be made unless, in the opinion of the Minister, the circumstances are such that it would be appropriate that the adjustment be made. The question is whether a challenge to the Minister's exercise of that discretion to deny a taxpayer's request for a downward transfer pricing adjustment is within the exclusive original jurisdiction of the Tax Court to determine appeals of assessments under s. 169 of the ITA. [ 2 ] Dow Chemical Canada ULC argues that a review of the Minister's decision under s. 247(10) of the ITA falls within the exclusive jurisdiction assigned to the Tax Court because that decision directly impacts the amount of the taxpayer's taxable income and tax liability, and thus goes to the "correctness" of the assessment. I disagree. [ 3 ] I have had the advantage of reading the reasons prepared by my colleague Côté J. in which she proposes to allow Dow's appeal. I agree with her that the Federal Court has exclusive statutory jurisdiction to review exercises of a Minister's discretionary power and that the Federal Court would be able to remedy a situation where the Minister exercises that power in error. In that sense, I agree with her that the Federal Court is able to provide Dow with relief and an appropriate remedy. [ 4 ] With the utmost respect, however, I am unable to agree with the view that the Minister's decision under s. 247(10) can be appealed as part of an assessment to the Tax Court. Allowing this matter to be appealed to the Tax Court as part of an assessment would disrupt settled law on the concept of an "assessment" and on the relationship between the Tax Court and the Federal Court in the income tax context. [ 5 ] Dow's submissions, if accepted, would disturb settled jurisprudence, including this Court's decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, and create practical difficulties in the distribution of jurisdiction between the Tax Court and the Federal Court. [ 6 ] Importantly, Dow seeks to undermine Parliament's design of limiting the Tax Court's appeal jurisdiction to reviewing the correctness of assessments by changing the foundational notion of an assessment to include discretionary decisions that affect an assessment's outcome. [ 7 ] By empowering the Minister to weigh her "opinion" of whether circumstances are such that it would be appropriate to depart from the ordinary rule and permit a downward adjustment, Parliament has given the Minister a discretionary power that is qualitatively distinct from the non-discretionary determinations that make up an assessment. The Minister exercising discretion, as opposed to duty, is a fundamental indication that the decision in question does not form part of an assessment. [ 8 ] The foundational principles of administrative law set forth by this Court in Vavilov dictate that the Minister's discretionary decision, the authorization for which was conferred by statute, is subject to judicial review in the Federal Court. This Court does not have the power, through interpretation of s. 169 of the ITA, to enlarge the Tax Court's jurisdiction to include reviews of discretionary ministerial decisions. [ 9 ] In service of its view of the Tax Court's appeal jurisdiction founded on this expanded notion of assessment, Dow advances a framework of analysis where deference to the Minister based on reasonableness principles would apply. This framework of analysis is inconsistent with Vavilov and with the de novo nature of the Tax Court's review of assessments under s. 169 of the ITA. [ 10 ] Equally problematic is Dow's position on available remedies which, in the end, invites this Court to expand the Tax Court's powers by giving "guidance . . . as to whether the Tax Court has the authority to remedy an improper exercise of discretion under [s.] 247(10) either under the existing remission power in [s.] 171(1)(b)(iii) . . . or under an implied jurisdiction to give appropriate relief" (A.F., at para. 160 (emphasis in original)). [ 11 ] These are all signs, I fear, that an embrace of Dow's position would undermine basic administrative law principles on standard of review and remedy and leave the dividing line between the Federal Court and the Tax Court's jurisdictions hopelessly unclear. [ 12 ] Dow's position also puts in jeopardy settled principles governing the jurisdiction of the Federal Court which, like the Tax Court, is a creature of statute. The Federal Court's exclusive jurisdiction over judicial review of federal administrative action would be jeopardized if any ministerial decision that has an impact on a taxpayer's income or tax liability were to be appealed to the Tax Court as part of an assessment. [ 13 ] Dow nevertheless says it advances its theory in service of the public good of access to justice, invoking the advantages its proposed innovation would achieve for unrepresented litigants before the Tax Court. I agree that access to justice is an important value. With respect, however, no amount of access-to-justice policy considerations can override clear statutory grants of authority to the Federal Court and the Tax Court. [ 14 ] It is plainly in the legislative branch where far-reaching considerations related to the jurisdictional divide between the Federal Court and the Tax Court should be studied and considered. It has not been the practice of this Court to engineer comprehensive reform to the distribution of jurisdiction between courts through statutory interpretation. [ 15 ] When asked at the hearing what the effect of recognizing a jurisdiction for the Tax Court to review discretionary decisions of the Minister would be, counsel for Dow acknowledged that it would be "a bit of a revolution" (transcript, at p. 85). But, he said, that was why Dow brought the case to the Supreme Court. In my view, this Court should decline this invitation and leave the matter to Parliament and its informed measure of the public policy implications of any such change to the Tax Court's and the Federal Court's respective jurisdictions. [ 16 ] Applying the settled principles that govern the nature of a tax assessment, the divided statutory jurisdiction between the Federal Court and the Tax Court in income tax matters, and the standard of review and remedial relief associated with general principles of judicial review in administrative law, I conclude that the challenge to a decision of the Minister under s. 247(10) is outside the appellate jurisdiction of the Tax Court. It is the proper and exclusive subject matter of judicial review before the Federal Court. I would therefore propose to dismiss the appeal. --- ### II. Background [ 17 ] Dow's appeal to this Court follows the divergent answers provided by the Tax Court and the Federal Court of Appeal to the following question, presented under s. 58 of the Tax Court of Canada Rules (General Procedure), SOR/90‑688a ("General Procedure Rules"), as a question of law: > Where the Minister of National Revenue has exercised her discretion pursuant to subsection 247(10) of the Income Tax Act ("ITA") to deny a taxpayer's request for a downward transfer pricing adjustment, does the decision by the Minister fall outside the exclusive original jurisdiction of the Tax Court of Canada to determine whether the taxpayer's assessment is correct? (T.C.C. reasons, at para. 21) [ 18 ] The question came to the Tax Court as a result of a denial by the Minister for a downward pricing adjustment relating to interest paid by Dow to a related Swiss company. I take due note of the position of both Dow and the Crown that the facts underlying the dispute are not before this Court and that Dow has not alleged that the Minister's conduct was abusive. [ 19 ] Transfer pricing rules are set out in s. 247 of the ITA. Where a taxpayer (in this case Dow) is dealing with a non-resident person with whom it is not at arm's length (here, the related Swiss company), the ITA provides for certain adjustments to the amounts paid or received by the taxpayer under transactions between them (s. 247(2)). These adjustments are designed to bring those amounts in line with what parties dealing at arm's length would pay or receive in the same circumstances. An upward adjustment, which increases the taxpayer's income, reflects an amount that the taxpayer would have received from a non-resident in an arm's length transaction but did not. A downward adjustment, which decreases the taxpayer's income, reflects a deduction that the taxpayer would have been entitled to had they been dealing at arm's length. [ 20 ] Dow believed that its income should be decreased to reflect an amount of interest that would have been paid in the circumstances. Where an amount is identified that would decrease the taxpayer's income, a downward transfer pricing adjustment must be authorized by the Minister under s. 247(10) of the ITA, which provides: > (10) An adjustment (other than an adjustment that results in or increases a transfer pricing capital adjustment or a transfer pricing income adjustment of a taxpayer for a taxation year) shall not be made under subsection (2) to increase the amount of a deduction or to reduce the amount of an inclusion in computing a taxpayer's income from a source in a country other than Canada for a taxation year unless the Minister is of the opinion that the circumstances are such that it would be appropriate that the adjustment be made. [ 21 ] In 2013, Dow requested that the Minister make a downward transfer pricing adjustment under s. 247(10). The Minister advised Dow by letter that she would not exercise her discretion to make the downward adjustment. In accordance with this decision, no downward adjustment was made when the Minister issued reassessments for the 2001 to 2006 taxation years. [ 22 ] Dow also objected to the Notice of Reassessment, dated December 12, 2012, for the 2006 taxation year. The Minister issued another reassessment for the 2006 taxation year in 2015, and again in 2018. Dow simultaneously applied to the Federal Court for judicial review of the Minister's refusal to make the downward adjustment and appealed to the Tax Court. --- ### III. Judicial History #### A. Tax Court of Canada, 2020 TCC 139, [2021] 2 C.T.C. 2063 (Monaghan J.) [ 23 ] The Tax Court judge held that the Minister's discretionary decision under s. 247(10) of the ITA is an "essential component" of the taxpayer's assessment and "goes to the correctness of [that] assessment" (para. 212). Therefore, it falls within the Tax Court's jurisdiction to determine whether the taxpayer's assessment is correct. [ 24 ] She observed that the Federal Court has jurisdiction to judicially review the Minister exercising powers under statute "unless an Act of Parliament expressly provides for an appeal to another court or tribunal" (para. 100; see also Federal Courts Act, R.S.C. 1985, c. F‑7, s. 18.5). Section 169 of the ITA provides for appeals to the Tax Court and, in her view, the Federal Court's jurisdiction is ousted by "necessary implication" such that an appeal under s. 169 encompasses challenges to s. 247(10) decisions. [ 25 ] The Tax Court judge considered jurisprudence from the former Exchequer Court of Canada, which had both appellate jurisdiction over tax assessments and judicial review jurisdiction over decisions of the executive. She observed that, prior to 1972, a provision similar to s. 247(10) was in force under the former Income War Tax Act, R.S.C. 1927, c. 97 ("IWTA"), and that the Exchequer Court had exercised its appellate jurisdiction to hear challenges to the exercise of ministerial discretion similar to that contemplated by s. 247(10) as part of assessment appeals. [ 26 ] Drawing in part on this historical analysis, the Tax Court judge wrote that if the Minister failed to exercise her discretion under s. 247(10) "judicially", or "in accordance with proper legal principles", then "the assessment would be incorrect" and could be reviewed by the Tax Court (para. 210). [ 27 ] She also held that the rules on an assessment appeal "do not preclude a conclusion that the Tax Court's appellate jurisdiction permits it to review the Minister's decision" (para. 159). In connection with the rules on remedy under s. 171 of the ITA, she concluded that the Tax Court could refer the assessment back to the Minister for reconsideration and reassessment under s. 171(1)(b)(iii) where the Minister has not exercised her discretion at all or has exercised it on incorrect principles. [ 28 ] The Tax Court judge concluded on an appeal of an assessment, the appeal may be allowed "on the basis that the Minister did not exercise her power under subsection 247(10) correctly" (para. 213). That is"[w]here the Minister did not exercise the discretion at all, or exercised it on incorrect principles, the assessment cannot be said to be correct" (ibid.). #### B. Federal Court of Appeal, 2022 FCA 70, [2022] 5 C.T.C. 1 (Webb J.A., Rennie and Locke JJ.A. concurring) [ 29 ] The Federal Court of Appeal allowed the appeal and set aside the order of the Tax Court. It decided that the Federal Court has exclusive jurisdiction to judicially review the discretionary decisions by the Minister under s. 247(10). [ 30 ] After reviewing the relevant provisions of the Federal Courts Act and the ITA, Webb J.A. wrote that "if the ITA does not expressly provide for an appeal of that opinion to the Tax Court, the Federal Court will have jurisdiction to judicially review that opinion, unless the Federal Courts Act expressly or by necessary implication oust[s] the Federal Court's jurisdiction" (para. 47). [ 31 ] According to Webb J.A."the resolution of this appeal turns on the different remedies that may be granted by the Tax Court and the Federal Court" (para. 64). The remedies in the Tax Court allow it to vacate an assessment, vary it, or refer it back to the Minister for reconsideration and reassessment. None of these remedies give the Tax Court the power to review the opinion of the Minister formed under s. 247(10). [ 32 ] The Minister's opinion regarding the appropriateness of a downward adjustment will certainly have a "direct impact" on Dow's taxable income and its tax liability (para. 75). But Webb J.A. observed that "the determination of whether in the circumstances it is appropriate that the downward adjustment be made was delegated by Parliament to the Minister" (para. 76). Decisions of the Minister made pursuant to a statutory grant of power "form a distinct category" from assessments (para. 77). [ 33 ] Webb J.A. concluded that"[s]ince the Tax Court does not have the power to quash an opinion rendered under subsection 247(10) of the [ITA], it will remain valid, unless it is quashed by the Federal Court on judicial review" (para. 84). Only after the Federal Court has quashed the decision can the Tax Court order a reassessment. For this reason, Webb J.A. held that the Federal Court has exclusive jurisdiction to judicially review the Minister's discretionary decisions under s. 247(10). --- ### IV. Issues [ 34 ] This appeal requires this Court to answer the question of law put to the Tax Court by the parties. [ 35 ] The parties agree on many key aspects of the jurisdictional question, including the fact that both the Federal Court and the Tax Court are creatures of statute. They agree that the challenge to a decision of the Minister is of a kind that would ordinarily fall within the Federal Court's exclusive original jurisdiction under s. 18(1) of the Federal Courts Act. [ 36 ] The point of disagreement is whether the appeal to the Tax Court from the assessment should also be interpreted, by "necessary implication", to include appeals from other decisions of the Minister, in particular decisions made under s. 247(10), such that the Federal Court's jurisdiction over a challenge to that discretion is ousted by s. 18.5 of the Federal Courts Act. [ 37 ] Dow advances three core submissions in support of its position that the appeal of an assessment amounts to an express statutory appeal of the Minister's decision under s. 247(10). First, it argues that the Minister's decision is "inextricably linked" to an assessment and may therefore be challenged as part of the assessment (A.F., at paras. 58-88). Second, it submits that the Tax Court has jurisdiction to review the Minister's decision under s. 247(10) by necessary implication (A.F., at paras. 89-130). Third, it contends that the Tax Court has the remedial power to deal with errors by the Minister in exercising her discretion (A.F., at paras. 131-161). [ 38 ] In answer, the Crown submits three broad arguments in support of its view that only the Federal Court can provide relief in respect of the Minister's discretionary decision under s. 247(10). [ 39 ] First, the statutory delegation of authority to the Minister signals Parliament's intention that the s. 247(10) determination be separate from the Minister's assessment of tax (R.F., at para. 65). As an assessor of tax, the Minister has no choice but to strictly adhere to the provisions of the ITA. This is a qualitatively different task from the exercise of discretion, which permits the Minister to weigh policy considerations. Second, the Tax Court's remedial powers do not extend to quashing or reviewing ministerial decisions that are not part of the assessment, so accepting Dow's position would create uncertain law on the Tax Court's jurisdiction (R.F., at paras. 66-78). Third, if downward pricing adjustments could be challenged as part of an assessment before the Tax Court, that would disrupt the Federal Court's exclusive jurisdiction to conduct judicial review, particularly if there is no assessment in the same taxation year and the challenge to s. 247(10) is brought via judicial review in the Federal Court (R.F., at paras. 79-92). --- ### V. Analysis [ 40 ] For the reasons that follow, I would decline to give effect to Dow's arguments, which are inconsistent with the settled meaning of "assessment" in law and the scope of the statutory grant of jurisdiction to the Tax Court. Challenges to discretionary decisions under s. 247(10) must instead be reviewed by the Federal Court, which is the only court with jurisdiction to conduct judicial review of the Minister's exercise of discretion. #### A. A Decision Under Section 247(10) Is Distinct From an Assessment [ 41 ] A central premise of Dow's argument is that the Minister's s. 247(10) discretionary decision is so inextricably linked to an assessment of tax — assuming that one is even issued following that decision — that it can be challenged through an appellate procedure that only expressly applies to assessments. [ 42 ] I respectfully disagree that the Minister's discretionary decision is part of the assessment. The meaning of "assessment" is settled in law, and the Minister's opinion formed under s. 247(10) is qualitatively distinct from that concept. This Court's settled interpretation of "assessment" aligns with the internal context of the statute, which distinguishes between the Minister's discretionary decisions and the non-discretionary determinations that comprise an assessment. ##### (1) The Settled Meaning of an Assessment Under the Income Tax Act [ 43 ] A tax assessment is, as this Court's jurisprudence confirms, a purely non-discretionary determination by the Minister of the taxpayer's tax liability for a particular taxation year (Okalta Oils, at pp. 825-26; see also C. Campbell, Administration of Income Tax 2023 (2023), at pp. 405-8 and 414; Anchor Pointe Energy, at para. 33). This definition is consistent with the settled meaning of "assessment" in s. 169 of the ITA. [ 44 ] In Okalta Oils, this Court did not hold that anything at all that is "ultimately related to an amount claimed" is part of an assessment (p. 826). Instead, Fauteux J., as he then was, wrote for the Court that an assessment is the amount of tax at issue, not the process that resulted in the determination of that amount: > It is the contention of the respondent that, construed as it should be, the word "assessment", in sections 69 a and 69 b [of the IWTA], means the actual amount of tax which the taxpayer is called upon to pay by the decision of the Minister, and not the method by which the assessed tax is arrived at; with the result that if no amount of tax is claimed, there is no assessment. > In Commissioners for General Purposes of Income Tax for City of London and Gibbs and Others, [[1942] A.C. 402 (H.L.),] Viscount Simon L.C., in reference to the word "assessment" said, at page 406: — > The word "assessment" is used in our income tax code in more than one sense. Sometimes, by "assessment" is meant the fixing of the sum taken to represent the actual profit for the purpose of charging tax on it, but in another context the "assessment" may mean the actual sum in tax which the taxpayer is liable to pay on his profits. > That the latter meaning attached to the word "assessment", under the Act as it stood before the establishment of the Income Tax Appeal Board and the enactment of Part VIIIA — wherein the above sections are to be found — in substitution to Part VIII, is made clear by the wording of section 58(1) of the latter Part, reading: — > 58(1). Any person who objects to the amount at which he is assessed . . . > Under these provisions, there was no assessment if there was no tax claimed. Any other objection but one ultimately related to an amount claimed was lacking the object giving rise to the right of appeal from the decision of the Minister to the Board. [Underlining added; pp. 825-26.] [ 45 ] In preparing an assessment, the Minister's role is simply to determine what the law requires the taxpayer to pay "by applying a fixed statutory formula to the amount of the person's taxable income for that year, and the amount of a person's taxable income is a function of the events that occurred before the end of that year" (Addison & Leyen SCC, at para. 8). [ 46 ] Plainly, when preparing an assessment, the Minister does not exercise any discretion. As Stratas J.A. explained"[w]here the facts and the law demonstrate liability for tax, the Minister must issue an assessment" (JP Morgan Asset Management (Canada) Inc. v. Canada (National Revenue), 2013 FCA 250, [2014] 2 F.C.R. 557, at para. 77; see also Anchor Pointe Energy, at para. 33). The Tax Court cannot review the process underlying the assessment, only the resulting amount. [ 47 ] The Tax Court's jurisdiction under s. 169 of the ITA is thus limited to reviewing the correctness of assessments, which as I will explain, it does through a statutory de novo review process. Since assessments are non-discretionary acts by the Minister"[i]t is trite to say . . . that [the Tax Court] is not a court of equity with jurisdiction in tax cases, but a statutory court" (Anchor Pointe Energy, at para. 40; see also Addison & Leyen SCC, at para. 8, per Bastarache and LeBel JJ.). [ 48 ] The Tax Court's jurisdiction over the correctness of assessments includes matters such as the validity of assessments and the admissibility of evidence in support of assessments. While the Tax Court's jurisdiction is limited to reviewing the correctness of the product of the assessments, certain procedural defects — those that result only in an incorrect assessment amount — may be raised on assessment appeals. The Tax Court can, however, consider challenges to the underlying process or motivation of an assessment as part of judicial review: > It is not disputed that the Minister belongs to the class of persons and entities that fall within the Federal Court's jurisdiction under s. 18.5. Judicial review is available, provided the matter is not otherwise appealable. It is also available to control abuses of power, including abusive delay. Fact-specific remedies may be crafted to address specific situations. The Federal Court retains its jurisdiction in respect of abuse of power matters, even where the Tax Court has jurisdiction to determine the correctness of the ensuing assessment. (JP Morgan, at para. 93) [ 49 ] In Iris Technologies Inc. v. Canada (Attorney General), 2024 SCC 24, a case argued before this Court on the same day as this appeal, the Federal Court of Appeal helpfully explained that the Tax Court does not have jurisdiction where the true purpose of an application for judicial review is to "seek practical relief against the exercise of administrative power" rather than to challenge the correctness of the resulting assessment. [ 50 ] Unlike the non-discretionary determinations that make up an assessment, s. 247(10) empowers the Minister to play a fundamentally different role, which does not require her to apply the facts and the law in exactly the same way to every taxpayer. Her decision is based on policy considerations rather than the strict application of the law to the facts. [ 51 ] Section 247(10) provides that certain transfer pricing adjustments shall not be made unless "in the opinion of the Minister, the circumstances are such that it would be appropriate that the adjustment be made". The subsection makes clear that the opinion of the Minister is a condition that may be relevant to the calculation of the transfer pricing adjustment applied by operation of law. But it does not follow that the opinion is itself part of the assessment or the assessment process. [ 52 ] Section 247(10) must be understood alongside the non-discretionary rule in s. 247(2) of the ITA. When the conditions of s. 247(2) are met, the Minister must issue an upward adjustment of the taxpayer's income to reflect ". . . the amounts that would have been determined if' the parties to the transaction had been dealing at arm's length" (s. 247(2)). Downward pricing adjustments under s. 247(10) are, by contrast, discretionary — and that discretion rests with the Minister. [ 53 ] It cannot be said that the Minister must exercise discretion under s. 247(10) in order for tax liability to be calculated correctly under the ITA. The general non-discretionary rule, which the Crown accurately characterizes as the "default position", is that a downward transfer pricing adjustment, according to the text of s. 247(10)"shall not be made" unless the Minister exercises her discretion to permit it. The Minister will often assess the taxpayer without having exercised her discretion under s. 247(10), since this discretion is exercised only when a taxpayer requests a downward adjustment. [ 54 ] Recognizing this interpretive error is especially important because, according to the Tax Court judge"[a]lthough the ITA contains very few provisions that give the Minister a discretion that affects the amount of a taxpayer's income or taxable income, subsection 247(10) is not the only provision of that nature" (para. 192). The Tax Court judge listed several other provisions of the ITA under which the Minister may exercise discretion that could affect a taxpayer's income or tax liability (para. 192). If these decisions were all understood to form part of an assessment, taxpayers could challenge them all in the Tax Court. [ 55 ] With this in mind, under s. 247(10), it is for the Minister to come to the "opinion" that (in French"si le ministre estime que") the circumstances are appropriate for an adjustment based on policy considerations that she considers to be appropriate (see generally Vincent and Ranger, at pp. 321-22). The question put to the Tax Court itself defines this decision as a "discretionary" one, separate from "the correctness" of the taxpayer's assessment. [ 56 ] I note in passing that the interpretation of s. 247(10) advanced by the Crown is consistent with guidance produced by the Canada Revenue Agency after the Court of Appeal released its judgment in this case (TPM-03R: Downward Transfer Pricing Adjustments, June 21, 2022 (online)). Section 247(10) is said to place "a limitation on any downward pricing adjustment. The limitation provides that a downward transfer pricing adjustment will only be made if, in the Minister's opinion, the circumstances are such that it would be appropriate that the adjustment be made" (at para. 3). [ 57 ] I would respectfully decline Dow's call to depart from this Court's settled jurisprudence by expanding the definition of "assessment" to include discretionary decisions that it claims are directly affected by or inextricably linked to assessments. With respect, under Dow's theory, the meaning of "assessment" would be expanded well beyond discrete, non-discretionary amounts of tax. [ 58 ] The Minister's opinion may well be a relevant consideration informing the correct computation of tax liability under the ITA. In correctly assessing tax liability, the Minister must take into account the opinion she has come to under s. 247(10), as this affects the calculation of the transfer pricing adjustment applied by operation of law. This does not mean that the opinion itself is part of an assessment. [ 59 ] In my view, the "inextricably linked" argument loses much of its persuasive force when one considers what happens with the taxpayer's assessment should a discretionary decision made under s. 247(10) be found to have been made improperly. When that decision is quashed, it does not automatically follow that the tax liability is wrong and that a reassessment must be issued. The Minister may reconsider the decision and reach the same conclusion as before on proper grounds. [ 60 ] We must be careful not to confuse the fact of the Minister's opinion with the basis for it. My conclusion does not mean that in making the assessment, the Minister must scrutinize the basis underlying the s. 247(10) opinion. It is the mere existence of the Minister's opinion that is relevant to "[the] product [of] the amount of the tax owing by the taxpayer" (Addison & Leyen SCC, at para. 8). Whether that opinion was reached properly or improperly is a separate matter entirely. [ 61 ] Indeed, when the Minister makes a discretionary decision under s. 247(10), she will not always issue an assessment to reflect her decision, as Dow readily acknowledged at the hearing (transcript, at pp. 15 and 24-25). This happens when in the opinion of the Minister it is not appropriate to adjust the taxpayer's income, as there is no departure from the general non-discretionary rule that downward adjustments "shall not be made". In other words, it cannot be maintained that the Minister's s. 247(10) decision is always issued alongside and in conjunction with an assessment. [ 62 ] With this in mind, and said respectfully, the Tax Court judge erred in law by stating that "the determination under subsection 247(10) . . . must be made before a correct assessment can be issued" (para. 191 (emphasis deleted)). Indeed, the Minister will often exercise her discretion under s. 247(10) after an initial assessment is issued. As a result, the Minister's discretionary decision under s. 247(10) is not necessarily a precondition for the issuance of a correct assessment. Dow recognized this when its counsel stated at the hearing that "[the] timing of 247(10) . . . may occur before or after an assessment" (transcript, at p. 24). If the Minister's decision is not always connected to an assessment, the decision cannot be considered part of one. [ 63 ] Neither party asked this Court to change the law of transfer pricing by holding that the Minister must always exercise her discretion under s. 247(10) before assessments are issued or that the Minister's decision must be recorded in an assessment even if the Minister denies the taxpayer's request for a downward adjustment. On the contrary, both parties agree that the Minister's decision can be made without an assessment being issued, or after the limitation period for assessments or objections has expired. [ 64 ] The Minister's assessment and the Minister's decision under s. 247(10) reflect two different statutory roles that are qualitatively and practically distinct. Dow's position would disrupt the settled meaning of an assessment in order to expand the Tax Court's jurisdiction far beyond what is conferred upon it by statute. If Parliament had wished to allow challenges to ministerial decisions to be made as part of an assessment appeal, it knew how to do so — and it has not done so for challenges to s. 247(10) decisions. ##### (2) The Tax Court's Jurisdiction Cannot Be Enlarged "By Necessary Implication" [ 65 ] Dow suggests that the power of the Tax Court to hear appeals of assessments may include decisions of the Minister pursuant to provisions like s. 247(10) "by necessary implication" (A.F., at para. 107). With respect, this is inconsistent with the distinct routes of appeal to the Tax Court from other decisions of the Minister that are set out expressly in the ITA. [ 66 ] Where Parliament provided for recourse from a ministerial decision to the Tax Court, it did not rely on an implicit connection to the assessment, but rather created an express right to appeal that decision. Express appeal routes would not be necessary if these decisions could be appealed to the Tax Court as part of the assessment. [ 67 ] For example, if the Minister refuses to grant a taxpayer an extension of the timeline to file a notice of objection"the taxpayer may apply further to the Tax Court for an extension of time pursuant to subsection 166.2(1) of the [ITA]" (Canada (National Revenue) v. ConocoPhillips Canada Resources Corp., 2017 FCA 243, 2017 DTC 5135, at para. 14). The ITA provides for an express appeal right to the Tax Court from that decision. [ 68 ] Decisions affecting tax liability are also subject to explicit routes of appeal to the Tax Court, where appropriate. For example, the ITA provides the federal Minister of the Environment with the power to determine the fair market value of ecological gifts (s. 118.1(10.2) to (10.5)). This fair market value could affect a tax assessment through the charitable donation tax credit scheme, and Parliament has provided a specific right of appeal to the Tax Court. [ 69 ] Further, the ITA gives the Minister the power to determine a taxpayer's losses in prescribed circumstances, which can bind both the Minister and the taxpayer for the purpose of calculating tax in any taxation year (s. 152(1.1) and (1.3); see Interior Savings Credit Union v. R., 2007 FCA 151, [2007] 4 C.T.C. 55, at para. 20). Parliament expressly provided for these notices of determination to be subject to objection and appeal to the Tax Court through the same process that applies to assessments. [ 70 ] This statutory context shows that ministerial decisions are understood as distinct from the tax assessment even where they may directly affect it. If Parliament wishes for the Tax Court to have jurisdiction to review a Minister's decision that may impact liability under the ITA, it says so explicitly and provides the Tax Court with an appropriate right of appeal. The absence of a right of appeal to the Tax Court for challenges to s. 247(10) decisions is consistent with the intent for such challenges to proceed before the Federal Court. ##### (3) The Historical Jurisdiction of the Exchequer Court of Canada Does Not Support Dow's Position [ 71 ] Finally, I disagree with Dow that the jurisdiction of the former Exchequer Court of Canada supports the view that decisions by the Minister under s. 247(10) of the ITA form part of an assessment. [ 72 ] It is true that the Exchequer Court had jurisdiction over exercises of discretion by the Minister under the former IWTA. Dow is right to say that "the Exchequer Court exercised their appellate jurisdiction in appeals from assessments that involved the Minister's exercise of discretion" (A.F., at para. 122) before Parliament established the current divided structure of tax jurisdiction between the Federal Court and the Tax Court. [ 73 ] Importantly, however, in addition to this power, the Exchequer Court had other broad sources of jurisdiction under the IWTA that supported its review of ministerial discretion. As Dow notes, s. 66 of the former IWTA provided the Exchequer Court "exclusive jurisdiction to hear and determine all questions that may arise in connection with any matter under [the IWTA]". The Tax Court of Canada Act does not confer a similarly broad jurisdiction on the Tax Court. [ 74 ] The Exchequer Court also had access to administrative law remedies, unlike the modern Tax Court (see, e.g., Pure Spring Co. v. Minister of National Revenue, [1946] Ex. C.R. 471, at p. 487). The Exchequer Court's jurisdiction over "the minister's discretion engaged what are now often referred to as the rules of 'natural justice'" (Bourgard and McMechan, at p. 1-28, fn. 134). [ 75 ] Further, as the Crown notes, the Exchequer Court cases on which Dow relies did not grapple with divided statutory grants of authority between two courts. Instead, the decisions articulate principles by which courts review ministerial discretion. I agree with the Crown that these principles have since evolved in fundamental ways. This is another reason why those decisions offer limited guidance on the jurisdictional question before this Court. [ 76 ] When determining whether the historical principles developed in the context of the Exchequer Court apply to the Tax Court, parallels drawn between their remedial powers must be understood in their full context. Despite having powers related to assessments that bear resemblance to those of today's Tax Court, the Exchequer Court exercised those powers in a fundamentally different jurisdictional environment. [ 77 ] I agree that the historical jurisdiction of the Exchequer Court is of limited relevance to the question at hand because "[t]he issue in this appeal relates to the jurisdiction of the Tax Court and the Federal Court, not the jurisdiction of the Exchequer Court as it related to appeals under the Income War Tax Act" (C.A. reasons, at para. 50). --- #### B. Accepting Dow's Call to Depart From the Settled Meaning of "Assessment" Would Create Significant Legal Uncertainty [ 78 ] In my view, Dow's jurisdictional theory has potential implications beyond the matter in issue. In particular, it would unsettle this Court's jurisprudence on the standard of review set forth in Vavilov. It would also bring about broader uncertainty regarding the Federal Court's jurisdiction. ##### (1) Accepting Dow's Theory Would Create Uncertainty in the Law Governing Standard of Review [ 79 ] As noted above, when a taxpayer challenges an assessment under s. 169 of the ITA, the Tax Court will conduct a de novo review of that assessment. The Tax Court is not limited to the record before the Minister when considering the correctness of the assessment and does not ask whether the Minister's assessment was reasonable (see generally D. Jacyk"The Dividing Line Between the Jurisdictions of the Tax Court of Canada and Other Superior Courts" (2008), 56 Can. Tax J. 661, at p. 674). [ 80 ] If a discretionary decision under s. 247(10) were part of an assessment, it would thus be reviewed de novo by the Tax Court like any other part of that same assessment. However, absent legislative direction, it would be inappropriate for the Tax Court to review the Minister's decision de novo. It is, as this Court emphasized in Vavilov"the very fact that the legislature has chosen to delegate authority which justifies a default position of reasonableness review" (para. 30 (emphasis in original)). Dow seems to recognize this by arguing that rather than performing a de novo review of a discretionary decision made under s. 247(10), the Tax Court should review these decisions for reasonableness in accordance with Vavilov (A.F., at para. 74) in a way that is not "more or less deferential than the standard of review that the Federal Court would apply in the same circumstances" (transcript, at p. 15). Dow insists that "it's called judicial review when it is before the Federal Court, but that same sort of standard can be applied by [the] Tax Court" (ibid.). Dow is, in effect, asking this Court to grant judicial review jurisdiction to the Tax Court. With respect, since Parliament has not created an exception to the rule that assessments are subject to de novo review in the Tax Court, Dow cannot argue, on one hand, that a discretionary decision under s. 247(10) is part of an assessment and that, on the other hand, it is not subject to de novo review. If the Minister's decision is truly part of an assessment, the only option allowed by statute would be for the Tax Court to review it de novo for correctness. The Tax Court cannot apply a deferential standard of review such as reasonableness to part of an assessment. Accordingly, the Federal Court is the only court that has jurisdiction to undertake this review on reasonableness. [ 81 ] Indeed, the Tax Court does not have the jurisdiction to conduct judicial review, which is reserved for the Federal Court by ss. 18 and 18.1 of the Federal Courts Act for federal administrative actors like the Minister (see Addison SCC, at paras. 8 and 11). This Court cannot confer jurisdiction to conduct judicial review on the Tax Court; only Parliament can do so. [ 82 ] In effect, Dow has asked this Court to extend, by judicial fiat, the jurisdiction of the Tax Court by providing it with original jurisdiction to undertake judicial review of the Minister's decision under s. 247(10). I recall that the Tax Court, like the Federal Court, is a statutory court, with its authority fixed by the legislature. Parliament, not the Court, must take responsibility for any expansion of the Tax Court's jurisdiction. [ 83 ] If Parliament had provided a statutory appeal mechanism through which one could challenge discretionary decisions made under s. 247(10) of the ITA, the presumptive reasonableness standard in Vavilov would not apply. Instead, the Tax Court would ordinarily need to apply the appellate standards of review such as those set out in this Court's decision in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 (Vavilov, at paras. 37-38). However, since Parliament has not created such a statutory appeal, the presumption in Vavilov is that the reasonableness standard of review applies and that the decision falls within the Federal Court's exclusive jurisdiction to conduct judicial review. [ 84 ] Dow cannot say, in the same breath, that a s. 247(10) discretionary decision is an assessment or part of one such that it is subject to appeal under the ITA but that it also is to be reviewed on the standard of reasonableness. To say so, in my respectful view, would be wholly inconsistent with fundamental administrative law principles settled in Vavilov. [ 85 ] Further, applying the appellate standards of review to a decision appealed to the Tax Court through s. 169 would be inconsistent with the settled nature of this appeal provision. Here, the parties agree that the appeal mechanism Parliament has created in s. 169 of the ITA subjects the Minister's assessment to de novo correctness review before the Tax Court. [ 86 ] I add that, to the extent it would be appropriate to apply an appellate standard of review other than those set out in Housen, I would be hesitant to rely on this Court's approach to standard of review applicable to judicial discretion. Judicial discretion and administrative discretion in transfer pricing are worlds apart; the parties did not develop this issue, and there is no basis in the record for an analysis that goes beyond the settled principles of administrative law. [ 87 ] I recognize that the Tax Court judge proposed applying a novel standard, distinct from reasonableness, to the review of the discretionary ministerial decision under s. 247(10). She described a "principle of law", applicable in this context, that "a discretion must be exercised judicially, [meaning] fairly and honestly and in accordance with the relevant principles of law" (T.C.C. reasons, at para. 210 (citation omitted)). [ 88 ] With respect for the Tax Court judge's view, I disagree with this approach. The exercise of discretion in s. 247(10) reflects an administrative decision, not a judicial one. The authority on which the Tax Court judge relies in developing this standard is a pre-Vavilov decision concluding that the failure to apply proper principles means a standard of judicial correctness. The general principles of administrative law articulated in Vavilov do not admit of a "judicial correctness" standard for administrative decisions. [ 89 ] The statutory de novo review in the Tax Court does not contemplate deference to the assessment other than placing the evidentiary burden of proof on the taxpayer (see Provencher and Dupuis, at pp. 180-81). It requires all aspects of the assessment, fact and law, to be scrutinized for correctness. Any approach that purports to apply a deferential standard of review to part of an assessment — including Dow's proposed approach — would be fundamentally inconsistent with the Tax Court's de novo review jurisdiction. [ 90 ] In sum, this is not an appeal in which we are well placed to create a novel standard of review in order to avoid fundamental defects in Dow's theory. Doing so in the absence of adequate argument by the parties and analysis in the courts below could give rise to unintended consequences. Parliament did not provide any basis in the ITA to depart from the standard of review principles settled in Vavilov. [ 91 ] In my view, the complication regarding the applicable standard of review flows directly from Dow's attempt to challenge s. 247(10) through an appeal provision that was never intended to apply to that discretionary decision. This complication falls away completely once one accepts that these claims were intended to be heard in the Federal Court. ##### (2) Dow's Approach Would Cause Uncertainty Regarding the Federal Court's Jurisdiction [ 92 ] Treating the Minister's decision as part of an assessment for the purposes of the appeal provision would in practice result in new bifurcated streams of review and give rise to new issues regarding the Federal Court's jurisdiction that could well provoke further litigation. [ 93 ] All agree that the Minister's decision under s. 247(10) can be made without an assessment being issued, as was done in Dow's case. If this Court were to conclude that this decision is part of an assessment, this could prejudice a taxpayer's ability to object to such decisions. In the case of corporations, the time limit to object to an assessment is generally 90 days from the sending of the notice of assessment (s. 165(1)(b) ITA). If the Minister's decision under s. 247(10) is made after the time limit for objections and appeals and no subsequent assessment is issued, the ability to challenge it may be statute-barred (s. 169(1) ITA). [ 94 ] Dow seeks to avoid this difficulty by arguing that, if the Minister does not issue an assessment after she makes a discretionary decision under s. 247(10), the Minister's decision can be challenged by way of judicial review in the Federal Court (transcript, at p. 24). [ 95 ] With respect, Dow proposes an untenable solution in which the Federal Court would retain its judicial review jurisdiction over discretionary decisions by the Minister as a general rule, but it would lose its jurisdiction to conduct judicial review of those same discretionary decisions if they are followed by assessments. Dow's solution raises significant questions as to the scope of the Federal Court's jurisdiction that could well provoke further litigation. [ 96 ] Moreover, Dow's approach concerns not only s. 247(10), but seeks to enlarge the Tax Court's jurisdiction beyond the correctness of assessments to other related Ministerial decisions. The Federal Court exercises jurisdiction over many taxation matters, including jurisdiction to review discretionary decisions of the Minister (see, e.g., Bozzer v. Canada (National Revenue), 2011 FCA 186, [2013] 1 F.C.R. 242; Jewett v. Canada (Attorney General), 2020 FCA 187, [2021] 4 C.T.C. 1; Shaw Estate v. Canada (Attorney General), 2021 FC 576). When asked at the hearing whether Dow's position is that "the discretion in 247(10) of the Minister . . . is properly a matter for the Tax Court", counsel replied that he "[does not] think that goes far enough" because the Tax Court should have jurisdiction "any time the Minister exercises a discretion" (transcript, at pp. 3-4). --- #### C. Only the Federal Court Can Grant an Appropriate Remedy for a Challenge to the s. 247(10) Decision [ 97 ] Dow also argues that the Tax Court has the remedial power to deal with the Minister's error in exercising discretion under s. 247(10). For the reasons that follow, I am unable to agree. [ 98 ] As Webb J.A. and the Federal Court of Appeal correctly observed in this case, when the Tax Court allows an appeal, it may vacate the assessment, vary it, or refer it back to the Minister for reconsideration and reassessment (s. 171(1)(b)). The Federal Court of Appeal noted that the Tax Court cannot quash the Minister's opinion: quashing an administrative opinion, like the one rendered under s. 247(10), is not among the powers granted to the Tax Court under s. 171 of the ITA. [ 99 ] This has important practical consequences for a case like Dow's. The Tax Court may refer the assessment back to the Minister under s. 171(1)(b)(iii), but the Minister will not be required to revisit the s. 247(10) decision. The Tax Court cannot vacate that decision, as it would be doing so contrary to the statute that conferred that power on the Minister. The Tax Court cannot vary the decision, because that decision is not a number. [ 100 ] If the Tax Court refers the assessment back to the Minister for reconsideration and reassessment, the Minister will simply be required to issue a reassessment that is consistent with her original s. 247(10) decision. This is because the Tax Court cannot quash or override a valid s. 247(10) decision that remains outstanding. In other words, the Tax Court referral would not be effective at giving Dow a remedy for the Minister's refusal to grant the downward adjustment, unless the Federal Court has quashed the s. 247(10) decision first. [ 101 ] As Webb J.A. correctly observed, the Federal Court has the power to quash the Minister's discretionary decision, which would require her to reconsider it (para. 77). While "the Federal Court is not allowed to vary, set aside or vacate assessments" (JP Morgan, at para. 93), it has access to administrative law remedies that are appropriate for discretionary decisions by the Minister, which as I have emphasized, are not assessments. I recall that "while it is true that the Federal Court cannot invalidate an assessment . . . the Federal Court may grant a declaration based on administrative law principles" in tax matters (Sifto Canada Corp. v. Minister of National Revenue, 2014 FCA 140, 461 N.R. 184, at para. 25; see also Maverick Oilfield Services Ltd. v. Canada (Attorney General), 2023 FC 1728, [2024] 2 C.T.C. 67). In this context, should the Federal Court quash a decision made under s. 247(10) on administrative law grounds and the Minister issue a new decision that affects the amount of tax owing, the assessment will be incorrect if it does not accurately reflect the new opinion. At that point, the Tax Court may intervene, but only after the Federal Court has quashed the Minister's decision, after the Minister made a new decision, after that new decision results in a change in the taxpayer's tax liability, and if the Minister fails to issue a reassessment to reflect a change in tax liability. [ 102 ] In sum, whether or not the Tax Court has jurisdiction in the matter, only the Federal Court can grant an adequate remedy for a challenge to the s. 247(10) decision, by quashing the Minister's decision. There is, accordingly, no ground for construing s. 169 as providing the Tax Court with jurisdiction to review the Minister's decision under s. 247(10). --- #### D. Parliament Intentionally Divided Jurisdiction Over Tax Matters Between the Federal Court and the Tax Court [ 103 ] Dow raised concerns about the efficiency of having to proceed before the Federal Court in order to challenge the Minister's s. 247(10) decision and before the Tax Court in order to challenge the assessment. Its argument has some force. However, the answer to those concerns lies with Parliament, not this Court. [ 104 ] It is important to understand how Parliament has carefully designed a complex structure in which the Federal Court and the Tax Court exercise jurisdiction over different aspects of income tax disputes. In light of this design, this Court should not engineer a fundamental reform to the Tax Court's jurisdiction through statutory interpretation. [ 105 ] As a matter of history, Parliament split income tax jurisdiction from the old Exchequer Court into both the Federal Court and the Tax Court in 1971 (Tax Court of Canada Act; Federal Court Act, S.C. 1970-71-72, c. 1). The Exchequer Court had broad jurisdiction over income tax matters, since it had both appellate jurisdiction over assessments and broader supervisory jurisdiction over administrative decisions. The Federal Court was created to absorb many of the old Exchequer Court's supervisory powers over administrative law. A new income tax appeal board was eventually transformed into the Tax Court of Canada (Tax Court of Canada Act, S.C. 1970-71-72, c. 1, s. 2). [ 106 ] As Webb J.A. correctly observed, the Federal Court has the power to quash the Minister's discretionary decision, which would require her to reconsider it (para. 77). While "the Federal Court is not allowed to vary, set aside or vacate assessments" (JP Morgan, at para. 93), it has access to administrative law remedies that are appropriate for discretionary decisions by the Minister, which as I have emphasized, are not assessments. I recall that "while it is true that the Federal Court cannot invalidate an assessment . . . the Federal Court may grant a declaration based on administrative law principles" in tax matters (Sifto Canada Corp. v. Minister of National Revenue, 2014 FCA 140, 461 N.R. 184, at para. 25; see also Maverick Oilfield Services Ltd. v. Canada (Attorney General), 2023 FC 1728, [2024] 2 C.T.C. 67). In this context, should the Federal Court quash a decision made under s. 247(10) on administrative law grounds and the Minister issue a new decision that affects the amount of tax owing, the assessment will be incorrect if it does not accurately reflect the new opinion. At that point, the Tax Court may intervene, but only after the Federal Court has quashed the Minister's decision, after the Minister made a new decision, after that new decision results in a change in the taxpayer's tax liability, and if the Minister fails to issue a reassessment to reflect a change in tax liability. [ 107 ] The Parliament that divided the Exchequer Court into the Federal Court and the Tax Court was well aware that income tax disputes could involve both determinations falling within the exclusive jurisdiction of the Tax Court and discretionary decisions falling within the jurisdiction of the Federal Court. Parliament set up a complex structure to deal with a multitude of tax‑related claims. Making a change to that complex structure without a thoughtful, comprehensive reform that can only be achieved by Parliament would be ill-advised. [ 108 ] The Tax Court has never been a single forum for all tax litigation. Parliament is free to expand the Tax Court's jurisdiction, but it has not done so here. --- #### E. Access to Justice Does Not Justify the Relief Sought by Dow [ 109 ] Dow argues that its interpretation promotes access to justice by allowing taxpayers to challenge the Minister's decision in the Tax Court. I cannot agree that access to justice concerns, standing alone, can override the plain language of the jurisdictional grants to the Federal Court and the Tax Court. [ 110 ] Dow relies on Canada (Attorney General) v. Collins Family Trust, 2022 SCC 26, in which this Court recognized that the Tax Court's de novo review process may be more appropriate than judicial review before the Federal Court in some cases. But that case cannot be taken to stand for the proposition that access to justice concerns alone can enlarge the Tax Court's statutory jurisdiction. [ 111 ] Moreover, even Dow acknowledges that where the Minister has not issued an assessment, the Federal Court may conduct a judicial review of the Minister's decision under s. 247(10) (transcript, at pp. 15 and 24-25). This means that, at a minimum, taxpayers seeking to challenge the Minister's decision under s. 247(10) can proceed before the Federal Court. [ 112 ] In my view, the access-to-justice argument, while compelling as a matter of policy, does not assist Dow on the legal question before this Court. Parliament, not this Court, must determine whether any reform to the jurisdictional divide between the Federal Court and the Tax Court is required, and how it should be implemented. [ 113 ] As noted above, Dow's argument before this Court explicitly sought to bring about a "revolution" in the jurisdictional relationship between the Tax Court and the Federal Court. This Court should decline to make such a fundamental change through statutory interpretation. [ 114 ] I would therefore dismiss Dow's appeal. --- #### F. Summary of the Majority's Conclusions [ 115 ] In summary, the majority reaches the following conclusions: 1. The Minister's discretionary decision under s. 247(10) is qualitatively distinct from the non-discretionary determinations that comprise an assessment under the ITA. 2. An assessment is a non-discretionary determination of tax liability. The Minister's decision to deny a downward transfer pricing adjustment is not part of an assessment. 3. The Tax Court's jurisdiction under s. 169 of the ITA cannot be enlarged by necessary implication to include challenges to s. 247(10) decisions. 4. The Exchequer Court's historical jurisdiction does not support the view that decisions by the Minister under s. 247(10) form part of an assessment in the context of the Tax Court's current jurisdiction. 5. Accepting Dow's theory would create significant legal uncertainty regarding the standard of review to be applied in the Tax Court and would potentially disrupt the Federal Court's jurisdiction. 6. The Federal Court has adequate remedial powers to address improper exercises of the Minister's discretion under s. 247(10). 7. Parliament's intentional division of income tax jurisdiction between the Federal Court and the Tax Court must be respected; any reform to this structure is a matter for Parliament. [ 116 ] I propose that the appeal be dismissed with costs. [ 117 ] The question put to the Tax Court should therefore be answered as follows: Yes, where the Minister of National Revenue has exercised her discretion pursuant to s. 247(10) of the ITA to deny a taxpayer's request for a downward transfer pricing adjustment, the decision by the Minister falls outside the exclusive original jurisdiction of the Tax Court of Canada to determine whether the taxpayer's assessment is correct. The challenge to that decision is the proper and exclusive subject matter of judicial review before the Federal Court. --- ### VI. Conclusion [ 118 ] For these reasons, I would dismiss the appeal. [ 119 ] The question put to the Tax Court is answered as follows: the decision of the Minister exercising discretion under s. 247(10) falls outside the exclusive original jurisdiction of the Tax Court. The challenge to that decision is the proper subject matter of judicial review in the Federal Court. [ 120 ] I agree with Côté J. that "Parliament has ensured that the correctness or validity of a taxpayer's assessment falls squarely within the jurisdiction of the Tax Court, to the exclusion of the Federal Court's supervisory jurisdiction." The question in this case, however, is not about the correctness or validity of the assessment. Dow does not dispute the correctness of the assessment, as the calculation of tax by the Minister follows the correct application of the law to the facts. The question is about whether the Minister's s. 247(10) decision — a discretionary one that may affect the assessment but is not part of it — falls within the Tax Court's jurisdiction. [ 121 ] Accordingly, I would dismiss the appeal with costs. [ 122 ] The stated question is answered as follows: the decision of the Minister exercising discretion pursuant to s. 247(10) of the ITA falls outside the exclusive original jurisdiction of the Tax Court of Canada to determine whether the taxpayer's assessment is correct. --- ## Dissenting Reasons The following are the reasons delivered by Côté J. (Karakatsanis and Rowe JJ. concurring) (dissenting) — ### I. Overview [ 123 ] I have read the reasons of my colleague Kasirer J. and, with great respect, I cannot agree with his conclusion. In my view, where the Minister has exercised her discretion to deny Dow Chemical Canada ULC's ("Dow Chemical") request for a downward transfer pricing adjustment under s. 247(10) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) ("ITA"), the resulting decision falls within the exclusive appellate jurisdiction of the Tax Court of Canada. [ 124 ] The Tax Court is the appropriate forum in which to challenge the Minister's exercise of discretion under s. 247(10) because that decision goes directly to the correctness of the taxpayer's assessment. A decision made by the Minister under s. 247(10) is a mandatory precondition to the issuance of a correct assessment in cases like this one. Unlike other provisions giving the Minister discretionary powers that may affect a taxpayer's tax liability, the power in s. 247(10) is not merely permissive — it is obligatory. [ 125 ] In taking this position, I am mindful that this Court must navigate between two poles: not to unduly restrict the Tax Court's jurisdiction to determine what the correct assessment should be, but equally not to unduly deprive the Federal Court of its important supervisory jurisdiction. In the circumstances of this case, the Tax Court's appellate jurisdiction provides for a more efficient resolution of the dispute. [ 126 ] Importantly, I agree with my colleague that the Federal Court has exclusive statutory jurisdiction to review exercises of a Minister's discretionary power. But where the Minister's exercise of discretion is a mandatory precondition to the issuance of a correct assessment, s. 18.5 of the Federal Courts Act ousts the Federal Court's judicial review jurisdiction. In those circumstances, the exclusive forum for challenging the Minister's decision is the Tax Court through an assessment appeal. [ 127 ] For the reasons that follow, I would allow the appeal. --- ### II. The Applicable Legal Framework [ 128 ] Statutory courts such as the Federal Court and the Tax Court derive their existence, jurisdiction, and powers solely from their enabling statutes. Section 18(1) of the Federal Courts Act grants the Federal Court supervisory jurisdiction over decisions of a federal board, commission or other tribunal. However, s. 18.5 of the Federal Courts Act ousts the Federal Court's jurisdiction to grant such relief where a federal statute expressly provides for an appeal to another body. [ 129 ] The relevant question in this case is whether the ITA, through s. 169"expressly provides for an appeal" of the Minister's decision under s. 247(10) to the Tax Court. If so, the Federal Court's jurisdiction is ousted and the Tax Court has exclusive jurisdiction to review the Minister's decision. [ 130 ] I agree with my colleague that a bare challenge to the s. 247(10) decision, standing alone, would ordinarily be subject to the Federal Court's supervisory jurisdiction. What distinguishes this case is the connection between the Minister's decision and the correctness of the assessment. --- ### III. The Minister's Decision Under s. 247(10) Is Within the Scope of an Appeal of the Assessment [ 131 ] In my view, the Minister's decision under s. 247(10) is within the scope of an appeal of an assessment because it directly and necessarily impacts the amount of tax owed. It is a mandatory precondition to the issuance of a correct assessment. [ 132 ] I recognize that the majority concludes that there is a bright line between assessments and administrative decisions. With respect, I disagree. The settled meaning of an "assessment" is the amount of tax owed. The Minister's decision under s. 247(10) directly determines what that amount should be. [ 133 ] The majority is correct that "assessment" refers to the amount of tax owed, not the process by which it is calculated. But the Minister's decision under s. 247(10) directly determines whether a downward adjustment must be made, which is a determinative step in establishing the amount of tax owed. It is not a question of "process". [ 134 ] Unlike many other discretionary provisions of the ITA, which merely give the Minister discretion to provide relief from what would otherwise be a correct assessment, s. 247(10) gives the Minister an obligatory power — she must decide whether the circumstances are such that it would be appropriate that the adjustment be made. The distinction is critical: a discretionary power that the Minister may choose to exercise, but does not have to, is qualitatively different from the s. 247(10) power, which the Minister is required to exercise in order for a correct assessment to be determined. [ 135 ] The majority argues that s. 247(10) is "not permissive" in the sense that it does not allow a downward adjustment to be made — it rather prohibits the adjustment unless the Minister consents. This argument, with great respect, misses the point. The reason why the Minister must exercise discretion under s. 247(10) is precisely that the statute requires her to decide whether a downward adjustment is appropriate before such an adjustment can be made. That mandatory exercise of discretion is a precondition for the correct determination of the taxpayer's income and tax liability. [ 136 ] My colleague raises concerns about the implications of Dow's position for the standard of review and argues that accepting Dow's argument would displace Vavilov. With respect, I disagree. A deferential standard of appellate review can and should apply when the Tax Court is dealing with the Minister's discretionary decisions under s. 247(10). The Tax Court may review the decision for errors of principle without substituting its own opinion for that of the Minister. [ 137 ] This conclusion is supported by the Tax Court's remedial powers. Section 171(1)(b)(iii) of the ITA allows the Tax Court to refer the assessment back to the Minister for reconsideration and reassessment. In referring the assessment back, the Tax Court can require the Minister to reconsider her exercise of discretion under s. 247(10). This is an adequate remedy for the type of challenge raised by Dow Chemical. [ 138 ] I would also note that allowing Dow Chemical's appeal would promote access to justice. The Tax Court is a specialized court that regularly deals with complex income tax issues. Requiring taxpayers to go to the Federal Court for judicial review of a ministerial decision that is directly linked to the correctness of their assessment — while simultaneously appealing the assessment to the Tax Court — is inefficient and creates a risk of inconsistent results. --- ### IV. The Dissent's Conclusions [ 223 ] The Minister's decision to deny the downward pricing adjustment requested by Dow Chemical resulted in reassessments for the 2006 taxation year. Dow Chemical objected to those reassessments and appealed the latest reassessment to the Tax Court, while simultaneously challenging the Minister's s. 247(10) decision by way of judicial review in the Federal Court. For the reasons set out above, Dow Chemical's challenge to the Minister's decision under s. 247(10) should be resolved in the Tax Court as part of the appeal from the assessment. [ 224 ] For these reasons, I would allow the appeal, with costs. The stated question is answered as follows: Dow Chemical's challenge regarding the Minister's decision under s. 247(10) of the ITA should proceed before the Tax Court. --- Appeal dismissed with costs, Karakatsanis, Côté and Rowe JJ. dissenting. Solicitors for the appellant: EY Law, Toronto. Solicitors for the respondent: Department of Justice Canada, NCR Tax Litigation Section, Ottawa. --- [^1]: In these reasons, as the Tax Court did, I use the terms "assessment" and "reassessment" interchangeably, which is consistent with the definition of "assessment" in the ITA (s. 248(1)).