Filing an Objection with Revenue Canada Agency
You can file an objection if you think the Canada Revenue Agency (CRA) misinterpreted the facts of your tax situation or applied the tax law incorrectly. When you file an objection, you must explain what you are objecting to, and why you disagree with your assessment or determination.
The CRA will not do your work for you and suggest grounds you can use, requests you should make and what facts and documents are relevant.
Sometimes it is worthwhile to use a representative to assist with compiling and presenting the relevant information and making the correct demands.
You can file an income tax objection online, yourself or through your representative or by mail. Making it by registered mail is the best as it will provide you with record of timing of your communications with the CRA.
Objections are resolved case-by-case and their processing time may vary depending on level of complexity. The number of days for the CRA to resolve an objection includes all the time that the objection is within its control, but excludes the time taken by taxpayers to provide additional information to support their objection. Nonetheless, the CRA must review and render its decision within reasonable time limits. If it does not and it prejudices the taxpayer (and it always does as the interest still accrues), the CRA shall be held accountable for it.
If your objection is not resolved to your satisfaction at the CRA level and you still disagree with the CRA’s decision, you can appeal it in court. Though resolving it with the CRA is much more expedient and much less costly – this is another reason to use representative, to make it right from the start.
An objection can be made to four types of notices – assessment, reassessment, determination and redetermination – and it must be filed within specific deadlines:
- Individuals (or a graduated rate estate) generally the later of:
- one year after the tax filing deadline for the return; or
- 90 days from the date of notice of assessment or determination;
- Corporations – 90 days from the date of notice of assessment or determination.
If you missed it, it is possible to apply for an extension up to one year after the deadline for filing an objection by writing to the Chief of Appeals and explaining why it was not done on time.
In most cases, once a valid objection is filed, CRA will postpone its collection efforts and you do not have to pay income tax amounts that are in dispute until the CRA has completed its review of your objection.
However, if the disputed amounts are:
- Taxes you had to withhold and remit – for example, GST and payroll, – you have to pay them on time. The CRA will not postpone collection action on these disputed amounts;
- Related to an amount you claimed as a charitable donation tax credit under a gifting tax shelter, you have to pay half of the amount in dispute. When the CRA makes a decision on your objection, you must pay any remaining amounts you owe, including taxes, penalties and interest.
Also keep in mind that even if the CRA postpones collection efforts, interest charges continue to accrue on amounts as assessed while it is in dispute. If these amounts are vacated, so will the interest charges, but if they are not vacated, the increased interest will stay. It may be a good idea to pay all (to stop interest accrual) or part (to decrease interest accrual) of the amount in dispute to avoid paying more interest in the event assessment is confirmed.
After the CRA makes a decision on your objection:
- it will refund the amounts you paid as assessed taxes, interest and penalties that were vacated; or
- you will have to pay any amounts owing that were confirmed and are no longer under dispute, including taxes, penalties, and interest. Collection actions are usually delayed for 90 days after a decision is sent.
If you cannot pay the full amount you owe, you can make a payment arrangement. If you cannot pay at all, the CRA can grant relief from penalties and/or interest, but only in certain circumstances. For example, under taxpayer relief provisions, which will be discussed in another post.