As can be expected, this broadly applied rule is often unfair to the taxpayer.
CRA, despite their reputation as very aggressive and difficult to deal with, recognizes this and has a process that allows taxpayers to be treated fairly. It is called the Taxpayer Relief Program.
The bad news: the program starts by first demanding immediate payment of the taxes plus huge penalties plus daily compounding interest and then teases you with the promise of getting relief from these same interest and penalties.
It is kind of a “you are guilty so here is your penalty + interest and you can prove your innocence” type of scenario.
The good news is that the program works – but you have to do absolutely everything right. After all, you are asking your ‘enemy’ for the relief!
CRA have made the program appear easy but have built in many complex tripwires that can quickly disqualify you (so they can get the interest and penalties anyway).
To be successful you need to navigate the program according to the game – and the hand is stacked against you. Experience is the only way to increase your chances of success and that means you need professional help. This is not a legal fight, so lawyers are generally the wrong professional as far as a set of skills (and far too expensive). It is not just filling in forms – you have to build a strategy that heavily depends on your fact situation and position your request in a manner that plays to your strengths. Because of this, the accountants who are good at financial statements and filling in forms generally are not skilled at this or simply do not do this as their main practice area, and thus are not the right fit either. The answer lies with one of the few tax solution specialist companies that has experience using CRA’s bureaucracy and rigidity against them.
Here are some of the main factors a successful Taxpayer Relief application needs to take into account:
- Taxpayer Relief time limitations – The case of re: Bozzer clarified that individuals are eligible for relief for up to 10 years retroactive from the date of the Taxpayer Relief application (and no longer that the tax year in question must itself be within that 10 year period).
- To qualify, your application needs to lay out grounds in one or more of the following areas: extreme financial hardship, medical issue, death, error on the part of CRA, extreme circumstances. Then you need to show support and how this reasonably caused the interest and penalties to occur.
- Error on the part of CRA would include undue time delays by CRA in assessing the taxpayer. This is very common with objections and most recently with the long, drawn out legal fights that CRA has had with tax shelter schemes (such as Global Learning and Gifting Initiative or GLGI) and suspended dealings with objections to old assessments until the first batch of cases was through the courts.
- Document, document, document – the more you can prove, the better. CRA’s bureaucracy loves “show me don’t tell me” packages. Make it easy for the CRA agent to tick off his boxes leading to a recommendation to approve your application. Remember that as soon as the bureaucrat sees a hole or weakness in your application, the “DENIED” stamp can come out and he can stop working on your file.
If you are facing a rejected application for Taxpayer Relief, you may resubmit with rebuttals for a second review. This is yet another game rigged for you not to succeed – yes, CRA appoints another agent to review your file but this agent has his own second reviews done by the same buddy whose file he is now reviewing, and who wants to show up a friend? A very experienced professional at a tax solutions company knows exactly how to work this potential weakness into one of two advantages for you: (a) get a proper second review done or (b) catch the CRA in not doing it properly and bring this forward at a judicial review.
Taxpayer Relief can offer significant savings when it comes to penalties and interest – but these waters need careful navigation in order to obtain approval. Tax Solutions Canada has the knowledge and expertise required to do so. Call us today at 1-888-868-1400.