If you have been notified of an assessment or reassessment that you do not agree with and have filed an objection, you could be looking at many years to hear an answer from the Canada Revenue Agency (CRA). There are countless Canadians who have filed objections in the past and are still waiting on CRA action. Many of these go back 10+ years. Why is this? CRA often requires a significant period of time to review each application or objection, but sometimes this can be longer than usual. Other times, specifically when a matter is taken to court, CRA may hold your file in abeyance pending a court decision. These delays can make a big difference and result in massive retroactive compound interest and penalties if the objection ends up being rejected.
Notice of Objection: when you file an objection you may expect a response within a reasonable amount of time – but your concept of reasonable and CRA’s likely differ greatly. Typical response times vary, but you can be looking at months or even many years before your objection is accepted or rejected.
What do these delays mean as far as penalties and interest? During the time that your objection is in process, CRA will stop trying to collect money from you, however interest will continue to accumulate on the outstanding balance. This can provide you with temporary relief from collection action but if the objection doesn’t go your way you could end up with a tax debt double or triple the size you started out with.
This doesn’t seem totally fair, especially when the delay in processing the rejection was completely out of your hands – so that is why, in this situation, you should also consider applying for Taxpayer Relief.
With Taxpayer Relief you can apply to have penalties and interest wiped out partially or in full (the debt will remain no matter what). However, you only have 2 chances to apply for relief. If your first application is denied you have the right to a second review. This is why your application needs to be complete and correct the first time, and include as much evidence as possible.
That being said, you can’t just apply for relief because you can’t afford to pay your debt (unless you can demonstrate severe financial hardship). There are certain extraordinary circumstances that allow you to qualify for relief. These include:
- Medical problems/death
- Financial hardship
- Error on part of CRA. Unnecessary time delays is an example of this, and so if your objection took months or years, resulting in the accrual of interest, CRA may grant relief on this basis.
- Extraordinary circumstances – this is broad, but there are guidelines, and so speaking with a professional tax firm is a smart step to take.
Again, time doesn’t stop. With Taxpayer Relief interest still accrues, and you will still be required to make payments, but in the end penalties and interest may be eliminated or reduced. Get an organization to make a relief application for you as soon as possible – time is ticking and you need to get it on record.
Delays on behalf of the CRA can make the objection process drag on, and if rejected, this can result in far more interest being applied. Make sure you are protecting yourself – think about applying for Taxpayer Relief if the length of time it is taking to process your objection is getting out of hand.
Contact Tax Solutions Canada today to find out more. 1-888-868-1400.