When you have been assessed and notified of a tax debt owing, it can be incredibly difficult to navigate the expectations and requirements with regard to the Canada Revenue Agency (CRA). This is especially true if you disagree with the assessment or if you believe circumstances existed which made it hard to comply with the Income Tax Act. If you find yourself in this position and wish to file an objection or apply for Taxpayer Relief, you can. But what if you want to do both? This is where things get even more difficult.
Notice of Objection: this is the formal process you follow when you disagree with a Notice of Assessment, Notice of Reassessment, Audit or a Determination. It outlines why you feel the assessment is incorrect and ideally provides proof explaining why CRA should change their decision. CRA determines the outcome after considering your objection. Depending on your circumstances it could take CRA many years to reach a decision. A great example of this is individuals who have gotten caught up in charity tax schemes. There are many cases before the courts and we have seen clients who have had objections held in abeyance as far back as 2005 pending the outcome of similar cases that are before the courts.
Taxpayer Relief Application: this is a program where you can apply for relief from interest and penalties. You may qualify for relief in the following circumstances: You are facing and can substantiate severe financial hardship, a documented medical problem, a death of an immediate family member, a disaster like a flood or fire, an error on the part of CRA or some other extraordinary circumstance.
Because you may only potentially be granted relief for 10 years back from the date of the application (not the tax year in question), many wonder if they the can file an objection and an application for Taxpayer Relief at the same time to get the relief application on record right away.
According to CRA, “If an assessment or reassessment for a tax year is issued by the CRA in a later year, or if an objection or appeal filed by a taxpayer may take considerable time to resolve, the taxpayer should send in their request for any potential relief before the 10-year time limit for that tax year expires.”
What does this mean? Well, if it looks as though your objection will take a significant period of time, or if the date you file is close to the 10 year-time limit, it is smart to file both at the same time. Even with the impacts of the Bozzer v. The Queen decision of 2011, which gave the Minister leave to consider even those applications for relief concerning a tax debt more than ten years old, it is smart to file before you get to this point.
Now this is not to say that CRA does not commonly make mistakes or have employees who don’t even understand the agencies policies.
Here is a great example. We had a client who filed an objection and Taxpayer Relief application in the same month in 2011. In 2012 the objection was rejected. By 2013 there still had not been a decision made on the relief application. In 2013 we began paper-trailing the situation and dealing with the Taxpayer Relief division who said that the relief application was not processed because you cannot file an objection and an application for relief at the same time.
Not true. You absolutely can! Through demonstrating the circular citing that and leaning on the Taxpayer Relief division we were able to get a decision on the application expedited. This is why it is so difficult for individuals and business owners to deal with CRA. If you don’t understand their policies and procedures they will just do whatever they want and until you fight for your rights – you will continue to be railroaded.
So, can you file an objection and a Taxpayer Relief application at the same time? Yes. Should you? Absolutely. Where CRA is concerned – time is never your friend!
For more about filing an objection and a relief application at the same time please contact Tax Solutions Canada by calling 1-888-868-1400.