If you have been hit with heavy-handed penalties and interest from CRA you are likely thinking about how to get relief. CRA offers a Taxpayer Relief program where, under extraordinary circumstances, CRA may cancel or withdraw penalties and interest associated with a tax debt.
We are often asked if people actually get approved for taxpayer relief – the answer is yes. As with any bureaucratic process that is linked to a powerful government agency there are very precise steps that have to be taken according to the process or you will get rejected.
Here are some examples of how you might qualify.
- Extreme financial hardship. If you can prove that you are suffering from extreme financial hardship you may be approved for Taxpayer Relief. With that said, if you have a boat and a summer home in Florida, leaving you asset rich and cash poor, you likely will not qualify for Taxpayer Relief. Having children at university or pursuing their potential in expensive senior level competitive hockey will also be unlikely to qualify you for relief. However, it is not an “all or nothing” application – sometimes you can get partial relief and that can go a long way to providing a solution you can live with.
- Death or illness in the immediate family. If you or an immediate family member is suffering due to a serious illness or a death in the family that you can prove, you may qualify for Taxpayer Relief.
- Disaster. If a natural disaster, such as a fire or flood, has occurred and has led to your inability to pay your tax debt or resulted in you filing returns late or having expenses disallowed (because receipts were destroyed, for example) – you may qualify for Taxpayer Relief.
- Error on the part of CRA – this ground for qualification is the most difficult to navigate. A really good example is when CRA takes several years to make a decision on an objection you have filed and then all these years later CRA rejects it and hits you with full penalties and interest. There are several other examples of where CRA is in the wrong and may therefore be persuaded to cancel or waive penalties assessed on your tax debt.
This probably sounds great and you may be thinking right now that you qualify, but you must note that the Taxpayer Relief process is an official process and you must be able to prove your claims. Simply filling in the Taxpayer Relief application and sending it in is not good enough. A good application will include the application, a summation and exhibits to support your claim. It has to hit precisely the right buttons in the way that works for CRA.
Here is the typical Taxpayer Relief process:
1. The initial application is made – it can take 15 to 18 months to receive an answer. A Taxpayer Relief application will not stop collection action. If you owe, an arrangement should be in place because if you simply ignore the tax debt, CRA will take enforcement action against you.
2. If the application is rejected you may apply for a second review where you can rebut CRA’s reasons for rejecting the application. Again there are very specific requirements to do this.
3. If the application is rejected again you may apply for a judicial review. This is where a judge reviews your claim and renders an opinion to CRA. Even though it is a judge it is only an opinion. A judge cannot issue an order requiring CRA to accept your application under Taxpayer Relief.
Do not confuse regular tax filing and compliance with the complexity and subtle nuances of these Relief Applications. If you do not make the argument correctly in the initial application you are likely setting yourself up for an expensive fight you will not win. Don’t get in over your head – you may want to think about speaking to a professional who specializes in these applications to increase your chance for success.
For more information about the Taxpayer Relief program please visit www.taxsolutionscanada.com or call 1-888-868-1400.