The taxpayer relief program enables you to apply for relief of interest and penalties in relation to a tax debt. When applying for taxpayer relief it is solely at the discretion of CRA to grant or reject your application. CRA can either cancel all of the penalties associated to a tax debt or eliminate part of the penalties.
CRA will consider a taxpayer relief application where some extraordinary circumstance led to the tax debt or inability to pay the tax debt. Some examples of grounds for taxpayer relief consideration include:
- Medical problem – you or an immediate family member
- Death – immediate family member
- Extreme financial hardship
- Error on the part of CRA
While the above are some common examples – CRA will consider any taxpayer relief application that reaches the threshold of an extraordinary circumstance.
Historically you could not apply for taxpayer relief on tax years older than 10 years. So, for example, in theory, if the year is 2014, you could apply for taxpayer relief for tax years backward to 2004.
This was until the Bozzer Case was decided. In December of 2006, Mr. Bozzer applied for taxpayer relief asking that CRA consider cancelling the interest that had accumulated on his tax debt. CRA rejected this application stating that the tax years in question were 1989 and 1990, that is, tax years older than the 10 year limitation.
Mr. Bozzer subsequently applied for a second review of the decision which was also rejected and a judicial review of the matter which was dismissed.
Mr. Bozzer went all the way to the Federal Court of Appeal where he argued that the 10 year time limitation could extend 10 years backward from the date of the application for taxpayer relief but for the interest relief to be applied only the interest that had occurred in the past 10
Tax years – 1989 and 1990
According to a recent CCH article the Federal Court agreed with Bozzer and the decision means that regardless of how old the tax year is, CRA can consider a taxpayer relief application for the preceding 10 tax years, as opposed to saying that an application is automatically rejected if the tax year in question is older than 10 years from the date of the application. You can read the full CCH article here http://www.cch.ca/newsletters/TaxAccounting/October2011/index.htm.
As it relates to taxpayer relief applications – time is of the essence. The longer you wait to make your application the more you stand to lose, including also asking for relief of penalties. The sooner you file your relief application the better.
For more information on filing a taxpayer relief application, even if the tax years in question are more than 10 years ago, please call Tax Solutions Canada today at 1-888-868-1400.