CRA's Objecction Deadline Too Short?
Readers are familiar with the importance of sticking to tax deadlines.
One such deadline is when objecting to a notice of assessment, which is either one year from the normal filing due date or 90 days after the date printed on the notice of assessment, whichever is later. But a taxpayer who misses that deadline due to circumstances beyond her control can apply to CRA within one year of the deadline for an extension. The Tax Act requires CRA to review the extension request “with all due dispatch,” and either grant it or refuse it. CRA must notify the taxpayer of its decision in writing. If it fails to do so within 90 days, a taxpayer is entitled to bypass CRA entirely and apply directly to the Tax Court to rule on her application to extend the time to object. If CRA does deny a taxpayer’s extension deadline, she can appeal this decision to the Tax Court. However, this must be done within 30 days, as a recent case demonstrates.
The HST case (Désir v The Queen, 2015 TCC 126) involved an application by Jean-Michel Désir. The timeline of the facts is as follows:
•March 12, 2012: CRA sends the taxpayer a notice of reassessment.
•January 1, 2013: The taxpayer sends in his notice of objection along with an application for extension of time to file his objection, since he’d missed the normal 90-day deadline.
•November 14, 2013: CRA sends the taxpayer a notice informing him that his extension application has been refused. In that notice, CRA tells the taxpayer he has 30 days to ask the Tax Court to reconsider CRA’s decision.
•April 15, 2014: The taxpayer sends a letter to CRA in which he admits he had been late in submitting his notice of objection.
•June 2, 2014: CRA responds by mail, indicating that the taxpayer has now exceeded the 30-day time limit for appealing to the Tax Court of Canada.
•July 9, 2014: The taxpayer nonetheless files an application for an extension of time with the Tax Court.
CRA argued that the Tax Court has no discretion to hear the taxpayer’s application for an extension of time given that he did not make it within thirty days of CRA’s notice of decision. CRA called this a “strict time limit.”
The taxpayer, however, argued that, after receiving CRA’s notice of the decision that it would not extend the deadline, he told his accountant to appeal to the Tax Court. He blamed the accountant for missing the deadline.
The judge analyzed the required deadlines. The first deadline was the date by which the taxpayer had to object—90 days after the notice of reassessment or 90 days after March 12, 2012, which was June 11, 2012. Having missed that deadline, the taxpayer requested an extension to file an objection on January 1, 2013. That request was made on time, as it was within one year of the expiration of the 90-day time period (i.e., before June 12, 2013.)
In this case, it took CRA approximately 300 days (until November 14, 2013) to mail its decision. During this time, the taxpayer never asked the Tax Court to intervene.
On July 9, 2014, another 237 days later, the taxpayer filed an application requesting an extension for filing a notice of objection, but it was too late: the Tax Act requires such an appeal be filed within 30 days from the day the notice of decision has been mailed.
The judge called CRA’s delay “plainly unreasonable. [….] It is obvious that such a long period of time would lead the taxpayer to believe that his case had been finally resolved. Although one cannot ignore the law, a reasonable person may surely think that he or she is entitled to a time limit of more than 30 days if that person also had to wait 295 days before a decision was issued in his or her case.”
The problem, however, lies with the Tax Act because it limits the dispute period to 30 days—without exception. “The due diligence required of the taxpayer is disproportionately more demanding than that of the Minister, as the Minister can respond whenever he sees fit,” wrote the judge.
Unfortunately for the taxpayer, the judge had no choice but to dismiss the taxpayer’s request since it was too late, but not before calling on the government to change the law. As the judge wrote, “Parliament should revisit the time limit of 30 days. […] In the case at bar, I cannot usurp the role of Parliament. I must follow the letter of the Act and the various decisions that have validated the rigour of the prescribed time limit.”