If you object to how the CRA assessed your taxes, you can challenge it — but make sure it’s in a timely manner
If you’re one of the nearly 26 million Canadians who has filed their 2015 tax return — self-employed individuals and their spouse or partner have until June 15 to file — you likely have already received your Notice of Assessment from the tax man. It’s important to pay close attention to the mailing date printed on that notice if you plan to challenge it later on by filing a Notice of Objection.
The deadline for filing an objection is one year from the normal filing due date or 90 days after the date printed on the Notice, whichever is later. If you miss the deadline, you can still apply to the Canada Revenue Agency within one year of the deadline for an extension of time. The application must include the reasons you didn’t object before the deadline and be addressed to the Chief of Appeals in an Appeals Intake Centre. Also, you need to demonstrate that you were unable to object within the time limits, you were unable to instruct someone else to act for you, you had a “bona fide intention to object,” it would be “just and equitable” to extend the deadline and that the application was made as soon as circumstances permitted. If the CRA denies your application, you may appeal to the Tax Court of Canada.
In the CRA’s “Annual Report to Parliament,” which was tabled in the House of Commons by the Minister of National Revenue in February, it was reported that nearly 76,000 income and commodity tax disputes were filed in the 2014-2015 year. That same year, however, only 3,424 appeals went beyond the objection stage and were appealed to Tax Court.
One of those appeals, heard last fall, involved a request by a taxpayer to extend the deadline to file notices of objection for the taxpayer’s 2001 through 2009 taxation years. The taxpayer not only failed to file notices of objection for those tax years within 90 days of the dates printed on the notices of assessment but also neglected to file an application with the CRA for an extension of time to object within one year from the expiration of the original 90 day deadline.
After the CRA denied both the taxpayer’s notices of objection as well as his application for an extension of time since they were submitted past the required deadlines, the taxpayer further failed to meet the deadline for filing an application with Tax Court for an extension of time. In court, the taxpayer’s representative stated that “her client did not understand the meaning and the significance of the notices of assessment.”
Unfortunately, there wasn’t much the Tax Court judge could do, saying that “the time limits in the (Income Tax) Act are strict and this Court cannot alter them.” The Judge cited a prior decision of the Federal Court of Appeal which found that “when a taxpayer is unable to meet the deadline prescribed by the Act, even by reason of a failure of the postal system, neither the Minister nor the (Tax Court of Canada) … can come to his help…. Hence, if a postal failure cannot save a taxpayer, he will not be saved by his failure to grasp the significance of a notice of assessment served on him.”
This recent decision should come as yet another warning to taxpayers to pay close attention to that date so you don’t inadvertently miss your chance to have your day in court — should you wish to do so.