Don't like your CRA assessment? The deadline to object is ticking, but sometimes you get lucky

National Post


By now, you’ve probably long forgotten about your 2020 tax return, which you hopefully submitted this past spring. You’ve received your Notice of Assessment (NOA) and filed it away, either in a drawer or perhaps in the cloud. But if you disagree with anything on the Canada Revenue Agency’s assessment, the clock is ticking on your deadline to file a Notice of Objection.

For individual taxpayers, the deadline for filing an objection is one year from the normal filing due date or 90 days after the date printed on the NOA, whichever is later. Practically speaking, that means if you filed your return by the April 30, 2021, deadline, and you received your NOA this past summer, you have until April 30, 2022 to file an objection.

If you miss the deadline, you can still apply to the CRA for an extension within one year of the deadline. That application must include the reasons you didn’t object before the deadline and be addressed to the Chief of Appeals at an Appeals Intake Centre. You’ll need to demonstrate that you were unable to object within the time limit, 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 your application was made as soon as circumstances permitted.

Should the CRA deny your application, or, if you don’t receive a response from the CRA within 90 days, you may further appeal to the Tax Court of Canada, which is what happened to a woman in a recent case heard last month.

The case involved a taxpayer who filed her 2015 return early, and received her original 2015 NOA, which was dated March 17, 2016. She was subsequently reassessed on March 23, 2017 — an assessment to which she did not object. She also filed her 2016 return early and received her 2016 NOA on March 20, 2017.

Fast forward to late 2017 when the taxpayer’s employer was subject to a routine audit. At that time, various employees were asked to complete a questionnaire and provide mileage logs for use of their motor vehicles.

In November 2018, the taxpayer received a letter from her employer saying that it had learned the questionnaires and logs had been reviewed by the CRA and that she would be receiving a new NOA. The letter also enclosed two amended T4s for the 2015 and 2016 taxation years based on the results of the CRA’s review. Each amended T4 increased her taxable employment income from the original T4s.

The taxpayer disagreed with the changes that would, if implemented, increase her taxes payable for the 2015 and 2016 tax years. The taxpayer patiently waited to receive the CRA’s notices of reassessments so she could dispute them, but they never arrived. She then contacted the CRA and the person she spoke to at the agency advised her to file a Notice of Objection to protect her right to object. The judge characterized this as a smart move, saying, “Doing so was a wise precaution to insure that there was a timely Notice of Objection.”

The taxpayer filed an objection and it was received by the CRA on Feb. 15, 2019. The CRA wrote back advising her that her objection was filed too late. She then took what appeared to be the next logical step, and on March 12, 2019, filed an application with the Tax Court for an extension of time to file objections for the 2015 and 2016 taxation years.

In a fortuitous twist of fate for the taxpayer, however, it turns out that “for unknown reasons” the CRA never acted upon the amended T4s and, as a result, she was never actually reassessed with respect to the increased amounts shown on her amended T4s for 2015 and 2016. This would explain why the CRA denied her notices of objection as they were filed more than 90 days after the latest (re)assessments for 2015 and 2016, both of which were mailed in March 2017. It was impossible for the taxpayer to object to upcoming or expected CRA reassessments that, in the end, were never issued.

The good news is that those returns are now considered “statute-barred,” because the CRA is generally prohibited from reassessing an individual taxpayer more than three years after the original reassessment, unless it can be shown that the taxpayer made “a false statement attributable to misrepresentation arising from carelessness, neglect or wilful default.” Since there was no such indication of that, and given the original (re)assessments were made in March 2017, the CRA is effectively prohibited from reassessing the taxpayer since more than three years have passed since that date.

The end result is that the taxpayer’s request to extend her deadline to object was moot. “Given that the proposed changes that the (taxpayer) wishes to object to were never acted upon by means of a reassessment there is in fact no dispute that needs to be reviewed on an objection,” the judge wrote. “An objection in such circumstances is pointless.”

The judge, therefore, did not need to grant the taxpayer’s request for an extension of the deadline to object since there was no longer any need to file an objection to a statute-barred return that was, in the end, never reassessed.

Proving that, sometimes, you just get lucky.