What to do when the taxman gets it wrong
If you're like the majority of Canadians and filed your 2008 tax return on time, by now you should have received your formal Notice of Assessment.
If you disagree with CRA's assessment, it is probably best to try to resolve the matter informally, discussing it with your local tax services office, as most issues can be resolved either by phone or through an casual meeting.
However, if you find yourself unable to resolve the issue informally, you do have the right to file a formal Notice of Objection, which must be in writing and clearly set out the reasons why you are objecting.
After the CRA has reviewed your Notice of Objection, it will either issue a reassessment or a confirmation that the assessment was correct (at least in the CRA's view!). You then have 90 days from the date of the CRA's review of the objection to appeal to the Tax Court of Canada. Note, however, that if the CRA hasn't responded within 90 days of filing of your Objection, you can appeal directly to the Tax Court.
A tax case decided last month dealt specifically with the form and timing of a Notice of Objection.
Robert J. Schneidmiller lives in Gull Lake, Sask., which is about 300 kilometres west of Regina. It was described with atypical rhyming flourish by the Tax Court judge as "a land of open range, where big farms meet big ranches and the deer and the antelope play and the skies are not cloudy all day."
Mr. Schneidmiller was in court to request an extension of his deadline to file Notices of Objection to reassessments of his 2002, 2003 and 2004 taxation years. The reassessments were issued in April 2006.
He phoned the CRA in Regina complaining that the reassessments incorrectly showed his "gross" rather than his "net" income and were therefore not correct. CRA advised him to file "T1 Adjustment Request" forms for each year, which he filed in May 2006.
Having heard nothing for nearly 18 months, Mr. Schneidmiller inquired as to the status of his adjustments and was told that even though they had been received, the CRA couldn't "locate" them and he was asked to resubmit them, which he did in November 2007.
In January 2008, he telephoned the CRA, which told him he should file formal "Notice of Objection" forms, which he did in February 2008.
Then in March, the CRA advised him that he was now too late to object to the Notices of Reassessment dated April 2006.
The judge pointed out that an "objection" is not specifically defined or described in the Income Tax Act, "(n)or should it be. It is a matter of substance, not form." The judge concluded that Mr. Schneidmiller's Adjustment Requests forms submitted - twice in fact - constituted "Notices of Objection" and as a result, they were indeed filed on time.
As of the trial date, the CRA had still not confirmed its reassessments, but since more than 90 days had elapsed, Mr. Schneidmiller can appeal his reassessments directly to the Tax Court.