Errors do happen on personal income tax assessments, and a little bit of investigation may prevent you from needlessly paying taxes you don’t actually owe.
Once you’ve received your Notice of Assessment (within weeks if filing digitally, or 8 weeks if filing by mail), you should review it thoroughly by comparing it to your income tax return. You may find that the CRA disallowed certain deductions, which then effectively increases your amount of tax owed. For example, if you have validly claimed medical expenses on your income tax return and, for some reason, the CRA altered the amount or completely disallowed it, you’re entitled to find out why.
That said, sometimes clerical errors can happen, so it could just be an honest mistake. Or, maybe you forgot to submit a document with your return that would clear it all up. Regardless of why the first step is to...
Step 1: Call the CRA
To call the CRA dial, 1-800-959-8281 within Canada and the U.S. You will need to determine if what you’re objecting to isn’t just a typo or other kind of mistake made by the CRA. Sometimes, all that is required is an informal inquiry that starts a review process.
Don’t be afraid to do this! The CRA wants to work with Canadians and encourages that taxpayers communicate with them. Simply accepting and paying what’s on your assessment when you have reason to believe it’s the wrong amount isn’t the way to go.
The informal inquiry may actually end up resolving the issue at hand. That said, if it does not, and you’re still unsatisfied after speaking with them, then you have the right to formally object via the…
Step 2: Notice of Objection Form (CRA Form T400A)
Though this form is not mandatory, it’s the easiest way to file an objection and formalize your dispute. It will help as an important guide, so you can verify you have all the required information (eg: documentation) needed. If you’re uncomfortable doing this on your own or need assistance, you can also hire a certified accountant to help you put it together.
You can get the CRA Form T400A right here at the CRA’s official website.
Deadline to File an Objection
The time limit for filing a Notice of Objection with the Canada Revenue Agency upon receiving your Notice of Assessment (or Reassessment) is 90 days. It’s imperative that you apply within these 90 days, as the CRA doesn’t usually grant extensions, unless due to dire circumstances (eg: extended hospitalization).
How to File a Notice of Objection
You can submit the Notice of Objection both by mail or online through the CRA’s “My Account” portal with the “Change My Return” service.
An important note about the online submission option: You can only use this method if you’ve signed up for an online account. The CRA has to send you a special code to be able to log into your account (to protect your privacy) once you’ve created it, so keep this in mind in your filing deadline should you wish to submit the form online.
You can file it, but it’s highly advisable to hire a tax professional to do it for you. Why? The more complicated your tax issue is, the more you should probably hire someone to help you handle it. Tax laws are complicated and a critical error at this point could throw your legitimate case down the drain.
How Long Does It Take to Resolve a Notice of Objection?
Resolution, whether in your favour, not in your favour or something in between (Eg: a settlement), can take several months. That said, communication doesn’t shut down between you and the CRA at this time. Check in regularly and ask for status updates. They may also call you if they need more details or need more documentation.
Step 3: Appeal to the Tax Court of Canada
If your Notice of Objection is denied by the CRA, you have one more recourse—the Tax Court of Canada. The “TCC” has jurisdiction over all tax matters in Canada and hears cases in over 50 cities across the country. They’re completely independent of the CRA and has approximately 25 independent judges that operate by their own procedures.
If you decide to take your objection to the courts, tax lawyers highly recommend that you seek representation, though you are also permitted by law to represent yourself.
There are two kinds of tax court procedures: informal and general
The informal procedure is quick, free, and simple, but you have to meet certain requirements to be eligible. It’s more relaxed and the goal is to find a resolution as quickly as possible.
An appeal qualifies for the informal procedure if the loss amount isn’t more than $50,000, if the disputed amount of your federal tax and penalties isn’t more than $25,000 (per assessment) or if the interest on tax & penalties is the only thing up for dispute.
A judge hears the appeal within 180 days of submission and, once the appeal hearing has occurred, judgement is made within 90 days.
If you do not meet these criteria, your appeal will be considered a general procedure. Unlike the informal procedure, the general procedure has a filing fee that ranges between $250 & $500, and the process usually takes over a year.
Fresh Start Finance is here to help you make the most of your tax refund. With simple tips, we can help get you on the path to a better financial standing.