In this 2 part article on the CRA review by the Auditor General of Canada our expert Canadian tax lawyers analyze the report and explain changes to the tax Notice of Objection process that CRA has agreed to implement.

The Auditor General of Canada went through the settlements of objections to assessments of personal and corporate income tax returns in the five years ending March, 2016, and examined :

  • Time taken by the CRA to provide taxpayers with decisions on their income tax objections
  • Delays occurred at various stages in the processing of objections
  • Usage and communication of information on tax court decisions

Report Structure

The Auditor General came up with eight recommendations in two broad headings which the CRA agreed with :

  • Processing of objections and measures taken thereof
  • Communication of measures within the CRA

Processing of Objections and Measures Taken Thereof

The Auditor General concluded that the CRA did not fare well in processing income tax objections timely and adequately. It inaccurately reported the time taken to process such objections.

Key Finding

Inefficacious dealing by the CRA caused delays in settlements of tax objections.

Recommendation #1

Depending on the intricacy of objection, the CRA should make known to a taxpayer the expected time required to settle it.

CRA's response

By the end of 2016-17 fiscal year, the website of the CRA will contain:

  • Expected and actual times with respect to each settlement of objection
  • Steps to be taken to settle tax disputes
  • Action plan with targets and its implementation with a view to reduce backlog of tax disputes to a reasonable level

Recommendation #2

The CRA is required to develop an action plan with targets and its implementation with a view to reduce backlog of income tax disputes to a reasonable level.

CRA's Response

The CRA has already identified some areas causing delays in settlements of tax notices of objections. It is about to come up with a strategy to overcome them. It is going to finalize it in early 2017.

Recommendation #3

On review of its overall process of settlements of objections, the CRA should bring in suitable modifications in the process so as to reduce backlog of disputes to a reasonable level.

CRA's Response

By the end of 2016, the CRA will review its overall process of settlements of objections. In early 2017, it will approach the taxpayers, if needed, for providing missing information required to make their filing exhaustive for settlement.

The Auditor General came up with a few more recommendations with a view to improving functional efficacy of the CRA. In Part 2 of this article about CRA improving the Notices of Objection process , our top Canadian tax lawyers will discuss them at length.

Check back on Wednesday for the next part of this article.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.