Disagree with the Canada Revenue Agency's Notice of Assessment? You don't have to accept it lying down. You CAN fight their decision by filing a Notice of Objection. Although we recommend that you consult with a tax lawyer before doing so, you can technically object without the help of a tax expert.
Here is how to fight an incorrect CRA tax assessment in 3 Steps:
STEP 1: Make sure you meet the conditions to file the CRA's Notice of Objection
To formally object, you need to have received one of the following notices:
- Notice of Assessment
- Notice of Reassessment
- Notice of Determination
- Notice of Redetermination
This includes notices you may have received with regards to tax credits or benefits such as the Canada Child Benefit or GST/HST tax credit.
If your business is declaring a loss, you can file an objection only AFTER you have received a Notice of Loss Determination. You can request this by contacting your local tax centre or tax services office.
Also, you must not have passed the deadline established by the CRA to file the Notice of Objection. For most individuals, the deadline is the later date of one of the following:
- 90 days from the date listed on your CRA Notice of Assessment or Notice of Determination.
- One year after the deadline for the filing the tax return
For corporations, the deadline to file an objection is 90 days from the date listed on the Notice of Assessment or Notice of Determination. The same rule applies for objections dealing with contributions to a registered retirement savings plans (RRSP) or a tax-free savings account (TFSA).
If you missed the deadline, you have the option to apply for an extension. Here, you will explain why you could not file your Notice of Objection on time. Was it due to delays by the Canada Revenue Agency? Were there extraordinary circumstances beyond your control, such as a natural disaster or illness? Provide whatever proof you have to support your explanation.
This option is only available up to one year after the initial objection deadline date. You can apply for an extension at the same time that you file your Notice of Objection.
STEP 2: Determine what kind of objection you need to file with the Canada Revenue Agency
There are nine:
- Income Tax Objection (T400A Notice of Objection Form)
- GST/HST Objection (GST159 Notice of Objection Form)
- Canada Pension Plan (CPP) or Employment Insurance (EI) Appeal (CPT101 Form)
- Ontario Corporations Tax Objection (ON100 Notice of Objection Form)
- Scientific Research and Experimental Development (SR&ED) Objection
- Excise Taxes and Special Levies Objection (in most cases, Form E413, Notice of Objection [Excise Tax Act], or Form E414, Notice of Objection [Purchaser])
- Selected Listed Financial Institutions (SLFI) Objection (GST159 Notice of Objection Form)
- Registered Charities, Registered Canadian Amateur Athletic Associations (RCAAAs), and other Listed Qualified Donees Objection
- Registered Savings Plan Objection
STEP 3: File your objection either online, by mail, in person or via a representative (such as a tax lawyer or accountant)
When describing the reasons for your objection, make sure you include all of the relevant information and documents to support your case. If you don't, the CRA may request this missing information which will delay the resolution of your tax problem.
Filing an objection online: Click on "Register my Formal Dispute" from within the tax portal and then select either "My Account for Individuals" or "My Business Account"
Filing an objection by mail or in person: In most cases, you will fill out Form T400A, "Objection – Income Tax Act" and mail or deliver it to the Chief of Appeals at your Appeals Intake Centre. See Step 2 for a list of forms for different tax objections. You can include a letter clearly explaining why you are objecting to the initial CRA tax assessment – along with any other supporting documents.
Filing an objection via a representative: Your tax lawyer or accountant will have you sign an authorization form. For individuals, it is Form T1013, and for businesses and non-profit organisations, it is Form RC59.
IMPORTANT CONSIDERATIONS WHEN FILING THE CRA TAX OBJECTION
Typically, you do not have to pay the amount in dispute while the Canada Revenue Agency is evaluating your Notice of Objection – UNLESS it relates to one of the following situations:
- GST/HST and payroll taxes that you collect on behalf of the government: In this case, you should remit the entire disputed amount to the Canada Revenue Agency. They will NOT postpone collection action while you are going through the CRA objection process
- Charitable donation tax credit under a tax shelter: Here, you will need to submit at least half of the amount under dispute
- Large corporations: In this situation, you need to pay at least half of the disputed amount
While the Canada Revenue Agency is evaluating your Notice of Objection, applicable interest charges for any balance due will be accruing. Some taxpayers choose to pay the entire amount under dispute to avoid paying interest if they are unsuccessful with their CRA tax objection.
If you decide to go this route, and you have not received a decision within 120 days of your application, you can request a refund for the amount in dispute – in most cases. The exception is if the payment had to do with a charitable donation tax credit or the taxpayer is a large corporation. In this case, you can obtain a refund for half of the amount in dispute.
Upon filing your Notice of Objection, a CRA representative will review all of the information you submitted and determine whether a readjustment is warranted. If you are partially or entirely successful, the CRA will send you a Notice of Reassessment or Notice of Redetermination detailing how they will be readjusting the taxes owed. If you are unsuccessful, the CRA will communicate this to you in writing and you will, therefore, be responsible for paying the amount due. This tax debt will now include interest IF you had chosen not to pay the disputed amount while undergoing the CRA objection process. Typically, CRA collection actions will commence 90 days after they have made this determination.
You do, however, have the option to continue fighting the decision by filing an appeal to the Tax Court of Canada. Although we recommend seeking legal counsel, a tax lawyer is not technically required in most cases to appeal the CRA's decision. If a corporation or charity is filing the tax appeal, then a tax lawyer is required.
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.