You filed your 2015 individual income tax return and now received your Notice of Assessment (NOA) outlining the Canada Revenue Agency’s (CRA’s) conclusions on your income and tax position for the year. Does the assessment differ from the information you provided? If so, and the change is to your disadvantage, then you must decide whether to dispute the CRA’s assessment. If you choose to dispute CRA’s assessment, keep reading for next steps.
Where the amounts are significant enough and the taxpayer genuinely believes that the CRA’s assessment is in error, the next step is to file a Notice of Objection. This advises the CRA that the taxpayer is disputing his/her tax liability for the taxation year in question. Filing of an Objection brings CRA to a halt on collecting taxes which it considers owing for the taxation year under dispute (although, if the taxpayer is eventually found to owe the amount in dispute, interest will have accumulated in the interim). There are two major exceptions to the deferred collection rule. Tax collection efforts by the CRA are not deferred where the amounts in dispute are those which the taxpayer was required to withhold and remit to the CRA, such as employee income tax deductions at source. As well, the CRA is required to postpone collection action on only 50% of the amount in dispute, where that dispute involves a charitable donation tax credit or deduction claimed in connection with a tax shelter arrangement.
Deadline to File a Notice of Objection
Individual taxpayers must file an Objection by:
- The later of 90 days from the mailing date of the Notice of Assessment (the date found at the top of page 1).
- One year from the due date of the return which is being disputed. For tax returns for the 2015 tax year, the one-year deadline (which is usually, but not always, the later of those two dates) would be April 30, 2017 (or June 15, 2017 for self-employed taxpayers and their spouses).
If the taxpayer is ultimately found to owe some or all of the taxes assessed by the CRA, interest will have accrued on those taxes for the entire period since the filing due date. If the filing of the Objection is delayed, the CRA may have already commenced its collection efforts. Certainly, if the deadline is looming, it’s necessary to file a Notice of Objection in order to preserve the taxpayer’s appeal rights, even if discussions with the CRA are still ongoing.
How to File a Notice of Objection
- Taxpayers registered with the CRA’s online services feature My Account can file their Notice of Objection online at www.cra-arc.gc.ca/esrvc-srvce/tx/ndvdls/myccnt/menu-eng.html.
- The taxpayer provides information with respect to the assessment being disputed and the reasons why the assessment is being disputed. Then submits those reasons by clicking on the Submit button at the bottom of the “Register my formal dispute – review” page.
- Taxpayers can scan and send supporting documents relating to that dispute to the Agency. If the CRA has requested that the taxpayer provide specific documents, he/she will have been provided with a case or reference number which is used to submit the document or documents. Where the taxpayer doesn’t have a case or reference number, it is still possible to submit documents online. In either case, there are some technical requirements which must be met when scanning and sending documents to the CRA.
- Each file submitted must have a unique name
- Each file submitted must be in .doc, .pdf, or .jpg file formats
- The total size of the documents submitted can’t exceed 150 MB
- Once documents are successfully submitted, the taxpayer will receive a confirmation number and a reference number. That reference number (or the one previously provided by the CRA) can be used at any time to submit additional documents.
While filing a dispute through My Account is faster, taxpayers can mail a hard copy of the Notice of Objection. CRA’s Notice of Objection standardized form – the T400A Objection – can be found on the Agency’s website). The CRA has two appeal intake centres, which are as follows:
Western Intake Centre Eastern Intake Centre
Vancouver Tax Service Office Sudbury Tax Service Office
9737 King George Boulevard 1050 Notre-Dame Avenue
PO Box 9070, Station Main Sudbury ON P3A 5C1
Surrey BC V3T 5W6
Taxpayers having a postal code starting with letters A to P should send their objection to the Eastern Intake Centre, while those with a postal code starting with the letters R to Y should send their objection to the Western Intake Centre.
It can take several weeks for the CRA to respond to the Objection. In the course of making its decision, the Agency may or may not contact the taxpayer for further discussions of the issues in dispute. Should the taxpayer be contacted, he/she may be asked to provide representations outlining his/her position, in writing or at a meeting. Through such representations and meetings, it may be possible for the taxpayer and the CRA to come to an agreement on the taxpayer’s tax liability. In either case, the CRA will either confirm its original assessment or change it. If the original assessment is changed, the CRA will issue a Notice of Reassessment outlining the changes. If the taxpayer continues to disagree with the CRA’s position, the next step is an appeal to the Tax Court of Canada, which must be filed within 90 days after the CRA issues its assessment or reassessment. While in many instances (generally where amounts in dispute are relatively small) taxpayers are allowed by law to represent themselves before the Tax Court, it’s generally a good idea, once things reach this point, to consult a tax lawyer before taking that next step.
The CRA also publishes a useful pamphlet entitled Resolving Your Dispute: Objection and Appeal Rights under the Income Tax Act, and the most recent release of that publication can be found on the CRA website.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.