Dealing with the Canada Revenue Agency is like dealing with most other big organizations. It can be very procedural and sometimes frustrating, especially if you’re involved in a tax dispute. However, it is important to keep things in perspective and be courteous. Don’t cut your channels of communication by being rude and don’t put the person you’re dealing with against you. The last thing you want is take the dispute personal and escalate tensions.
Tax audits are performed by the CRA on a regular basis to ensure the integrity of the tax system. There can be many triggers for an audit. If an auditor finds something during his audit, he will issue a notice of reassessment.
A notice of reassessment from the CRA generally means that there is a discrepancy between the amount of tax owing, as computed by the CRA, and the amount of tax owing as reported by the taxpayer. If a taxpayer disagrees with a reassessment from the CRA, the next step is to file a notice of objection. Once the notice of objection is filed, the matter is transferred to another CRA officer (referred to as the “appeals officer”). The appeals officer will review the file and will cancel, modify or confirm the reassessment. If a disagreement remains after the file is reviewed by the appeals officer, the next step for the taxpayer is to appeal the matter to the Tax Court of Canada.
The Income Tax Act gives the CRA discretion to grant specific reliefs to taxpayers. The CRA allows applications for taxpayer relief only when all the criteria in their guidelines are met (there is a fine line between the CRA following their guidelines and fettering their discretion). Each application for taxpayer relief is considered on its own merit. Should the CRA refuse to grant the relief requested by a taxpayer, the latter can apply to the Federal Court for a judicial review of that decision.
The Governor in Council may, on the recommendation of the Minister of National Revenue, “remit any tax or penalty, including any interest paid or payable thereon, when the Governor in Council considers that enforcement of the penalty is unreasonable or unjust or that it is otherwise in the public interest to remit the tax or penalty.” The CRA has developed guidelines to assist in determining when to recommend that a remission order be issued, but the threshold is very high. A remission order is an exceptional measure of last resort as it involves not only a departure from the ordinary rules of taxation, but also from the principle of equality of treatment.
Last updated: October 21, 2016