The Canada Revenue Agency (“CRA”) or Revenu Québec (“RQ”) may grant what is commonly referred to as “taxpayer relief” in certain circumstances. The decisions made by the CRA/RQ in the context of taxpayer relief applications are discretionary.
Following are some of the main matters for which a taxpayer can ask the CRA/RQ for relief:
- The CRA/RQ may waive the requirement that a taxpayer file some documents. However, this waiver is not absolute as they can ask for those documents later on.
- The CRA/RQ may extend the time for “making a return”.
- The CRA/RQ may waive or cancel penalties or interest if certain conditions are met.
- The CRA/RQ may extend the time for making an election or grant permission to amend or revoke an election if certain conditions are met.
- Where an individual is required to pay tax because of an overcontribution to his RRSP, the CRA can waive that tax if the individual establishes that the overcontribution was due to a reasonable error and reasonable steps have been taken to eliminate the excess.
- The CRA/RQ may authorize a refund in certain circumstances even though the income tax return has been filed after the normal reassessment period.
- The CRA/RQ may authorize a reassessment or redetermination for an individual beyond the normal reassessment period where the adjustment would result in a refund or a reduction in an amount payable by the individual.
- The CRA/RQ may waive or cancel all or any portion of any penalty or interest otherwise payable by a taxpayer under the Voluntary Disclosures Program (“VDP”). In general terms, this relief is available to taxpayers who come forward “voluntarily” to report past errors or omissions before an enforcement action has taken place.
When asking for taxpayer relief, you should put forward a strong case with all supporting documentation. The CRA/RQ allow taxpayer relief applications only exceptionally and only if all the requirements published in their guidelines have been met. It is recommended that you consult with a tax lawyer to ensure that you put forward valid grounds.
If the CRA refuses your application for taxpayer relief, you can apply to the Federal Court for a judicial review of that decision.