The Canada Revenue Agency may grant what is commonly referred to as “taxpayer relief” in certain circumstances under the Income Tax Act. The decisions made by the CRA in the context of taxpayer relief applications are discretionary. The CRA has published guidelines in order to ensure a measure of consistency in the exercise of its discretion.
Following are some of the main matters for which a taxpayer can ask the CRA for relief:
- Subject to some exceptions, the CRA may waive the requirement that a taxpayer file some documents. However, this waiver is not absolute as the CRA can ask for those documents later on.
- The CRA may extend the time for “making a return” under the Act.
- The CRA may waive or cancel any penalty or interest under the Act if some conditions are met.
- The CRA 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 are being taken to eliminate the excess.
- The CRA may authorize a refund in certain circumstances even though the income tax return has been filed after the normal three-year period.
- The CRA 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 may waive or cancel all or any portion of any penalty or interest otherwise payable under the Act by a taxpayer. 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. For more information, see the Voluntary Disclosure Program‘s page on the CRA’s website.
When asking for taxpayer relief, you should put forward a strong case with all supporting documentation. The CRA generally allows taxpayer relief applications only exceptionally and only if all the requirements published in their guidelines have been met. For matters that are especially sensitive, such as the Voluntary Disclosure Program, it is advisable to consult a tax lawyer.
Last updated: October 21, 2018