Challenging a CRA Reassessment Starts With a Strong Objection

Often when an assessment or reassessment is issued to a taxpayer, they may disagree with the amount owing, the application or denial of deductions or credits, or may be distressed to find that penalties and interest have been added. Those that wish to have their reassessment reconsidered have the right under the Income Tax Act, the Excise Tax Act, and other statutes to file an objection internally with the Canada Revenue Agency (CRA). A Notice of Objection must be filed within strict CRA objection timelines to dispute the reassessment.

Limitation Period for Filing a CRA Objection

When an assessment or reassessment is issued, the CRA deems it valid and payable by law—even if the assessment is incorrect. The only way to overturn it is through a subsequent reassessment, which can only be forced through the CRA objections and appeals process. Timelines for filing a notice of objection are strict.

• For income tax or GST/HST reassessments, a taxpayer has 90 days to file a Notice of Objection.
• If this deadline is missed, the taxpayer must apply for a Notice of Objection Extension within one year after the 90-day period expires.

Time is critical, and failing to file a CRA objection on time may result in losing the right to dispute the reassessment.

Extension of Time to File a Notice of Objection

If the initial 90-day period is missed, a taxpayer may still apply for an extension of time to file an objection with CRA. However, this extension is not automatically granted—certain conditions must be met, including:

• The taxpayer must prove they were unable to act or instruct someone else to act in filing the CRA objection.
• The taxpayer must have had a bona fide intention to object to the CRA reassessment.
• The delay in filing the Notice of Objection must be justifiable and equitable.
• The application must be filed as soon as circumstances permit.

If these conditions are met, the CRA must allow the application and accept the objection as valid.

The CRA Appeals Division: What Happens After Filing a Notice of Objection?

Once the objection has been filed and accepted as valid, it will typically be placed into an internal queue at the Appeals Division of CRA, and an Appeals Officer will be assigned to review and discuss the reassessment with the taxpayer. The process of waiting for an officer to be assigned can often take several months, and in some cases years, depending on the complexity of the issues under objection and the current caseload of the CRA.

Appeals Officers themselves are generally the more experienced agents of the CRA. They have often cut their teeth in the collections and audit divisions and are trained to be impartial when reviewing a file and coming to a decision. They are generally more collaborative in their approach to reviewing a taxpayer’s file than the audit division, though for certain issues they must follow departmental mandates when issuing decisions.

Once assigned, the Appeals Officer will typically review the file and then make contact in writing with the taxpayer to discuss their initial impression of the file and to request any additional information they may require to form their decision. After a few rounds of exchanging correspondence they will generally prepare their formal decision by way of a “proposal letter” which will state their position and provide the taxpayer one last chance to respond if they continue to disagree.

Once a final decision is made, the Appeals Officer has two choices on the outcome.  First, they can direct that a subsequent reassessment be issued to either completely eliminate the previously incorrect taxes levied, or to alter them to some lower amount.  Alternatively, if they disagree with the taxpayer and intend to uphold the reassessment in dispute they will issue a formal “Notice of Confirmation”, stating the CRA’s position that the tax was assessed correctly.  Once a Notice of Confirmation is issued, the taxpayer’s only recourse is to appeal to the Tax Court of Canada, which must be done within a ninety (90) day period.

CRA Notice of Confirmation: What If Your Objection Is Denied?

The process related to filing an appeal is discussed in our article on tax appeals.  However, it should be noted that it is a formal requirement that a taxpayer must first file a Notice of Objection if they intend to proceed to the Tax Court of Canada – without an objection the Tax Court of Canada does not have the jurisdiction to hear an appeal. In certain circumstances, a taxpayer may wish to appeal “directly” and to avoid dealing with the CRA directly.  In this case, the Income Tax Act provides that once a ninety (90) day period has elapsed and the CRA has not issued a decision to the taxpayer on their objection that they may then proceed to file an appeal. Given the administrative backlog at the CRA an objection is almost never decided within this timeframe, and thus taxpayers can often appeal quickly – but must be aware that the formal requirement for filing an objection is a strict one. Without filing an objection within the time limits described above, all rights of appeal are lost.

Proper Experienced Advice – if you disagree with a reassessment and wish to dispute the amounts, proper advice and representation is invaluable to ensure both that the formal requirements of the acts are met, and that you are in the best position to present a logical and winning case to the Appeals Division of CRA.  The tax lawyers Toronto at Devry Smith Frank LLP have years of experience in all types of objections and can advise you expertly, keep professional costs down and maximize your chances of success.

A Notice of Objection is a crucial first step in disputing a CRA reassessment. Missing deadlines can jeopardize your ability to appeal, making prompt action essential. If you need assistance with CRA objections, appeals, or disputes, contact Devry Smith Frank LLP today. We offer multiple convenient locations in Toronto, Whitby, Barrie and more to serve our clients with ease. Find the office closest to you by calling us at  416-449-1400 or by visiting our locations page.