Based on information from 2009, Canada takes longer to resolve tax objections than any of the other G7 countries. Generally, Canada takes 276 days to work through disputes, nearly four times the G7 average of 70 days. While you cannot speed up matters on the government’s end, there are numerous steps you can take to help ensure a speedy resolution for your clients.
Understand the Process
If you want to help your clients through the tax dispute process quickly, you need to understand how the process works. Generally, after you file your client’s tax return, the CRA sends a notice of assessment or reassessment if the agency disagrees with some of the information. At that point, you can object to the assessment. You have until the later date of either one year after the return was due or 90 days after your client received the notice. You may want to file your objection online to speed up the process.
Then, an appeals officer looks over your objection and issues a decision. This takes a varying amount of time depending on the complexity of the issue. If you don’t agree with that decision, you can appeal to the Tax Court of Canada. If that doesn’t work, you can appeal again to the Federal Court of Appeals and once again to the Supreme Court of Canada. If you want to resolve your client’s dispute as quickly as possible, it’s also important to know when to turn the issue over to a tax resolution specialist, rather than handling it yourself.
Keep Clear, Well Organized Records
If the CRA reaches out to your client about an issue with their tax return, it’s easier to resolve the issue if you have clear, well-organized records. To explain, imagine your client reports a business loss, and the CRA wants more information to backup the claim. If you have well-organized records, you can easily access the information that supports the claim and provide it to the CRA quickly. If you’re not organized, you may end up wasting time sifting through all types of records until you find what you need.
Present All the Facts Right Away
When dealing with a dispute, don’t hold back information. Unfortunately, some tax professionals assume if they hold back some details until the appeals stage, the appeals officer may be more likely to side with their client. According to the CRA, this is not true, and in fact, introducing new information at that stage can make the dispute last even longer. The CRA may decide to reassess the tax return in light of the new information.
Provide Complete and Clear Information
If you’re objecting to a CRA assessment on behalf of your client, make sure the records you provide are clear and complete. When your information is clear and complete, objections are more likely to be resolved at the processing or audit stage, rather than going to the objection stage.
To illustrate, imagine your client is a small business owner and they hire independent contractors throughout the year. When your client claims those payments as a business expense, the CRA disputes the validity of the claims and sends a notice to your client. To convince the CRA that the claims are legitimate, you send the agency a copy of the T4A slips issued by your client. To ensure the CRA accepts that information and doesn’t move the dispute to the next stage, you need to ensure the writing on the forms is legible and that the forms are filled out correctly. You may also want to include any other proof you have to backup your clients claim such as invoices from independent contractors, timesheets, and contracts.
Dealing with tax disputes is usually not fun for anyone involved. However, with the right strategies, you can help your clients resolve these issues as quickly and easily as possible.