What happens if you and your client disagree with a ruling from the Canada Revenue Agency? Instead of simply going along with what the government has imposed or assessed, you have a few options, and may end up helping your client pay less taxes.
Role of the CRA
The Canada Revenue Agency interprets tax rules. It doesn’t make them; it just upholds them. The CRA, just like taxpayers such as your clients, has to interpret rules it didn’t create. For this reason, there’s always a chance you can successfully challenge the CRA’s position.
Eligibility to File Tax Objection
You can only submit an income tax objection if you’ve received certain notifications from the government. If you haven’t, you’re not eligible to make any objections regarding how much income tax your client owes. Your client has to have received a Notice of Assessment, Notice of Reassessment, Notice of Determination, or Notice of Redetermination. If your client got a Statement of Account or proposal letter from an auditor, you can’t file an objection.
How to File an Income Tax Objection
You can file a tax objection online or by mail. If you’re applying online, you can object by using the My Account, My Business Account, or Represent a Client portals through the Government of Canada’s website. For any objection, you have to be clear why you and your client disagree with the ruling. Include all relevant facts and reasons you don’t agree, and provide as many supporting documents as possible to support the claim.
Make Sure to File in Time
You have a certain amount of time to file an objection. If you’re filing on behalf of an individual client, you have until whichever date is later: one year after the tax return filing deadline or 90 days after a notification has been sent to your client. The deadline for your business clients is limited to within 90 days after the notification has been sent.
If you miss the deadline to file an objection, you’ve got options. You can file for an extension if you tried to contact the CRA office or if circumstances beyond your client’s control prevented a timely filing. You have to write to the Chief of Appeals to explain why you failed to comply with the timeline. You can file for an extension within one year of the expiration date.
Choosing Adjustment Over Objection
Don’t adjust your client’s return until you receive a notice of assessment. If you agree with the assessment, the easiest way to make an adjustment is by using the My Account portal online. You can’t change your client’s return if it has not been assessed or it relates to carryback amounts, or your client is not a resident of Canada. You can also complete Form T1-ADJ along with a signed letter to outline what you’re changing. Make sure to send in any supporting documents you have for the change. Adjusting online is usually wrapped up within two weeks, while corrections made via mail take up to eight weeks.
If your client received an assessment from the CRA, you have a few options. If you and your client disagree with the ruling, you can object. Otherwise, you have to file an adjustment. Either way, know the rules so you can wrap up your client’s return as quickly as possible.