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Tax Notices of Objection, Deadlines and Applying for Extensions

Upon receiving a Notice of Assessment or Reassessment, and disagreeing with its contents, a taxpayer may choose to file a formal dispute with the Canada Revenue Agency (“CRA”) by filing a written Notice of Objection. The tax objection must set out the relevant facts and the reasons why the taxpayer believes the assessment or reassessment is incorrect. In order to perfect the objection, it must be filed on or before 90 days after the date that the Notice of Assessment or Reassessment was sent. Therefore, as an example, if a Notice of Assessment was sent to the taxpayer on August 5th, 2020, then the last day that the taxpayer could file their Notice of Objection as of right is November 2nd, 2020.

If a taxpayer misses this tax filing deadline, they can apply for an extension of time under subsection 166.1(1) of the Income Tax Act. This extension is not always granted and must be made within one year after the expiration of the 90-day deadline—effectively providing the taxpayer a total of 15 months to submit a Notice of Objection along with an application for an extension of time.

Following the prior example where the last day to file a Notice of Objection was November 2nd, 2020, the objection window would thus expire on November 3rd, 2020. The taxpayer then has until November 3rd, 2021 (one year after the expiration of the 90 days) to file their application for an extension of time and their Notice of Objection.

To file for an extension of time, the taxpayer must make an application and set out the reasons why a Notice of Objection was not served or made during the original 90-day limitation period. This extension application, along with a copy of the Notice of Objection, should be sent by registered mail and addressed to the Chief of Appeals of the CRA Tax Centre closest to the taxpayer. The CRA’s Appeals Division will then consider the application and grant or refuse it.

For the application to be successful, the taxpayer must demonstrate that within those original 90 days,

  • The person was unable to act or have someone else act in their place during the 90 days;
  • There was a bona fide intention to appeal;
  • Given the reasons in the application, there is a just and equitable reason to grant the extension of time; and,
  • The application was made as soon as circumstances allowed the taxpayer to do so.

Ultimately, if a Taxpayer cannot file a Notice of Objection within 15 months of their Notice of Assessment, there is no opportunity as of right to refute and overturn the CRA’s decision and any tax assessed becomes fully payable and subject to CRA collections efforts.

Notice of Appeal deadlines and applying for extensions

If a Notice of Assessment is confirmed or reassessed by the CRA’s Appeals Division after filing a Notice of Objection, a taxpayer then has a further 90 days to file a Notice of Appeal to the Tax Court of Canada. Under subsection 167(1) of the ITA, a taxpayer who does not file a Notice of Appeal within the allotted 90 days can appeal to the Tax Court of Canada for an extension of time.

Like the process for filing an extension to a Notice of Objection, this application for extended time must be made within one year after the expiration of the 90 days. This effectively provides the taxpayer at most 15 months after the confirmation to file a Notice of Appeal. However, note that the Tax Court of Canada does not have to grant a taxpayer an extension of time and will frequently not grant the extension application. Therefore, it is always better to file a Notice of Appeal within the allotted 90 days as this is the only way to ensure that appeal rights are maintained.

To file an application for an extension of time to Tax Court the taxpayer must provide reasons why their appeal was not made within the original 90 days. Then, three copies of this application accompanied with three copies of the Notice of Appeal must be filed with the Registry of the Tax Court of Canada or sent to the Registrar by registered mail.

In addition to being filed within one year after the expiration of the 90-day deadline, the taxpayer must meet these other conditions:

  • The person was unable to act or have someone else act in their place during the 90 days;
  • There was a bona fide intention to appeal;
  • Given the reasons in the application, there is a just and equitable reason to grant the extension of time;
  • The application was made as soon as circumstances allowed the taxpayer to do so; and,
  • There are reasonable grounds for appeal.
    • This step is not required when applying for an extension of time for a Notice of Objection under subsection 166.1(1). Thus, applying for an extension of time for a Notice of Appeal under subsection 167 (1) is set at a higher bar.

 

If the CRA opposes the application, the Court will designate a hearing date for the parties to provide evidence and legal argument as to why the application should be allowed or disallowed.  The rules of the Tax Court applicable to motions govern these application hearings.

Tax Tips from an Experienced Canadian Tax Lawyer on Deadlines for Disputing Tax Assessments 

If a taxpayer receives a Notice of Assessment, Reassessment, or Confirmation and disagrees with its contents, it is imperative that they file a Notice of Objection or Appeal within 90 days of when the Notice of Assessment, Reassessment, or Confirmation was sent. This provides the best odds at successfully objecting against the CRA’s assessment.

The ability to object is available up to 15 months after the Notice of Assessment, Reassessment, or Confirmation is sent. However, after the 90-day deadline, the taxpayer will not only have to prove that their Assessment or Reassessment is incorrect, but also prove that a) they were unable to act during the 90 days; b) they had a bona fide intention to object or appeal; c) it would just and equitable to grant the taxpayer an extension or time; d) the application was made as soon as the circumstances allowed the taxpayer to; and, if appealing a Notice of Confirmation, e) there are reasonable grounds to appeal. This is ultimately a significantly higher bar to pass than if the taxpayer was able to file a Notice of Objection in the original 90 days.

If a taxpayer misses the 15-month deadline, the Tax Court of Canada no longer has jurisdiction to allow the application, and there are also no equitable remedies available to the taxpayer. This means that the taxpayer is out of time and out of luck.

The CRA is not always correct in their assessments, which can leave you with an unfair and significant tax burden. Speak to one of our experienced Toronto Tax Lawyers about your options when filing a Notice of Objection or Appeal.

 

Disclaimer:

"This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."

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