Published: May 26, 2020
Last Updated: October 25, 2021
A Canadian Tax Lawyer’s Perspective on Objecting to Amend Your Tax Return
When a taxpayer receives a tax assessment or reassessment he or she disagrees with, that taxpayer can file a “Notice of Objection” with the Canada Revenue Agency. The taxpayer will provide the Canada Revenue Agency with reasoning and/or supporting documentation as to why the Canada Revenue Agency’s tax assessment is incorrect. If the Canada Revenue Agency agrees with the taxpayer’s position, the taxpayer will be reassessed accordingly. The Notice of Objection must be filed within 90 days of the tax assessment or reassessment’s date of issuance, or within a year and 90 days of the date of issuance with an extension of time request approved by the Canada Revenue Agency.
Objecting to Amend Your Tax Return
A taxpayer can object to an assessment even where that tax assessment is consistent with the return he or she filed. This kind of objection is usually carried out under the advice of an expert Canadian tax lawyer and may be done for several reasons such as where a taxpayer would like to maintain his or her appeal rights or to assert a controversial claim that would have led to tax liability if claimed on the taxpayer’s tax return. This type of objection may also be filed where a taxpayer wishes to amend his or her tax return. A taxpayer may amend their tax return to claim an unclaimed tax credit or correct claimed income or expenses.
Filing a notice of objection to an income tax assessment will suspend tax collections action during the objection period. This aspect of objections would be beneficial for a taxpayer whose filing error resulted in an inflated amount of tax owing. However, taxpayers are cautioned against using objections purely to avoid collections action. Objecting to your tax return to avoid collections action is not a valid ground of objection. If the Canada Revenue Agency believes a taxpayer is objecting just to avoid collections action with no valid basis for his or her objection, they may refuse to process the tax objection. Additionally, interest on any unpaid taxes continues to accrue during the objection period.
As the taxpayer in Sivadharshan v. Canada (National Revenue), 2013 FC 47 discovered, supporting documentation may also be required before the Canada Revenue Agency is willing to reassess the taxpayer. Mr. Sivadharshan filed a T1 adjustment request after purportedly discovering he had inadvertently included an extra zero in his reported income for two taxation years. However the Canada Revenue Agency refused process the amended returns because he could not provide documentation supporting his lower income. The court agreed the Canada Revenue Agency was permitted to refuse to reassess on the basis of the amended returns where no supporting documentation was provided. Similarly, a taxpayer objecting to amend his or her tax return may be required to provide supporting documentation to the Canada Revenue Agency before a reassessment will be issued.
Filing a Notice of Objection allows taxpayers to correct errors made by the Canada Revenue Agency and errors they themselves make with their returns.
Tax Tips: Other ways to amend your return
Objecting to your tax return is not the only means of amending an incorrectly filed tax return. A taxpayer may also amend a tax return by filing an adjustment request or applying for the Voluntary Disclosure Program (VDP). This is a complex procedure and should always done under the guidance of an expert certified specialist in taxation Canadian tax lawyer. The main benefit of these methods is the objection deadlines mentioned above do not apply to an adjustment request or VDP application. The taxpayer must file their adjustment request or VDP application within 10 years of the tax year they wish to adjust, though at least one reporting period must have passed before a VDP application can be filed. No collections action will be suspended while these requests and applications are processed. In the case of both an adjustment request and a VDP application, the taxpayer may be required to provide supporting documentation before the CRA will process the adjusted tax return. The VDP program provides penalty and interest relief which will not be obtained by filing an adjustment request. A taxpayer cannot file a VDP application where the CRA has already commenced enforcement action related to the subject of the voluntary disclosure.
Which of three options; objection, adjustment request, or VDP, is best for a particular taxpayer depends on his or her situation. For example, taxpayers are less likely to be accepted for voluntary disclosure relief if they have applied for the VDP previously. If a taxpayer is too late to object and the interest and/or penalties resulting from the adjustment are minimal, an adjustment request would likely make the most sense for adjusting that particular return. Our experienced Canadian tax lawyers can assess which option is the most advantageous means of adjusting your tax return and assist with any necessary applications or objections.
"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."
The deadline for filing a Notice of Objection with the CRA is 90 days after the Notice of Assessment or reassessment date. However, for the current taxation year, the deadline is one year after the tax return’s normal filing date, which is typically April 30, the previous taxation year. If you miss those deadlines, you have one year to apply for an extension of time, but that time extension is discretionary to the CRA and may not be granted.
Taxpayers who spot that they have made an error on their tax return can put in an adjustment request. The easiest way to do it is to use the option provided in the My Account section of your online CRA account. If, however, you did not submit your tax return digitally you can simply download a T1 Adjustment Request form and submit it to your tax center.
Taxpayers who disagree with a CRA assessment or reassessment can submit a Notice of Objection. The taxpayer needs to explain why they think the calculation is wrong and provide documentation that supports their claim. Doing this effectively can be difficult. So, if there is a lot of money involved it makes sense to hire a tax lawyer or chartered accountant to help you to prepare your Notice of Objection.