If you have an objection in terms of tax return assessment and other procedural formalities, you have all the rights to bring a case to court. However, there is a need to file a valid objection on a timely basis.
There are two ways to file an objection. These include filing an objection online and the second way is to mail by printing your complaint details. For filing an online objection, go to MY CRA account then select notice of objection or register my formal dispute. Once you click on it, the screen will pop up to upload the documents.
On the other hand, if you have opted to file via mail, you will be required to print and complete the form called T400A – objection on the income tax act. This form is like an appeal at your appeal intake center. However, if you don’t want to use this form, simply type a letter for the CRA, write down the facts and figures or the basis of your objection, sign it, and dispatch it to the address of CRA.
There is a set deadline for filing/sending the objection which is later of,
However, if you have missed the above deadline, there is no need to worry and an application can be made to extend the date within one year of the deadline. However, if CRA does not accept your application, you may appeal in the tax court of Canada.
It’s important to note that you may not skip the step of filing an objection letter and reaching the court. Similarly, late filing an objection and reaching the court with an objection may not be acceptable. This argument is supported by two recent cases in the tax court. Let’s discuss these cases.
The taxpayer did not file an objection within a given deadline. So, no compliance was observed with the income tax act. Hence, the taxpayer may not be able to appeal in the court of tax because he did not comply with the procedural aspects of the appeal. The CRA assessment was made on March 13, 2020, for the years related to 2011, 2012, and 2013. So, the taxpayer had a responsibility to file an extension till 90 days of the notice of assessment which is June 11, 2020. Even, the taxpayer did not file an objection in the one-year extension period after the deadline.
As support of this argument, CRA provided an affidavit from a litigation officer who checked the record to see if there was any objection letter from the taxpayer. However, there was no such record. The taxpayer also admitted before the court that he did not file an objection by the given deadline for an extension.
On the basis of a given ground, the judge dismissed the case on the basis of a preliminary hearing. In other words, the judge did not hear the case because the taxpayer was not in compliance with the income tax law that required filing of the objection by a given deadline.
Hence, the appeal of the taxpayer was not entertained because a valid objection was not filed. So, if you want to opt for the CRA assessment, the first step is to file the objection. Otherwise, you will not be able to appeal the tax law, that’s because of the fact that ignorance of the law is not an excuse. Further, there is a time limit defined in the law for filing an objection. Let’s discuss related details for the same.
Under paragraph 165(1)(a) of the Canadian income tax law, the taxpayer has 90 days to apply for the date of mailing of the CRA Income tax assessment. However, if the window of 90 days from the assessment notice is missed, as per paragraph 166.1(7(a), the time of the notice can be extended for one year after the expiry of the 90 days window. So, in total there is a total of 15 months’ time (3+12) to file an objection under Canadian income tax law’s provision. However, if 15 months period lapses, the application can be made in the Tax Court of Canada under subsection 166.2(1) of the income tax.
Under subsection 165(1)(a)(ii) of the Tax act, CRA needs to send the notice of assessment to the taxpayer, it does not need to ensure that notice is actually received by the taxpayer. However, if the taxpayer has made a claim that he never received the notice, it’s the responsibility of the CRA to prove that notice was mailed to the taxpayer or otherwise communicated to the taxpayer. In fact, there have been cases in the past, where tax lawyers have taken the stand that their clients/taxpayers were not sent the notice and this was also invoked by the tax court of Canada.
Let’s discuss some of the cases related to the filing of the objection on the CRA assessment.
It was the case where notice of assessment was not mailed to the correct mailing address of Mr. Pilgrim. He was of the view that he did not receive an assessment notice from CRA. On the contrary, he came to know about the assessment in 2014 for the assessment of tax years 2009, 2010, and 2011. He was sent a notice of assessment in the year of 2012. However, it was not received because of the wrong address in the notice as CRA did not write a unit number in the address. This case was filed under subsection 166.2(1) extension of time for serving the notice of objection for the reassessment in 2015.
The decision was given in the favor of Mr. Pilgrim on account of the fact that CRA is responsible to ensure assessment notice is sent to the taxpayer. In the given case, the mail was not sent to the correct address. Hence, the decision was given in the right of the taxpayer.
This case proves the appreciation of the law. This law proves that CRA needs to ensure notice is sent to the correct address. The address should be complete that should include the unit number for multiple dwellings. However, it should be noted that it may not be always easy to prove that the assessment notice was not sent to the correct address of the taxpayer. Further, it should be noted that tax attorneys have used this provision of the law in Canadian tax court.
In this case, British Columbia made a claim under paragraph 20 of the income tax law that the reassessment notice was sent to the wrong address. So, the trial judge considered this a fact that the notice was not mailed. So, the decision was given in the favor of the taxpayer.
If you have an objection to the assessment made by the CRA, there is a need to file a notice of objection within 90 days of the assessment notice. However, if the one-year period lapses and an objection is not filed, the extension can be made for the one year. So, the total time for filing the objection is fifteen months in total. However, if you have not filed a valid objection letter, the case cannot be brought in the Canadian court of the tax. As we have discussed above where the taxpayer did not comply with the tax laws and directly made an application in the court, the court did not hear the case as the taxpayer did not comply with the income tax law.
Further, it should be noted that CRA is responsible to dispatch the mail to the correct address. If CRA does not dispatch mail to the correct address, it’s considered that mail was not sent as evidenced in the case of Pilgrim vs. Queen.
Disclaimer: Information in the blog/post/article has been presented for a broad and simple understanding. This is not legal advice. RKB Accounting & Tax Services does not accept any liability for its application in any real situations. You need to contact your accountant or us for further information.