Introduction: The Canadian Tax Objections Process
Under subsection 165(1) of Canada’s Income Tax Act, every taxpayer has the right to object to a tax assessment or reassessment, provided they meet the statutory time limits and procedural requirements. This process begins when a taxpayer files a Notice of Objection.
The CRA’s Appeals Division will then assign an appeals officer to review the merits of the objection.
If the decision is unfavorable, taxpayers can escalate the dispute to the Tax Court of Canada. However, taxpayers cannot bypass the Notice of Objection step; even if they plan to go directly to Tax Court, they must first file a Notice of Objection.
The Income Tax Act imposes strict deadlines for objections—typically 90 days from the date of the tax assessment. If this deadline is missed, taxpayers can apply for a one-year extension, but they must demonstrate a valid intent to object within the original timeframe.
Failing to meet these deadlines forfeits the right to dispute the assessment, even if it is incorrect. However, taxpayers may still apply for interest or penalty relief through the CRA’s Taxpayer Relief Program.
Can You Object to a Tax Assessment Based on Your Own Return?
Yes, Canadian taxpayers can object to a tax assessment that reflects their own filed return. This principle was confirmed in the Delle Donne v The Queen, 2015 TCC 150 case, where the Tax Court recognized that taxpayers can amend their return through the objections process.
Earlier, in the case of The Queen v Imperial Oil Ltd, the CRA argued against this right, claiming that objections should only apply to assessments resulting from audits. The courts rejected this argument, affirming that taxpayers can indeed object to assessments based on their own filings.
Why Would You Object to Your Own Tax Return?
There are several reasons a taxpayer might object to an assessment reflecting their own return:
- Correcting Errors or Omissions:
If you forgot to claim a deduction or credit, objecting preserves your rights while the CRA processes a correction (T1 Adjustment Request). This also suspends CRA collections on the disputed tax debt. - Strategic Considerations:
If dealing with complex or newly enacted tax laws, you may need extra time to determine eligibility for certain deductions or credits. Filing a Notice of Objection allows you to make this determination without risking late-filing penalties. - Controversial Tax Claims:
Raising a debatable claim during the objection process avoids potential penalties that might arise if the CRA rejects the claim during an audit. If the CRA denies the objection, you can still appeal to the Tax Court. - Litigation Strategy:
Objecting to your own return can prevent the CRA from gaining a strategic advantage during audits and appeals, as demonstrated in the Imperial Oil case.
Pro Tax Tips for Filing Strategic Objections
- Preserve Your Rights:
Filing a Notice of Objection ensures your ability to dispute an assessment and halts CRA collection actions during the dispute process. - Consult an Accountant:
Engaging an experienced accountant ensures that your objection is filed correctly and strategically. They can help you navigate procedural rules, deadlines, and evidence requirements. - Consider Timing:
If you need time to evaluate a deduction or credit, filing an objection can give you that flexibility while maintaining compliance.
Frequently Asked Questions (FAQ)
Can I Object to a Tax Assessment Based on My Own Return?
Yes. Subsection 165(1) of the Income Tax Act allows you to object to any tax assessment, including one based on your own filed return.
Why Would I Object to My Own Tax Return?
You may want to correct an omission, make a strategic claim, or gain time to assess eligibility for a deduction or credit. Objecting also prevents CRA collections during the dispute.
This article is written for educational purposes.
Should you have any inquiries, please do not hesitate to contact us at (905) 836-8755, via email at info@taxpartners.ca, or by visiting our website at www.taxpartners.ca.
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