Tax Rant Alert: So for those of you who have not figured it out by now, I am a Canadian tax lawyer. Let me explain how your rights work and do not work with regard to dealing with the Canada Revenue Agency. Please feel free to forward this to people who have complained about their interactions with the CRA. There will likely be more issues and disputes following all of the COVID-19 distributions when the CRA audits and “desk audits” people.
The CRA has the right to issue a notice of reassessment at any time for any tax year if they accuse you of “fraud, willful blindness, carelessness or neglect” in the filing a misstatement with regard to any return or application to the CRA. So the CRA can open up pretty much any year, accuse you of wrongdoing, and hit you with a 50% penalty for said wrongdoing, at will. At that point the burden of proof shifts to you, the taxpayer. That is right, in tax, unlike the entire cannon of western law, you are literally guilty until proven innocent.
So once the CRA assesses you or reassesses you for the year, you have 90 days to file a notice of objection in writing with the CRA to dispute whatever the CRA said you did wrong or says you owe. If you miss that deadline, you have 1 year from the end of the 90 days to ask the CRA for permission to object to whatever they said you did wrong.
If you call up the CRA 20 times during that period and “ask to speak to someone” and they tell you they will look into it, and nothing happens (which is what will likely happen, not always, but likely) and the one year runs out…. you lose, and all your rights to dispute what they say you owe (tax, penalties and interest thereon) are gone. You have to pay them whatever they say you owe regardless of the facts or law or go bankrupt. There are no other options. Calling up the CRA to complain or discuss or deal with the issue means NOTHING.
At least every couple months or so I run into a potential client who has let their rights run out by trying to deal with the CRA like a reasonable person, presuming, as a reasonable person would, that all you have to do is just explain the situation to someone reasonable, and the matter can be resolved. Sorry, that is not how it works. And I have to turn them over to the bankruptcy people, regardless of whether they actually legally or factually owe what the CRA says they owe. Every once in a while I can re-open a dead tax year, but the CRA usually is not stupid and will not let me “rope-a-dope” them into it.
So I did a presentation to this on Katie’s grade 9 class a couple years ago, I made them repeat back to me as loud as they could: “How long do you have to object to a notice of assessment?” “90 days!”, “How long?”; “90 days!!”.
So just remember, if the CRA comes around in a couple of years and says your CEWS or your CERB or CEBA or whatever is wrong, you have 90 days to preserve your rights by filing a notice of objection. And that is my rant for today.