CRA Pre-assessment Review, Tax Audit & Appeal Process Support
Once you file your income tax
return, the CRA will enter the information into their computer system. As
part of this process, after you have filed your return but before the CRA
issues a Notice of Assessment to you, your return might be selected for a
pre-assessment review. Generally the pre-assessment review process
involves the CRA requesting support documentation from you to validate specific
deductions or credits that you may have claimed, such as copies of your
charitable donation receipts or banking and investment statements to support
interest deductibility charges. As a pre-assessment review typically only
involves you providing to the CRA support documentation to validate specific
amounts you claimed, your TDMP Approved Accountant is generally in a much
better position to assist you as they know the documentation upon which they
relied to prepare your return.
Audit
& Reassessment
Receiving a Notice of
Assessment from the CRA does not mean the end of your tax assessment. The
Income Tax Act gives the CRA broad powers to conduct a subsequent and much more
detailed review or audit of your income tax return. If you have been
selected for an audit, the CRA will generally send you a letter informing you
that they intend to audit your tax return, telling you when they would like to
start the audit, and instructing you on the information and documentation that
you are to make available to them for their inspection. Once they have
completed their audit, the CRA will send you one of two possible forms of
letters. The first and preferred option is a letter informing you they have
completed their audit and that they have no changes or adjustments. The second,
and much more common, is a Proposal to Reassess Letter. This letter will inform
you that they are in the process of completing their audit, that they are
proposing to reassess you, and providing details of the changes and adjustments
that they propose to make. The letter will then inform you that you have 30
days from the date of the letter to provide further information or submissions
regarding the CRA’s proposed reassessment. Once they have reviewed any further
information you have provided to them, the CRA will then issue to you a Notice
of Reassessment that will set out the additional taxes they believe you owe,
along with any interest and penalties that they have assessed.
Filing A
Notice of Objection
Upon receipt of a Notice of Reassessment, you have 90 days from
the date of mailing of the Notice to file with the CRA a formal Notice of
Objection to the reassessment. Your Notice of Objection will then be
considered by the Appeals Division of the CRA. The CRA’s Appeals Division
may:
- vacate
the CRA auditor’s reassessment
- confirm the auditor’s reassessment of your tax return, or
- make its own adjustments and issue to you a new Notice of
Reassessment. In any event, they will issue to you a Notice of Decision
outlining the reasons that they have chosen to vacate, confirm, or vary the CRA
auditor’s reassessment of your return.
Appealing
to The Tax Court of Canada
Once you receive a Notice of
Decision from CRA Appeals in respect of your Notice of Objection, you have the
right to appeal that decision to the Tax Court of Canada. However, in
order to do so, you must file a Notice of Appeal with the Tax Court of Canada
(and pay the prescribed filing fee) within 90 days of the date of mailing of
the CRA’s Notice of Decision.
TDMP
Premium Tax Filing - Subscriber Responsibilities
To successfully deal with any
tax audit, objection, or appeal, it is important to keep in mind that all that
your accountant, financial planner, TDMP and lawyer can do is assist, advise,
and represent you. The taxes, interest, and penalties that are ultimately
assessed remain your responsibility and therefore, it is essential that you
remain actively involved and participate in the audit, objection, and appeal
process. This includes ensuring that any correspondence you receive from the
CRA is dealt with in a timely manner and that you continue at all times to
cooperate with your accountant and with any other professionals who are
advising and assisting you.
It is also important to
realize that there are certain strict deadlines and limitation periods
contained in Canadian tax legislation and that if they are missed, you may lose
your appeal rights.
45 Days To
Send Certain Documents Received From CRA
Canada’s Income Tax Act provides taxpayers 90 days to appeal:
(a) a tax
reassessment, and
(b) a decision made by the Appeals Division of the CRA.
The 90-day limitation period
starts on Date of Mailing of the Notice of Reassessment or Notice of
Decision. In order for TDMP to have sufficient time to review the Notice,
and if appropriate, to assist you in objecting to or appealing it, we must
receive a copy of the Notice of Reassessment or Notice of Decision from you
within 45 days of its Date of Mailing.
Co-operation
It is essential that you cooperate with your accountant and with
TDMP to help us in helping you. Cooperation includes:
- Responding to telephone calls and other correspondence within a
reasonable period of time,
- Providing and sending documentation within a reasonable period
of time when requested to do so,
- Keeping us informed of any correspondence or inquiries that you
might receive from the CRA or other tax authorities.
Excluded Issues
Examples of the types of assessments,
reassessments, and actions that are excluded from the scope of Service provided
under the TDMP Premium Tax Filing Plan are as follows.
Tax
Evasion & Other Offences
Investigations undertaken by
the Special Investigations Unit of the Canada Revenue Agency or by any other
tax authority, and any charges laid for allegedly committing any criminal or
quasi-criminal offence under any taxing statute (i.e. tax evasion
investigations or charges) or any other law, do not fall within the scope of
the Hours of Service provided under the Plan.
Tax
Shelters
Any assessment or
reassessment of taxes owing that arises because you purchased or participated
in a tax shelter is excluded under the TDMP Premium Tax Filing Plan.
However, as a general rule, the promoters of such tax shelters create a fund in
order to assist their clients in the event of a tax audit or reassessment of
the tax shelter. If you are audited, assessed, or reassessed as a
consequence of your participation or involvement in a tax shelter, you should
contact the promoter of the program to find out what assistance they are able
to provide to you.
General
Anti-Avoidance Rule (GAAR) Assessments
If you undertook or
participated in any transaction or series of transactions for the primary
purpose of reducing the income tax payable by you and the planning that went
into the transactions or series constitute abusive tax planning, the Canada
Revenue Agency or any other tax authority may reassess you on the basis of the
General Anti-Avoidance Rule (a “GAAR Assessment”). GAAR Assessments are
excluded from the TDMP Premium Tax Filing Plan.
Corporate
Taxes
The TDMP Premium Tax Filing is
designed to assist and advise individual Canadians in respect of audits and
reassessments by the Canada Revenue Agency of normal income tax payable under
Part I of the Income Tax Act (Canada) and the equivalent provincial income tax
payable under equivalent provincial income tax laws that are administered by
the Canada Revenue Agency. Corporations and other entities are not
entitled to Service under the TDMP Premium Tax Filing Plan.
Audit
& Assessments of Other Taxes
The Canadian Tax Audit
Protection Plan is designed to provide legal assistance to individual Canadians
in respect of audits and reassessments by the Canada Revenue Agency of normal
income tax payable under Part I of the Income Tax Act (Canada) and the
equivalent provincial income tax payable under equivalent provincial income tax
laws that are administered by the Canada Revenue Agency. Audits,
assessments, and reassessments of other forms of taxes (i.e. payroll source
deductions, CPP/EI, GST/HST, Part XIII Withholding Taxes, etc.), or of taxes
administered by tax authorities other than the CRA (i.e. provincial sales
taxes, Quebec personal income taxes, etc.) are excluded from the Service
provided by the TDMP Premium Tax Filing Plan.
Third-Party
Assessments
The Income Tax Act (Canada)
and other taxing statutes contain provisions that allow the CRA to assess a
person for the tax liability of others. For example:
1. If you
are a director of a corporation and the corporation fails to remit payroll
source deductions or CPP or EI Premiums, the CRA can assess the directors of
the corporation for these amounts;
2. If a
family member or someone with whom you are not dealing at arm’s length
transfers money or property to you at a time that the other person owes taxes
to the CRA, section 160 of the Income Tax Act (Canada) allows the CRA to assess
you for the taxes owing by the other person to the maximum value of the money
or property they gave you. Such third-party assessments are beyond the
scope of the Services provided under the TDMP
Premium Tax Filing Plan.
