Do you feel that once you’ve received THE envelope from CRA that it’s the end of the line and you need to pay what they have determined you owe? Well you don’t have to leave it at that, especially if you feel you have additional information with the relevant facts and documentation that could change their position. Here are the top most frequent 5 CRA (Re) Assessments tax liabilities that arise in my office:
1. Income Tax
3. Registered Savings Plans
5. Employment Insurance (EI)
You must first file a Notice of Objection in all situations. These come with their different procedures and forms.
1. Income Tax
This is not just personal income tax. This also covers personal GST/HST and the Canada Child Tax Benefit. You can file the Notice of Objection by using one of the 3 following options;
1) using My Account or My Business Account which is done on the CRA website
2) using Form T400A, Notice of Objection – Income Tax, or
3) writing to the Chief of Appeals at your tax service office or tax centre – you can determine which one yours is by the address indicated on your Notice of (Re) Assessment.
For business goods and services tax (GST) and the harmonized sales tax (HST) you would file a notice of objection using Form GST 159. This form is not applicable to Quebec.
3. Registered Savings Plan
I usually only see this problem if there has been an excess of RRSP contributions made. If that is your situation then the form you need to complete is a Form T1-OVP
This is probably one of the most complicated CRA forms I have ever had to work with. Be prepared to work with the source of your contribution. Whether your contributions were made through your employer, a financial planner or your bank, you may need their assistance. The amount of detail required can be overwhelming.
There are usually two situations which can cause this;
1) The designation of the charity is questionable or their registration is refused, revoked or not renewed.
2) There are taxes and penalties pertaining to the charity and its under notice of suspense.
What I see in my office is an “if it looks too good to be true…” scenario. I’ve had clients that have donated monies to athletic organizations, for school supplies and for medical supplies. A tax client can make a $500 donation and receive a $2,000 tax receipt. Each time those have been presented to me, I have; a) asked to see all paperwork and how this donation came about and b) warned them of a potential audit. Since they all believed in what they were told, I processed their tax returns with the donation receipts. In all cases they were audited, which lasted almost 2 years. And the donations were refused, which meant they had to refund the tax difference from the original filing, plus interest.
Here are the links if you need to file an appeal; a) through the Federal Court of Appeal or b) through the Tax Court of Canada . This is almost as challenging as filing an appeal for RRSP excess contributions.
5. Employment Insurance
On the CRA website, this is listed as Employment Insurance but it actually includes information for dispute resolution for Canada Pension Plan (CPP).
1) Like the Income Tax appeal, you can also do this on My Account and My Business Account on the CRA website.
2) For CPP and EI, use Form CPT100 to appeal a CPP/EI ruling.
3) For CPP and EI, use Form CPT101 to appeal CPP/EI ruling as it pertains to a payroll assessment
4) You can also write a letter to the Chief of Appeals. They are your local tax service office.
As you can probably tell, none of these are easy or quick to appeal. The response time from the CRA can be 6 weeks or 6 months before a decision is made. If you are not satisfied with the results of your appeal, you can go to a higher source in most cases. That information is included in the links above.
When you do get that letter requesting your valuable tax dollars, I suggest you pay it as soon as possible. Do not wait for the decision of an appeal. The amount of interest you could be charged over the period of decision time, could accumulate to a substantial amount. If your win your appeal the CRA will repay you, plus interest. The current rate of interest on your money sitting with the CRA is 3%.
As the CRA mentions on numerous websites, it could be a matter of misinterpretation of the facts or the law was applied incorrectly. What have you got to lose?
Share your stories with me. I love getting feedback. Here on this blog, you’ll get commentluv. This is a wonderful opportunity to leave a link back to your own blog when you leave a comment.
Until next time,