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Jim Maroney

:: Notice of Objection - how to fix errors on your personal income tax returns.

:: Maroney on Money for May 25, 2002

In my last article I reviewed various methods available to taxpayer’s to correct errors on their personal income tax returns. Sometimes though it just isn’t possible to achieve a satisfactory result and CCRA refuses to reassess your tax return according to your wishes. What then?

If CCRA has refused to process the requested adjustment to your tax return, you believe your Notice of Assessment or Reassessment is incorrect or if you disagree with CCRA’s interpretation of the law you can go to the next level and file a Notice of Objection.

Courtesy of the 1991 “Fairness Package” an Objection can be as simple as a letter informing CCRA that you object to your Assessment or Reassessment. If you choose to write a letter it is imperative that certain basic information be reflected in your Objection including your name and address, your Social Insurance Number and a telephone number where CCRA can reach you during the day. You will also need to indicate the date of your Notice of Assessment and the taxation year to which you are objecting. In fact, I suggest you simply include a copy of the relevant Assessment since it contains most of the pertinent information CCRA requires.

It is imperative that you clearly state in your letter that your written submission constitutes a Notice of Objection. This subject has actually been the focus of a number of court cases so you’d be well advised to be unequivocal in your letter leaving no opportunity for misunderstanding by CCRA.

Rather than provide an opportunity for oversight, I’d avoid writing a letter altogether and opt instead to use the optional form CCRA provides for filing an Objection. This form is known as a T400 Notice of Objection and can be obtained by calling CCRA or visiting their website and searching in the forms and publications section. By completing this form in its entirety you’ll be sure that nothing has been left out.

Regardless which approach you choose, you’ll need to provide the facts and reasons for your Objection. Think long and hard about what you write since your Objection could end up in court if the process takes you that far.

Lay out the facts in point form and be brief. State your reasons for objecting separate from the facts and, again, keep it short and to the point. If you’re a do-it-yourselfer I suggest adding a catch-all phrase like “other such reasons as counsel may advise” as your final reason. This should serve to keep the door open in the event you need to seek professional help and additional reasons are found to support your Objection.

Your Objection should be sent to the Chief of Appeals in a Tax Services Office or a Taxation Centre of CCRA. Objections can be hand delivered or sent by regular mail, although, because of the important nature of an Objection, I would highly recommend using registered mail so you can be sure the document arrived as intended.

The Date on your Notice of Assessment

In a previous article I noted that probably the most important bit of information contained on a Notice of Assessment is the date. The reason the date is so critical is that it comes into play in determining the deadline to filing an Objection. For individual taxpayers, the time limit for filing an Objection is the later of one year after the date of the subject tax return’s filing deadline and 90 days after the date on the Assessment. For example, if your 2001 personal income tax return was due on April 30, 2002 and the date on your 2001 Assessment is March 31, 2002 you have until April 30, 2003 to file an Objection. If, on the other hand, you file your 2001 tax return one year from now, the 90-day limit will apply and the date on your Assessment takes on increasing importance.

Filing an Objection will hold CCRA’s tax collectors at bay but it will not stop the interest clock from ticking. CCRA will continue to accrue interest at their prescribed rates - currently 6 per cent. If you’re unsuccessful in your Objection, you’ll have to buck up for all taxes owing plus any accrued interest. On the other hand, if you pay the amount due before filing your Objection and you are successful, CCRA will pay you interest on your money albeit at a rate that is 2 per cent lower than they were prepared to charge you.

After filing your Objection your file will be turned over to an Appeals Officer at CCRA. An Appeals Officer is an individual completely different from those involved in issuing the original Assessment. The idea here is that the Appeals Officer should bring a fresh pair of eyes to look at the issue(s).

Back in 1997 CCRA (technically Revenue Canada as it was then known) released a document known as the Appeals Renewal Initiative – Towards an Improved Resolution Process. As stated in this document, “the Appeals Branch… will instruct its officers to make all relevant documents available to taxpayers at the outset of the objection stage to help them better understand the Department's assessment”. Accordingly, you have a right to see documents related to the issue(s) in dispute. Your access should include reports prepared by the auditor to support CCRA’s Assessment; working papers prepared by an auditor that are relevant to the issue(s) in your dispute and records of discussions between an appeals officer and an auditor regarding your Assessment.

Eventually, after reviewing all of the facts, Appeals may decide to settle the issue(s) based on mutual agreement with you or confirm or vary the assessment. At that point, if you’re still not satisfied, it’s off to the Tax Court of Canada. Depending on the issues and amounts involved, most taxpayers don’t relish the court option preferring to settle the matter at the Appeals level.

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Free Tax Advice Article Submitted to Income Tax Canada.net exclusively by Jim Maroney
CA Canadian Chartered Accountant with Brown, Andrews & Maroney in Maple Ridge, BC, Canada

Official details about this and other topics on income taxes can be found in English & Francais at www.ccra-adrc.gc.ca
Canada Revenue Agency (CRA) / l'Agence du revenu du Canada (ARC) offers bilingual information on its website for
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