Taxes: An Imperfect Process
If you’re a last minute tax crammer or flustered by doing your own taxes, sometimes accidents do happen. Slips get lost in the junk mail by the door or receipts from expenses get counted twice.
Errors surrounding taxes are a very human thing – unless you’re talking about the Canada Revenue Agency.
“I’d say rarely does the CRA make a mistake,” says Jamie Golombek, CIBC’s managing director of tax and estate planning. “They do make mistakes but it’s pretty rare that there’s going to be a computational mathematical mistake.”
But what if your unwavering faith in the CRA’s ability to provide an honest assessment of your taxes is put to the test?
Here are the steps you take if you feel like the CRA has made a mistake:
Give the CRA a Ring
After filing your taxes the CRA will send you a notice of assessment. If all is copacetic, you can carry on your merry taxpaying way. However, if you feel their reassessment is contrary to what your calculations show (or it doesn’t show up at all) you need to contact the CRA.
“It is possible they don’t see one of your slips,” admits Golombek. “I think these mistakes are easily correctable over the phone.”
Agree to Disagree
Sometimes denied expenses or tax slips that were actually in a spouse’s name can affect your tax return.
“The best thing I find is to try to resolve it informally either by telephone or schedule a meeting with someone,” he adds. “But if that is not the case or they say something and you disagree, like they disallow your moving expenses that you think are valid, then you have legal rights.”
Taking the Legal
At this stage it might be wise to seek out professional tax counsel.
“My general advice before you get involved in all this is to sit down with a tax lawyer for one hour of your time and let them look at the situation,” says Golombek. “Maybe a properly worded letter from the tax professional with the right citations and cases could help you avoid going to court.”
Once you’ve received your assessment you have 90 days to fill out a T400A notice of objection .
“You’re going to get a response from the CRA – either a confirmation that they’re not changing anything or a reason why they disagree with you,” says Golombek.
Once you get the response you have a further 90 days from the day you receive their response to take your notice of objection appeal to the tax court of Canada. The whole process is explained very well here .
Taking a Tax Dispute to Court
In court you can represent yourself or hire a tax lawyer.
The challenge with going against the CRA, says Golombek, is that you’re facing the law itself as opposed to an interpretation of the law.
“The tax act is black and white,” he says.
Ultimately, if you’re still unhappy with the results in tax court, you can appeal and have your case heard by three independent judges. The next stop is the Supreme Court of Canada, which Golombek says only sees three to four tax cases a year.
“I think a lot of people can avoid a lot of wasted time, inconvenience and frustration if they just get some professional advice up front,” he says. “But you always have a right to your day in court.”