The first thing to do is to file a Notice of Objection. A Notice of Objection is a kind of internal appeal that can be filed with the CRA to dispute the amount of tax levied in a Notice of Assessment or Reassessment.
If you disagree with the findings of the CRA to your Notice of Objection, or feel that your case may not be well suited to adjudication through the CRA, you can file an appeal to the Tax Court to continue contesting it.
The Tax Court of Canada is a specialized court in Canada that has exclusive jurisdiction over the correctness of federal tax assessment. The Tax Court is the proper venue for addressing most decisions of the CRA that taxpayers care to contest.
The Tax Court of Canada has the jurisdiction to hear a wide variety of appeals under several statutes such as the Excise Tax Act, the Employment Insurance Act, the Excise Act and the Customs Act. For most Canadians, the jurisdiction that is most relevant is the Tax Court’s jurisdiction to hear tax appeals arising from disputes with the Canadian tax department under the Income Tax Act.
The Tax Court has only three powers granted to it with respect to appeals of assessments and reassessments:
- The Tax Court of Canada judge may confirm the assessment or reassessment issued by the CRA;
- The Canada Tax Court judge can vacate the assessment, which means that the taxpayer reverts to the prior assessment;
- The Tax judge may also direct the Minister to reassess the taxpayer in accordance with his or her instructions, based on findings from trial or through a settlement offer.
Unfortunately, it does not have jurisdiction to direct the CRA to waive interest or cancel penalties otherwise than by finding them to be inapplicable at law. It cannot direct that assessments be cancelled or adjusted on compassionate or “equitable” grounds”.
A Notice of Appeal to the Tax Court of Canada must be filed within 90 days from the date of a notice of reassessment or notice of confirmation issues following a notice of objection. You can also appeal directly after an objection has been filed.
If you miss the 90-day deadline, there are mechanisms to file an Application for an Extension of Time to allow an additional 12 months to file the Tax Court Appeal. In order to be successful with the request for an extension of time you must be able to demonstrate the following:
- That within the appeal period:
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- You could not appeal or have someone else appeal for your; or
- You intended to appeal;
- That it would be fair to grant your application;
- That you applied as soon as you could; and
- That you have reasonable grounds for appealing.
The Court and Department of Justice are typically willing to grant some flexibility to taxpayers hoping to appeal a tax assessment who are within the additional one-year, although there is not much that can be done after that point.
