Deadline to Object
Deadline for Objecting to an Assessment/Reassessment
A taxpayer has the right to object to a Canada Revenue Agency assessment of tax. Objecting is the first formal step a taxpayer takes in disputing the assessment. The right to object must be exercised within 90 days of the date the Notice of Assessment or Reassessment was mailed to the taxpayer. The right to object is exercised by filing a Notice of Objection with the Chief of Appeals of the CRA.
The 90-day deadline to prepare a Notice of Objection requires prompt action by the taxpayer. The taxpayer must gather its resources quickly in order to prepare a persuasive and comprehensive objection.
Extension of Time to Object
If a taxpayer does not file a Notice of Objection within the 90-day deadline but wants to contest the assessment of tax, the taxpayer must file an application for an extension of time to object.
There are four requirements that must be met in order for a taxpayer to obtain an extension:
- the application for an extension of time must be made within one year after the 90-day period for objecting has expired;
- the taxpayer must demonstrate that it was unable to act within the 90-day period for objecting or had a bona fide intention to object within the 90-day period for objecting;
- the taxpayer must demonstrate that it is just and equitable to grant the application for an extension; and
- the taxpayer must demonstrate that the application for an extension was made as soon as practicable.
A persuasive and effective application to extend time to object specifically addresses each of these four requirements and includes an explanation of how each requirement is satisfied.
If the CRA denies the extension the taxpayer can apply to the Tax Court of Canada. The Tax Court of Canada will make a decision with reference to the same four requirements. The deadline for applying to the Tax Court of Canada is 90 days after the CRA denies the application for an extension of time to object.
If more than one year and 90-days has elapsed since the date the assessment or reassessment was mailed to the taxpayer, the taxpayer does not have a right to object to the reassessment and no extension of time to object can be granted by the CRA or the Tax Court of Canada.
Typically, where a taxpayer has failed to file a Notice of Objection within the 90-day deadline and has also failed to file an application for an extension of time to object within one year of the expiration of that 90-day deadline, the taxpayer is out of luck. Typically in such circumstances, the reassessment stands and the taxpayer has lost its opportunity to dispute the assessment of tax. There have been some creative arguments advanced that have resulted in taxpayer success outside the one year and 90-day period. My next post will review two of these decisions.