What is a Notice of Objection?
A Notice of Objection is the initiating document to an appeal process that a taxpayer can follow to dispute a tax assessment including a Notice of Assessment, Notice of Reassessment, Notice of Additional Assessment, Notice of Determination, or Notice of Redetermination (e.g. of losses) (“Notice”).
There are various types of objections. Once a Notice of Objection is filed the dispute will be handled by a Canada Revenue Agency (CRA) Appeals Officer (following a CRA audit, for example). If the Notice of Objection is unsuccessful the next step is an appeal to the Tax Court of Canada. There is a procedure whereby a taxpayer can skip the Notice of Objection process and move the dispute to the Tax Court of Canada.
The various types of objections and how to file can be found here. Most objections can be filed through the respective CRA online account by filing a formal dispute.
This article focuses on the Income Tax and GST/HST objection. Information about a CPP/EI objection/appeal can be found here. The processes are very similar and in general if the tax assessment you wish to dispute (object to) is accessible through the online CRA account there is an option to file a formal dispute.
How Long do you have to File an Objection?
Most importantly, a taxpayer has 90 days from the date on the Notice issued by the CRA to file a Notice of Objection. If the 90-day deadline is missed a taxpayer can file an extension request with the objection. However, it must be filed within one year of missing the initial 90-day filing period. If the statutory deadline to object to a Notice is missed, under certain circumstances, there are methods to attempt to “restart” the clock and meet the deadline. An experienced Tax Lawyer should be able to advise you accordingly.
How do you File a Notice of Objection? Mail, Fax or File a Formal Dispute through the Online CRA Account
How to file a Notice of Objection? The Notice of Objection can be filed online through CRA’s My Account, or My Business Account services or by mail or fax. An authorized representative, such as an accountant or a Tax Lawyer, can prepare and file the objection for you.
Once a Notice of Objection is filed it is eventually assigned to a CRA Appeals Officer. At that time the taxpayer is provided the opportunity to debate the correctness of the respective tax assessment.
CRA publishes processing times for income tax and GST/HST objections. Expect a wait for an Appeals Officer to be assigned.
What should you Include in your Objection?
It is important that a Notice of Objection contain as much relevant information as necessary. This includes why CRA’s tax assessment is incorrect, as well as factual and legal arguments to support your position.
Some representatives may choose to only file CRA’s Notice of Objection Form T400A or GST159, merely containing a couple of lines noting their disagreement. This is careless. For instance, if CRA mistakenly confirms the Notice, and therefore the opportunity to file submissions to support the T400A is missed, a taxpayer is left appealing to the Tax Court of Canada without sufficient pleadings at the Notice of Objection stage. Accordingly, the CRA’s lawyers from the Department of Justice may argue that a missing issue was not brought up during the objection therefore it cannot be appealed to the Tax Court.
Notice of Objection - Application for Extension of Time
A Notice of Objection is initially due within 90 days of the date of the Notice. However, a taxpayer can request an extension to file an objection within 1 year and 90 days of the date of the Notice.
For example, pursuant to subsection 166.1(7) of the Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)), a taxpayer can request an extension to file an income tax objection. According to the Income Tax Act, an extension will not be granted unless:
- It has been less than one year from the date of the expiry of the 90-day period within which to file a Notice of Objection;
- The taxpayer demonstrates a bona fide intention to object;
- The delay was caused by factors outside of the taxpayer’s control;
- It would be just and equitable to grant the extension; and
- The application was made as soon as the circumstances permitted.
Notice of Objection Standards for Large Corporations
For Large Corporations,* the law mandates what must be included in the Notice of Objection. For example, according to subsection 165(1.11) of the Income Tax Act (considered, for reference, by the Federal Court of Appeal in Devon Canada Corporation v. Canada, 2015 FCA 214 (CanLII)):
Where a corporation that was a large corporation in a taxation year (within the meaning assigned by subsection 225.1(8)) objects to an assessment under this Part for the year, the notice of objection shall
(a) reasonably describe each issue to be decided;
(b) specify in respect of each issue, the relief sought, expressed as the amount of a change in a balance (within the meaning assigned by subsection 152(4.4)) or a balance of undeducted outlays, expenses or other amounts of the corporation; and
(c) provide facts and reasons relied on by the corporation in respect of each issue.
It is recommended that all Notices of Objection meet the large corporation drafting standard.
*A corporation is a large corporation if the total taxable capital employed in Canada at the end of the tax year by the corporation and its related corporations is over $10 million.
Contact us for a free consultation. We will review your facts and outline the steps necessary to challenge CRA’s position.
SpenceDrake Tax Law
Sample Objection Letter to CRA
Link: CRA – Resolving Disputes
Notice of Objection Successful in Reversing a > $2,600,000 Audit Assessment
