After a tax audit, you may receive new assessments from the tax authorities, and often the auditors’ findings will differ from what you had in your initial returns.
However, you may be unaware of the remedies you can use to challenge an assessment you believe to be wrong. The Canadian tax system recognizes your rights through a two-step process:
- An objection, which is an administrative remedy; and
- A judicial remedy, if the objection is rejected.
This article takes a look at the objection process. Judicial remedies will be discussed in a future issue.
Objections: An essential remedy
Whether you’ve spotted a calculation error, disagree with an interpretation, or feel a document has been misunderstood, filing an objection is the first step in asserting your rights.
To use this process effectively, you need to understand the steps involved, the deadlines to be met and how to deal with the tax authorities.
Timing considerations and forms
Taxpayers typically have 90 days after receiving their assessment to file a notice of objection.
As such, it is important to quickly analyze the assessment, consult a tax specialist if necessary, and prepare your objection. The Canada Revenue Agency and Revenu Québec provide taxpayers with specific forms for this purpose.
Although these forms include a section for arguments, it is strongly recommended that you attach a detailed brief. It should be noted that, in some cases, the arguments set out in your objection cannot be modified at a later date.
Reviewing the file
Once the objection has been filed, the case is subject to administrative review. In principle, the disputed amounts do not need to be paid until a final decision has been made. There are some exceptions, however, and interest continues to accrue throughout the process.
An objection officer is assigned to analyze the case. They may request additional documentation and, since the burden of proof lies largely with the taxpayer, it is crucial to provide all the relevant information.
Processing times and outcome
Depending on the complexity of the case and the tax authorities’ workload, an objection can take several months or even years to review.
If the objection is accepted, the assessment is adjusted or cancelled. If it is rejected, the taxpayer can appeal to the courts (in particular the Tax Court of Canada or the Court of Québec for a judicial remedy.
Challenging a tax assessment requires rigour and strategy. Miller Thomson’s Tax Law team regularly assists individuals and businesses in preparing strong objections and defending their rights before the tax authorities. Feel free to contact a member of our tax group to receive support that is tailored to your particular situation.
