Within 90 days of any assessment or reassessment, you can appeal any corporate or personal tax or HST assessment or reassessment by the CRA internally to the Appeals Division. Once you appeal your tax and HST assessments or reassessments, no collection action can be taken on the personal tax balance as it is deemed to be a “disputed amount” but the CRA can continue collection efforts on the HST amounts even if an appeal is filed related to the HST balance. Use the Form T400A “Notice of Objection” stating facts and reasons for the tax appeal and GST159 to appeal HST. You can then appeal from the CRA Appeals Division within 90 days of the Notice of Confirmation to the Federal Tax Court. We have lawyers who are associated with our firm we can refer you to for this service.
If you keep good records, you are ready for an audit. The CRA can only reassess tax returns up to 3 years from the date of the original assessment. They can re-open returns more than 3 years after the date of an assessment if there is proof of “carelessness, negligence or fraud” in the more recent returns being reviewed.
Retain and authorize a professional agent to act on your behalf on a CRA audit. The CRA can audit a return only up to 3 years from the date of an assessment unless you sign a document waiving the 3-year limitation. NEVER sign that document unless you obtain professional advice to do so. Lacking a waiver, the CRA can go beyond the 3 years only in cases of non-declaration of income, falsified expenses or of "misrepresentation" which may include carelessness. You need not and should not talk to a CRA auditor. You are allowed to be represented exclusively by your authorized agent. If you chat with an auditor, we guarantee that statements about driving habits, hobbies, business practices, etc. will commonly be interpreted prejudicially to you.
PENALTIES ON AUDITS
CRA auditors will routinely try to scare taxpayers by threatening to levy 50% penalties under s. 163(2) of the ITA on the tax related to disallowed expenses or what they clumsily deem to be undeclared income. That section is entitled “False Statements or Omissions”. The CRA auditors often do not realize that the courts have set a very high threshold for the CRA to meet in levying 50% penalties under s. 163 (2).
We have extensive experience in appropriately preparing your bookkeeping and records for audit review. We are associated with tax lawyers who are experts on the law in audit tactics, methods and penalties. If you have received an audit letter, a notice of reassessment or a phone call from an auditor at CRA, call us at 416-493-0444 or e-mail our Audit and Appeal Department at firstname.lastname@example.org.