Appealing a CRA audit decision

Region: Ontario Answer # 201

If you disagree with a notice of assessment or reassessment of your tax return, received after filing your income tax, or after an audit by Canada Revenue Agency (CRA), before appealing the decision with the Tax Court of Canada you must first file an objection with CRA.  In simple cases, you may be able to file an objection on your own, although you may still want to consult a lawyer for advice. If you file an objection and you disagree with the decision made by CRA and want to appeal, you should consult a lawyer.

If you disagree with a notice of assessment or reassessment, you can first contact the General Inquiries line of CRA to discuss the matter with a representative.

File an Objection with CRA

If the matter is not resolved, you can formally object to the assessment or reassessment. You have a number of options for how to file an objection:

  • Online submission: if you have an individual account or a business account registered online with CRA, select the option to Register my Formal Dispute;
  • Through your representative: using the Represent a Client option online and selecting the option to Register my Formal Dispute; or
  • By mail, using Form T400AObjection – Income Tax Act available from Canada Revenue Agency or by writing a letter: write to the Chief of Appeals at the Appeals Intake Centre (in either Surrey, BC or Sudbury, ON).

In all cases, you have to explain why you object to CRA’s assessment or reassessment and include all relevant facts and documents.

Objections must be received within 90 days from the date the Notice of Assessment was written. However, individual taxpayers may be able to file an objection within one year of filing a return even if the 90 day period has passed. You should call CRA to determine your deadline for objecting.

Once your objection has been received, an independent review will take place and you will usually be able to present information about your objection to an Appeals Officer who will make a decision. CRA will send you its decision by way of a notice of assessment or a notice of confirmation. If you do not agree with CRA’s decision, you can make an appeal to the Tax Court of Canada.

Appealing to the Tax Court of Canada

Your appeal to the Tax Court of Canada must be made within 90 days from the date of the notice of reassessment or notice of confirmation.

There are two ways to make an appeal to the Tax Court: an Informal Procedure and a General Procedure. The type of procedure you use will depend on the amount of money in dispute.

1. Informal Procedure

If you choose the Informal Procedure, you do not require a lawyer, although some people are represented by other professionals such as accountants. This method is faster and less formal than the General Procedure.

You qualify to use the Informal Procedure if:

  • the disputed amount of federal income tax and penalties is not more than $25,000 per assessment; or
  • the disputed amount for GST appeals is not more than $50,000 per determination.

It is important to note, however, that if the amount in question is close to the Informal Procedure limits, you may still use this procedure by simply restricting your claim to those limits. If you do this, you will have to state this fact in your appeal. There is no filing fee to file an appeal under the Informal Procedure. Also, you do not need to file a specified form, your notice of appeal can be a written letter that is delivered or mailed to a Tax Court of Canada office. However, you can also submit your notice of appeal electronically using the online “Notice of Appeal – Informal Procedure” form.  Your notice of appeal should include your contact information, the fact that you are requesting your appeal to be heard under the Informal Procedure, the reasons for your appeal, and the relevant facts.

Appeals from a decision made under the Informal Procedure can, under certain circumstances, be made to the Federal Court of Appeal. Grounds for such appeals, however, are restricted by section 27 of the Federal Courts Act.

2. General Procedure

The General Procedure is a formal trial before a judge. The Tax Court of Canada will hear your appeal under the General Procedure regardless of the disputed amount, except when you qualify for and choose to use the Informal Procedure.

The General Procedure follows formal court rules, and covers matters such as:

  • filing of an appeal;
  • rules of evidence;
  • examinations for discovery; and
  • production of documents.

There is a filing fee when appealing using the General Procedure, which is based on the amount of tax or penalty being disputed. The fee ranges from $250 to $550. Also, there are formal documents that must be filled out to make an appeal through the General Procedure. You can submit your appeal using the Tax Court electronic filing system, or in person or by mail, but in all cases, it must follow the format set out in the “Notice of Appeal – General Procedure” form.

Most people who go through the General Procedure are represented by a tax lawyer. Decisions made in a General Procedure may be appealed to the Federal Court of Appeal and a further appeal can be made to the Supreme Court of Canada. You must file your appeal within 30 days of the Tax Court’s decision (the months of July and August are not included when calculating the 30 day time-limit).

Visit the Tax Court of Canada website for more information.

How long should you keep your tax records?

In most cases, CRA can reassess (review) your tax returns for the previous three years and audit them for the previous four years. However, CRA can go further back and there is no time limit as long as there is suspected fraud or misrepresentation on the part of the tax payer. Generally, you must keep all required records and supporting documents for six years from the end of the last tax year they relate to.

More information on disputing and appealing a CRA income tax decision can be found from the Canada Revenue Agency.

For legal advice and assistance with tax planning, a CRA tax dispute, or other tax issues, contact Tax Chambers LLP

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