CRA OBJECTIONS AND APPEALS

Transcription

1 CRA OBJECTIONS AND APPEALS

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3 Preview: CRA Investigative Powers CRA Objections and Appeals CRA Collection Powers Substantive Discussions: Payment Plans Separation in Tax vs. Separation in Family Law

4 CRA INVESTIGATIVE POWERS Types of Investigations CIVIL AUDITS (ITA 231.1) Questionnaires (ITA 231.2) Phone Calls House Visits (ITA 231.1(2)) Spot Audit (Business) - (ITA 231.1) BE AWARE: Questions and Payment Plans

5 CRA INVESTIGATIVE POWERS CRIMINAL INVESTIGATIONS Search and Seizure (ITA 231.3) They can't collect legal taxes from illegal money. AL CAPONE, attributed, Capone Limits on Investigative Powers Civil Investigations broader powers than criminal (R v Jarvis, [2002] 3 S.C.R. 757) Charter

6 CRA: Objections and Appeals Administrative Appeals Assessment Re-assessment Notice of Objection Review with CRA officer (9-12 months) Notice of Confirmation Judicial Appeals Notice of Appeal (informal vs. general procedures) Reply Hearing

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8 CRA Deadlines Notice of Assessment Issued between 8 to 12 weeks of filing your return. Triggers the three to six year limitation period for reassessments

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10 CRA Deadlines Notice of Reassessment May reassess anytime misrepresentation due to neglect, carelessness, wilful default, or fraud. Generally 3 years limitations. Within 90 day after MAILING notice of Reassessment must object.

11 CRA Deadlines Notice of Confirmation / Decision Letter outlining decision from Administrative process and reasons. Must Appeal to Tax Court within 90 days of the date of the Notice of Decision, or 180 days of mailing the Notice of Objection (where no Notice of Decision).

12 CRA Deadlines Notice of Appeal Judicial Proceeding at the Tax Court of Canada Informal Proceedings $25,000.00, excluding interest Relaxed rules of evidence General Proceedings $25, and $50, choice to limit the amount $50, Taxpayer may be self-represented Most things can be filed online Next Steps

13 CRA Deadlines Reply Prepared by the CRA Pleading Should be examined carefully

14 Missed Deadlines? Notice of Objection Application to Extend time to File Notice of Objection: (ITA 166.1) Made within 1 year of the expiry to file objection Provide explanation Demonstrate that was unable to act or to instruct another to act Had a bona fide intention to object to the assessment It would be just and equitable to grant application The application was made as soon as circumstance permitted

15 Missed Deadlines? Notice of Appeal Application to Extend time to File Notice of Appeal (ITA 167 (1) and (5)) Ultimate Deadline Same as objection There are reasonable grounds for the Appeal Client Best Practices Get important dates: Call CRA Ask for copies

16 Collection Powers The CRA can initiate collection: Immediately, if reasonable grounds that collection may be in jeopardy (IC98-1RA) 90 days after mailing the Notice of Assessment of Re-assessment (exceptions where it may begin earlier may apply see. (IC98-1RA). The CRA may collect by: Garnish wages or other income sources. (ITA 224) Seize and sell assets. (ITA 225) Place liens on property. (ITA 224) Freeze bank accounts. (ITA 224.3) Refuse to issue tax refunds and credits. Void certain property transfers (non-arms length)

17 Collection Powers Limits on Collection Powers: Duty of fairness (Burkes v MNR, 2011 FC 166) Decisions that impact how Applicant organizes its financial affairs Judicial Review Standard of Review Reasonableness Taxpayer Bill of Rights 5. You have the right to be treated professionally, courteously, and fairly 8. You have the right to have the law applied consistently

18 Collection Powers When does Collection Stop? When all the debt is paid. What if the person has no ability to pay? Talk to CRA Judicial Review

19 QUESTIONS What did the Tax Lawyer do to liven up the office party? He didn t show up

20 Substantive Discussion: PAYMENT PLANS Authority No-statutory authority FCA Minister of National Revenue has the discretion to make suitable collection arrangements (Optical Recordin Corp v Canada, 41 FTR 40 at para 27) Application Collection Officers 6 months to 1 year Statement of income and expenses Arrangements over one years Decision Duty of fairness Subject to Judicial Review Reasons for the decision are required

21 Payment Plans: Are they right for you? Considerations Interest Interest Interest Interest continues to Accrue Interest usually added to last payment Interest rate: 5%

22 Payment Plans: Procedure Initial Contact Discussion with collection officer about potential plan Potential for implementation of interim payment plan If necessary, provide financial disclosure Formal payment proposal by client Formal acceptance by CRA

23 Payment Plans: Best Practices Contact the collections officer directly Do not overcommit your client Follow interim plans Build trust and accountability

24 Substantive Discussion: Separation for Tax Purposes Child Tax Benefit is a tax-free monthly payment made to eligible families for children under the age of 18 After the 90 day mandatory separation period, the CRA will process a separated taxpayer s application for the Child Tax Benefit Child Tax Benefit is paid retroactively to the date of separation Marital Status Change form is required Separated spouse who applies and is an eligible individual will be entitled to claim the Child Tax Benefit Shared custody entitles both parties to the 50% of the total claimed Benefit

25 Separation for Tax Purposes In tax law separation of spouses or common-law partners must last for at least 90 days and requires certain proof No express definition in the Income Tax Act, but defines cohabiting spouse During the 90 day period, separated spouses or common-law partners must be living separate and apart (subject to certain exceptions) Onus is on the separated taxpayers to prove separation, if the CRA assumes they aren t; onus then shifts to the CRA to prove its assumptions Evidence: court orders listing separate addresses for taxpayers, bills, mortgage papers, lease agreements, licenses, third party letters or questionnaires, etc.

26 Sharing a Home Living Separate and Apart under the same roof (Sadrudin v R, 2009 TCC 82). spouses must occupy separate bedrooms, there must be an absence of sexual relations, there must be little or no communication between spouses, the wife must not perform domestic services for the husband they must eat meals separately, and they must not engage in social activities together.

27 Third Party Letters or Questionnaires Alternate form of proof where there is no other proof of separate residence and living separately Documentation might be requested to prove change in marital status Writers: employers, social workers, insurance companies, bank managers or officers, doctors, lawyers, clergy, etc.

28 Types of Evidence before the CRA Source documents are the best evidence Affidavits are very weak evidence

29 About CTS Who we are Who we service Where we service

30 Questions and Thank You