When the Canada Revenue Agency disagrees with the amount of tax you reported and believes that you owe more, you have a tax dispute. Tax disputes can relate to income tax or HST. They typically start with the CRA conducting an audit or review and then issuing a notice of reassessment.
Tax disputes usually involve filing an objection with the CRA and, if necessary, appealing to the Tax Court of Canada.
At HazloLaw – Business Lawyers, we have expertise in helping individuals and corporations successfully resolve their tax disputes, obtaining the best result possible, as efficiently as possible.
Services Offered by Our Tax Disputes Group
What Our Clients Say
When I came to Dean, the CRA had reassessed me $1.3 million. When Dean was finished, the CRA had dropped the reassessment entirely. Dean earned my trust and confidence from the beginning. He is a great communicator. He kept me abreast of developments and made himself available to respond to all of my questions. I was most impressed with his legal knowledge and acumen.
Dean Blachford is an exceptional tax litigator: smart, effective, kind and compassionate. He knows the law and he gets the job done. But most importantly, he cares about the people who come to him for help. I have nothing but praise for Dean for his efficient and prompt resolution of my issue.
What I respect about Dean is that he didn’t sugarcoat things for me. He told me that succeeding in my personal and corporate tax appeals would be difficult. Then he did the work necessary to get the results.
Dean is extremely dedicated and dependable. He was always someone I could rely on. In the end, he helped me get the outcome that I was looking for.
It was clear to me from the outset that Dean had a plan and that he was taking ownership of my appeal. He always seemed to be in control of the situation. He made me feel confident by telling me what the next step in the process would be and what to expect. He told me about the risks of pursuing various options and ultimately negotiated a settlement that I was comfortable with.
Dean was handed my complicated appeal as we were awaiting our court date. He spared no effort in endeavouring to master all of its details. After which he skillfully liaised with the assigned Justice solicitor, and, to my great astonishment, was able to convince her to quash all of the charges. I still don’t know if I am more astonished or thankful. Throughout what was a trying ordeal for me, Dean was unfailingly professional; a consummate communicator, and an insightful master of the tax law regime. I can’t thank him enough for his robust and polished efforts on my behalf.
A Notice of Reassessment (“NoR”) is very different from a Notice of Assessment (“NoA”).
When you file your tax return, the CRA will process your return and issue you a NoA, usually within two to eight weeks. The NoA typically confirms the amount of tax that you owe based on what you reported in your tax return.
But if the CRA later conducts an audit and concludes that they do not agree with your initial tax return (perhaps they believe you have unreported income or they deny your business expenses), they will issue you a NoR. The CRA can issue you a NoR years after they issued your NoA and they often add significant tax and penalties.
You have the right to object to the NoR (and taxpayers often succeed), but you have to file your objection before the time deadline. For more information, read here.
There is hope. In 2016 the Auditor General released a report in which it found that 65% of taxpayers are fully or partially successful in objecting to a Notice of Reassessment. This does not include the taxpayers who go on to succeed after filing an appeal to the Tax Court of Canada.
We often obtain significant reductions in reassessments on behalf of our clients. Sometimes, we convince the CRA to drop the reassessment entirely.
We achieve these positive results through determination and hard work. It will take commitment and effort on your part as well.
A typical tax dispute begins with the CRA conducting an audit. If the CRA does not agree with the amount of tax that you initially reported owing, they will issue you a Notice of Reassessment.
Once the CRA has issued the Notice of Reassessment (and before the time deadline), you can file a Notice of Objection. (We recommend you call us before doing so).
The CRA will assign your objection to an Appeals Officer, who is different from the auditor. You will have an opportunity to make submissions to the Appeals Officer to convince them that the auditor got it wrong.
If the Appeals Officer does not fix the auditor’s errors. You can file a Notice of Appeal with the Tax Court of Canada.
Our experience is that, ultimately, about 95% of Notices of Appeal settle before trial, but if necessary, you can have a judge of the Tax Court make an independent ruling on your appeal.
Canadian tax law imposes strict time deadlines on taxpayers who wish to dispute a Notice of Reassessment by the CRA. If you miss one of these deadlines, you lose all rights to dispute the reassessment, which may leave you with no choice but to pay the full amount.
The day on which the CRA issues you a Notice of Reassessment starts a 90-day time deadline for you to file a Notice of Objection. If you miss that deadline, you have another 365 days to submit an Application for an Extension of Time to File a Notice of Objection. If you miss that deadline, you lose your right to dispute the tax that the CRA has reassessed you.
If you object to CRA’s reassessment within the timeline but the CRA denies your objection, you have 90-days from the date of CRA’s rejection letter (“Notice of Confirmation”) to file a Notice of Appeal with the Tax Court of Canada. If you miss that deadline, you have another 365 days to file an Application for an Extension of Time to File a Notice of Appeal.
If you miss that deadline, you lose your right to further dispute the tax that the CRA reassessed you. Tax disputes are complicated and procedural errors can cost you your rights. We recommend you call is if you are involved in a dispute.
If you’ve clicked on this question, the answer is probably “now”. There’s no downside to making the call. Plus, one of the keys to succeeding in a tax dispute is developing, at the outset, a winning-argument and then sticking to that argument throughout the entirety of the dispute.
Often, the most damning evidence we have to overcome is a statement made by the taxpayer (and sometimes their accountant) during the audit or objection stage.
Even if you already have an accountant working on the file, it’s still wise to have a preliminary discussion with a lawyer who specializes in tax dispute resolution and litigation. Accountants have specific knowledge and expertise that are critical to succeeding in a tax dispute.
The best results often come when an accountant and a tax lawyer work together.
We understand that legal costs are always a concern. We will provide you a clear picture of the costs you can expect to incur to succeed in your dispute.
Reaching a settlement agreement with the CRA is often the most efficient and affordable means of resolving a tax dispute. And indeed, our experience is that about 95% of tax disputes settle before going to trial.
But negotiating a settlement in a tax dispute is very different from negotiating a settlement in normal litigation or in a typical business transaction. By law, the CRA can only agree to settlement agreements that are “principled”.
This means they can only agree to concede a particular element of a reassessment if they have been provided with an argument and supporting evidence that is legally compelling.
As a result, the CRA cannot agree to settle a dispute merely because the legal costs outweigh the amount in dispute. Likewise, they cannot agree to “split the difference” and we cannot simply “make them an offer.” Therefore, succeeding in a tax dispute requires detailed legal analysis and diligent gathering of evidence.
Understandably, this is very frustrating for individuals and corporations that find themselves in tax disputes.
In tax disputes, the burden of proof is on the taxpayer. This means, that it’s you that must prove that your position is correct. The CRA does not have to prove that their reassessment is correct. This entitles CRA employees to make assumptions and, in some instances, emboldens them to behave unreasonably.
The best antidote is to retain a professional who specializes in tax disputes to defend your rights and empower you to make informed decisions. Canada’s Taxpayer Bill of Rights affords you the right to pay no more tax than what is required by law and to be treated professionally, courteously and fairly.
Unfortunately, exercising these rights often requires the assistance of a tax dispute resolution and litigation lawyer.