Selected for an audit? Do you know your rights? Worried about making things worse? Feeling overwhelmed, confused and anxious?
Our approach for our clients is to try to settle any dispute with the CRA so that the issue does not have to proceed to litigation, as litigation can be both time-consuming and costly. More than ever, Canadian tax authorities are aggressively pursuing tax audits and adding more resources to recover taxes from both businesses and individuals.
The process that leads to litigation is quite simple. In any dispute that you have with the CRA, they will issue a Notice of Re-Assessment. If you believe that the CRA was in error when they re-assessed you then you may take your issue to the Appeals Division of the CRA. This unit is part of the CRA and not an independent court.
The Appeals Division has two potential positions it can take:
· It agrees with your position based on the strength of your arguments and reverses the re-assessment
· It agrees with the auditor’s re-assessment: in this case, your only option is to take this to the Tax Court of Canada for review
The good news is that the CRA is only one player in Canada’s tax system and not the final decision-maker. If you disagree with a decision of the CRA Appeals Division, you can appeal their decision for a completely independent review by the Tax Court of Canada. Similarly, if you sought relief, including from penalties and interest, and believe that the CRA’s decision was unreasonable, you can seek a review of that decision in Federal Court.
Clearly, in all dealings with the CRA, it is important that you build the strongest case you can use all the facts at your disposal. Given the potentially significant financial consequences of going through the above processes, it is highly recommended that you seek professional help.
The reality is that tax litigation is complex and unique, and it is essential that you work with lawyers whose sole focus is on tax.
We have an affiliation with Beitel Tax Law with whom we have worked closely for the last three years. Every lawyer on their team has made Tax Law their focus and has extensive experience representing clients before the CRA and in all levels of court, including the Tax Court of Canada, and the Federal Court of Appeal.
In most cases, a compromise settlement is reached through the pre-trial process.
There is a time limit for filing a Notice of Appeal and it is possible to have this deadline extended.