Application Hearing Success – Rosen Kirshen Tax Law
On September 28, 2022, the Honourable Justice Randall S. Bocock released a precedence-setting decision in support of taxpayers’ rights. Rosen Kirshen Tax Law is proud to have advocated for the Taxpayer in this Application Hearing (2021-1015(GST)APP), removing the bureaucratic idiosyncrasies obstructing the Taxpayer’s access to justice.
Reason for the Application Hearing
Like many other homeowners, the Taxpayer applied for and received the New Residential Rental Rebate (the “Rebate”) from the Canada Revenue Agency (“CRA”) pursuant to the Excise Tax Act (“ETA”). A few years later, the CRA conducted a follow-up audit of the Taxpayer’s books and records in relation to the Rebate. Bocock J. noted that despite all of the Taxpayer’s earnest efforts to assist the CRA with this process, the Minister “inexplicably stopped” communicating with the Taxpayer, and so the Taxpayer’s efforts “became late and in vain.” The Taxpayer’s objections continued to fall on deaf ears and his Rebate was denied with no explanation as to why his case was abandoned. This was the point when the Taxpayer came to us.
Those who have been unfortunate enough to be audited are aware of the frustrating and difficult bureaucratic processes that are inherent to this undertaking; an audit is akin to a tennis match of correspondences and missing a serve can have devastating consequences. The CRA requests a “wish list” of all the documents pertaining to the audit and a list of questions (called “queries”) that taxpayers are expected to answer and return, all within 30 days from the date of the letter. Failing to satisfy the criteria allows the CRA to conduct the audit at their complete discretion without the taxpayer’s input. As such, it is important for taxpayers to keep up with the multiple back and forths, as our Taxpayer diligently did.
Upon concluding an audit, a “Reassessment” is issued to effect the tax consequences. Under the ETA (and the corresponding provisions in the Income Tax Act), a taxpayer has 90 days from the date of an Assessment or Reassessment to file a Notice of Objection (“Objection”). This deadline can be extended by 1 calendar year if the taxpayer files an “Application to Extend” (“Extension”).
The Application Hearing
The main issue for our Taxpayer was that he made submissions to the CRA refuting the Reassessment without meeting the formalistic requirements of a “Notice of Objection.” Moreover, the CRA, despite abandoning communications with the Taxpayer, now claimed that any Objection submitted failing to meet the formal requirements would be invalid as the statutory deadlines have lapsed.
Bocock J. unequivocally found for the Taxpayer at the Application Hearing. This was an “active dispute” and the Taxpayer’s submissions after the Reassessment had obvious indicators of an Objection, including the mandatory reference number. As Bocock J. notes in paragraph 22 of the decision: “[t]he Court cannot abide by this. The Minister’s receipt of the submission communication with two weeks of the reassessment is precisely how the system should work. The form was not usual, but there is no prescribed form.”
With Justice Bocock’s ruling, the Taxpayer is allowed to proceed with his objection. The CRA was trying to stop the Objection itself from being reviewed, which was an attempt to limit the taxpayer’s access to justice.
This is a major step in protecting taxpayers who make valid and valiant efforts to make their case heard by the CRA. The Taxpayer diligently worked to keep in touch with the CRA’s agents and kept very good records of his submissions, including records confirming that the CRA had received his submissions. Moreover, this case highlights the significance of referencing dates, documents sent by the CRA, and the reference or case number provided by the CRA to show an active and ongoing dispute when making submissions to the CRA.
Here at Rosen Kirshen Tax Law, we have a team composed of advocates who aim to make the complex taxation regime accessible to everyday taxpayers. If you have questions or would like assistance in a tax matter, give us a call today !
This article provides information of a general nature only. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in this article. If you have specific legal questions you should consult a lawyer.