by Sung Samson An

by Matthew Pollock

TaxMarch 30, 20230 comments

The Limits on Limits: A Brief Overview of Taxpayers’ Procedural Rights

An essential part of our taxation regime is the right to appeal the Canada Revenue Agency’s (the “CRA’s”) assessments and reassessments through the notice of objection (the “Objection”). This Objection is a first level review that is brought before a CRA officer at the Appeals Division. Instead of adjudicating every issue in court, this mechanism is meant to streamline simpler and easily resolvable cases; accordingly, it alleviates the use of judicial resources while increasing accessibility to procedural fairness for taxpayers.

Assessments, reassessments, and letters will often include the wording of the Income Tax Act (the “Act”) to highlight prescribed deadlines and limitation periods for responses. Similar provisions exist under the Excise Tax Act which rules over value-added taxes like the Goods & Services Tax.

Generally, pursuant subsection 165(1) of the Act, a taxpayer’s limitation period is based on the following:

(a) if the assessment is in respect of the taxpayer for a taxation year and the taxpayer is an individual (other than a trust) or a graduated rate estate for the year, on or before the later of

(i) The day that is one year after the taxpayer’s filing-due date for the year, and

(ii) The day that is 90 days after the day of sending of the notice of assessment; and

(b) in any other case, on or before the day that is 90 days after the day of sending of the notice of assessment

Generally, the taxpayer’s Objection must be filed 90 days after receiving the assessment (or reassessment). Sometimes, the later deadline is longer than 90 days based on subparagraph 165(1)(a)(i) such as when an individual taxpayer’s assessment is received before January 30 of the following year. In such a case, the deadline would be April 30. Given the processing times, however, most Objections will be due 90 days from the date of the assessment.

But this is not an ultimate statutory deadline. Under subsection 166.1(7) of the Act, a taxpayer can submit their Objection with an application for an extension of time (the “Application”) to the CRA as long as they send both the Objection and Application within 1 year from the original deadline to submit the Objection. This request can be brought to the Tax Court of Canada under subsection 166.2(5), if the CRA has either refused the Application or 90 days have passed since the taxpayer submitted the Application and no response has been provided by the CRA.

In summary, a taxpayer’s right to appeal has two deadlines:

1. The notice of objection must generally be submitted within 90 days from the date of the assessment or reassessment (the “Objection Deadline”)
2. If less than one year has passed since the Objection Deadline, the taxpayer can submit an Application to the CRA as long as they meet the requirements laid out in subsection 166.1(7) and submits this with their Objection (the “Extended Deadline”)

Although these statutory deadlines are strictly adhered to, there are flexibilities based on a taxpayer’s situation. For example, the Objection has often been upheld as a broad expression of the taxpayer’s intent to object rather than a prescribed form (see: 870 Holdings Ltd. v. Canada, 2003 FCA 460). Even a taxpayer’s T1 adjustment request could be considered a valid Objection, as was the case in Schneidmiller v. The Queen, 2009 TCC 354.

Generally, the taxpayer’s Objection must be filed 90 days after receiving the assessment (or reassessment).

Moreover, an Application can be accepted after the statutory deadline. Although these cases are rare, the Tax Court of Canada has stopped the running clock where a taxpayer “mistakenly but reasonably believes that she has validly instituted an appeal” and permitted resubmission beyond the Extension Deadline (see: Hickerty v. The Queen, 2007 TCC 482).

More recently, in 102751 Canada Inc. c. l’ARQ, 2019 QCCQ 7378 (aff’d 2021 QCCA 605), the Quebec Courts have upheld the continued validity of an Objection and appeal to the court even when a subsequent reassessment was issued by Revenue Quebec to the taxation year in dispute.

Ultimately, the specifics of a taxpayer’s situation will be important to determining the best course of action especially when it comes to preserving their rights to procedural fairness.

At R&A Tax Law, we aim to provide the best service to assess and meet our client’s specific needs. If you have an assessment or reassessment that you would like to contest, please contact us today!