CRA Bill of Rights
April 12, 2019 aadolphAudits
The CRA Taxpayer’s Bill of Rights is a formal document that, while not (currently) enshrined in legislation, is supposed to guide CRA and how it deals with all taxpayers.
While it may look just like any other CRA pamphlet, this pamphlet actually has teeth.
Recently a client came to me with what was a seemingly impossible situation: their CRA agent was about to confirm the disastrous decision of a previous agent. If the client wasn’t able to convince this officer that the previous CRA officer was in the wrong, their only recourse would be tax court. This would have been expensive for the client, and a waste of resources for CRA, who would surely lose.
In this situation, the taxpayer made a simple request to have a loss carried back to a prior year. This would have generated a small refund if handled correctly. However, the CRA mishandled the request and processed a reassessment resulting in taxes owing. No proposal letter (contrary to CRA policy)… just a Notice of Reassessment with a new amount owing.
The reassessment officer’s position was wrong. and now the case was with an appeals officer, who was supporting the original decision.
Enter the CRA Bill of Rights
When I contacted the appeals officer by phone, I could immediately tell that he had not read the file. Had he done so, using technical knowledge he should have had, he would have realized that his predecessor made an error.
The appeals officer did not know anything about the CRA Bill of Taxpayer’s Rights. When I quoted several of the more relevant ones, the agent doubled-down on his opinion and abruptly terminated the call.
I followed up our conversation by letter that same day, laying out the background info, and identifying which specific of m taxpayer’s rights that had been violated.
I requested the letter be reviewed by the Appeals Officer’s Team Leader and that Team Leader’s Manager. This step basically forces CRA management to take a second look, or risk a service complaint, or worse, a Ministerial inquiry.
Several days later we received a call from the same Appeals Officer to inform us the proposed reassessments will be reversed.
Here’s the Rights We Used to Win
Currently, there are 16 rights in the CRA Taxpayer Bill of Rights. We won the day by quoting three of the rights:
By quoting this right, and insisting the issue be reviewed by a CRA Manager, the CRA finally realized the mistake.
By quoting this right, we pointed out that the client’s original request was mishandled and adjustments processed that should have been properly proposed and explained beforehand.
Because of CRA’s initial mishandling, the client was being directed to produce supporting documents for business expenses they incurred in 2015. These were never an issue until the Appeals stage. It would taken our client a lot of time and money to produce these.
As scary as the CRA Bogeyman can be, all tax assessments need to stand up in the courts.
In a future blog I will go into the Bill of Rights further, including a push to get them enshrined into law.
If you have received an audit notification letter from CRA, don’t go into this alone. Call us for a free consultation.
Andrew Adolph is a CPA and former CRA auditor with 25 Years of experience. He helps businesses to not par any more in sales taxs than the law says they must and acts as an advocate for you if you are being audited, so you can fous on your business.