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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:

Taxpayer’s Right #1: You have the right to receive entitlements and to pay no more and no less than what is required by law.

By quoting this right, and insisting the issue be reviewed by a CRA Manager, the CRA finally realized the mistake.

Taxpayer’s Right #5: You have the right to be treated professionally, courteously, and fairly.

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.

Taxpayer’s Right #10: You have the right to have the costs of compliance taken into account when administering tax legislation

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.

Outcome

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.