The Canada Revenue Agency homepage in August, 2020. Disputes between Canadians and the tax authority have been on the rise, data show.Graham Hughes/The Canadian Press
The end of April marks the end of tax season for most people. But if you disagree with an assessment or reassessment by the Canada Revenue Agency, it may be just the start of a different ordeal.
Data provided to The Globe and Mail by the CRA suggest disputes between Canadians and the tax authority have been on the rise. When taxpayers, whether individuals or businesses, think the agency has made a mistake, they can file a notice of objection to ask for an impartial review. The number of objections filed annually nearly doubled between the 2018-19 and the 2024-25 fiscal years, The Globe previously reported.
If you’re among the Canadians who believe the CRA made a mistake on their taxes, here’s what experts suggest you do.
If the CRA asks questions, answer them
If the CRA needs to clarify your tax situation, it often reaches out to ask for more information before issuing a notice of assessment or reassessment. This may happen through a simple review or as part of an audit, an in-depth examination of your records.
It’s important to respond to those requests on time and as thoroughly as possible, said Lori Bokenfohr, a Calgary-based tax lawyer and partner at Fasken Martineau DuMoulin LLP. This raises your odds of resolving the matter quicker, she said.
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If you think CRA is wrong, pick up the phone first
If you receive an assessment you think is wrong – whether or not the CRA got in touch with questions beforehand – the first step, in many cases, should be to pick up the phone or write to the CRA about the presumed error.
“Many misunderstandings arise from miscommunication or a lack of information,” the agency says on its website. “That’s why we say: ‘Talk to us.’”
Trying this informal route makes sense especially if fixing the mistake hinges on you amending your tax return or supplying information you didn’t previously provide, said Caine Chapman, a tax lawyer based in Brantford, Ont.
But watch the clock
As you talk with CRA, keep in mind you have a limited amount of time to file a formal notice of objection, which will trigger an independent review by the agency.
For individuals, the deadline is the latter of two possible dates: one year from the tax-filing deadline of the return affected by the supposed error or 90 days from the date of the related notice of assessment or reassessment. (Good to know: The countdown starts from the date on the letter, not when you received it.)
If the agency hasn’t officially reassessed your situation and you’re coming close to the deadline, it’s time to send in a formal objection, Mr. Chapman said.
If you missed the deadline for submitting an objection, you still have one year from that date to ask for an extension. But you’ll need to explain why you need more time, and the exception is at the CRA‘s discretion.
How to file an objection
Sending in an objection makes sense if you think the CRA misinterpreted the information you reported or applied the law incorrectly. You can do so online, through your tax accountant, via mail or in person at a tax centre.
There’s a form to fill in, but make sure to also include copies of all documents supporting your position as well as an explanation of how your evidence ties together, Mr. Chapman said.
After you file an objection, your case moves to the appeals branch, a separate part of CRA staffed by highly trained and experienced officers, Ms. Bokenfohr said.
The CRA will then classify your objection as low-, medium- or high-complexity, which affects how long the review will take.
Good news: Wait times are getting shorter
The drawback of objections is that it can take months – or more than a year in more complex cases – for the CRA to work its way through them.
On the upside, though, wait times have been getting shorter. For example, low-complexity income tax objections resolved in March of this year took an average of a little over four months to process. That’s better than the CRA’s official goal of resolving low-complexity objections within six months at least 80 per cent of the time.
Once your objection has been reviewed, the agency will decide whether it agrees – in full or part – or disagrees with your position.
If the decision means the government owes you money you already paid, you’ll get that back with interest, Mr. Chapman said.
If the outcome reaffirms you have a balance owing, you must pay up, including any penalties or interest. Note that while the CRA generally pauses collections once you’ve filed an objection and until 90 days after it is resolved, interest on any money owing continues to accrue.
Also, the rate of interest the CRA pays on funds the government owes you is lower than the rate it applies to outstanding debts.
Beyond objections
If you still disagree with the CRA once your objection has been processed, the next step is generally to take the matter before the Tax Court of Canada, a specialized superior court that resolves disputes between taxpayers and the government.
Typically, resolving disputes at this stage becomes more difficult, Ms. Bokenfohr said. Generally, the government’s findings or assumptions are presumed to be correct and you’ll have to prove them wrong, she said.
“You’re guilty until proven innocent.”
