TSG (Tax Specialist Group) - CRA Disputes (CRA Disputes)

Whenever a taxpayer or his/her representative is dealing with the CRA at the objection stage, it is important to understand what information is available to you. An objection can be filed only after an audit has been completed and an assessment or reassessment has been issued. The objection must be filed within 90 days of the date of the assessment or reassessment.

According to CRA, the kind of information that is available is as follows:

Reports prepared by an auditor to support the assessment;

Working papers prepared by an auditor that are relevant to the issues in dispute;

Records of discussions between an Appeals officer and an auditor regarding the assessment;

Copies of court decisions and relevant sections of legislation relied on by the auditor to support the assessment;

Scientific, appraisal, and valuation report relied on by the auditor; and

Information obtained from a third party with whom the taxpayer is doing business such as sales invoices, purchase orders or cancelled cheques, etc.

The kind of information that is not available to a taxpayer according to CRA is as follows:

Personal information relating to another person;

Information from a third party obtained on the expectation that the information would remain confidential;

Information subject to solicitor/client privilege;

Documentation related to an ongoing investigation;

Confidential information obtained from other federal or provincial departments or treaty partners; and

The CRA audit techniques, limits, tolerances and specific tests, the disclosure of which would prejudice the results or future use.

As you can see from the above list, there is a significant amount of information that is available to a taxpayer every time they file a Notice of Objection. It would be of significant benefit any time an objection is filed, to obtain the information relating to how the auditor made his/her determination. This will often provide the taxpayer with a starting point as to which arguments need to be dealt with so as to prove his/her case.

In some cases, the taxpayer simply needs to ask the auditor for the information. In other cases, the taxpayer may need to file under the Freedom of Information Act to obtain some of the information. If an application is made under the Freedom of Information Act, the information officer will determine if there is any reason why that information should not be given. In most cases, there should not be a problem. However, there could be issues when other taxpayers are involved. A careful analysis should be done on a case-by-case situation.

TAX TIP OF THE WEEK is provided as a free service to clients and friends of the Tax Specialist Group member firms. The Tax Specialist Group is a national affiliation of firms who specialize in providing tax consulting services to other professionals, businesses and high net worth individuals on Canadian and international tax matters and tax disputes.

The material provided in Tax Tip of the Week is believed to be accurate and reliable as of the date it is written. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Neither the Tax Specialist Group nor any member firm can accept any liability for the tax consequences that may result from acting based on the contents hereof.