If you don’t fight an assessment, you are losing by default. It is definitely worth the fight.
Most Notices of Objection get resolved without going to court.
The unresolved objections move on to be appealed to the Tax Court of Canada or the Canadian International Trade Tribunal because the taxpayer or registrant disagrees with the decision and is willing to pursue the issue further.
Unfortunately the high cost of legal fees keeps many taxpayers out of the justice system where they feel a complete sense of injustice.
Fortunately Tax Audit Solutions has a less expensive route for Canadians to use to get to tax court. You can contact us for more information on this option.
Of the objections that are filed, the objections range from simple to complex; the majority are simple.
Complex objections usually follow an assessment made as a result of an audit.
Simple objections represented 77 percent of the total number of objections and complex objections represented 23 percent. But those proportions are reversed when the dollar amounts in dispute are considered: simple objections account for about 25 percent of the total dollars in dispute and complex objections for about 75 percent.
The CRA Branch’s objective is to resolve tax disputes as efficiently as possible. By their very nature, tax disputes involve money and CRA will get as much as they can.
Appeals officers are expected to be impartial in reaching their decisions. This is often, but not always the case.
In examining the facts of an objection and the applicable laws, officers refer to the Agency’s documentation supporting the assessment in question (which may include an auditor’s report), together with representations made by the taxpayer or registrant. These representations often include new information that was not provided previously or was unavailable at the time of the audit.
Appeals officers also review applicable legislation, court cases, and Agency policies, and they discuss the case with appropriate experts when they think it is necessary.
Appeals officers are expected to do more than check the accuracy of an audit. They are expected to try to resolve disputes administratively. If that is not possible, the taxpayer or registrant can appeal the decision to the Tax Court of Canada, which is a more expensive solution.
There are many ways to resolve disputes administratively, from simply explaining the basis for an assessment, to reaching a common understanding of the facts involved and the applicable laws, to agreeing on a settlement. It is my experience that in today’s climate, there is less and less interest on CRA’s part to settle until it gets to tax court.
While appeals officers must follow the law and the Agency’s policies in deciding on an objection, they can agree to settle when appropriate.
Most objections to an assessment are assigned to an appeals officer who is at the same job classification level as the assessor or auditor who issued the assessment.
Classification levels generally reflect the competencies and experience required for a position, with higher levels requiring more competencies and experience.
The highest classification for auditors is AU6, whereas AU3 is the highest for appeals officers in the field (at headquarters it is AU4).
Interestingly enough, an appeals officer can be asked to resolve an objection to an assessment prepared by an auditor at a higher classification level. The more junior appeals officer could allow the objection and reject the auditor’s assessment.
At any rate, in today’s environment, CRA is overly aggressive and more than ever taxpayers need to move to audit ready accounting to keep out of trouble.
See our article on audit ready bookkeeping in this web site.