As clients file their 2014 tax returns and receive refunds, remind them to look out for their notices of assessment. In particular, tell them to pay close attention to the mailing date printed on that notice. Why? If your client disagrees with the way CRA has assessed his return, he may need to formally object by filing a Notice of Objection by the appropriate deadline (see “Help Your Client Take on the Taxman”).
The deadline for filing an objection is one year from the normal filing due date (generally April 30, but if your client is self-employed, he and his spouse or partner can file as late as June 15), or 90 days after the date printed on the notice of assessment, whichever is later. Let’s say your client recently adjusted his 2013 personal income tax return because he discovered a missed donation slip that he wanted to use in 2013. He filed a T1 adjustment request, and CRA sent him a notice of assessment dated March 15, 2015. He has until the later of 90 days after March 15, 2015, or one year from his April 30, 2014 filing deadline. So, his absolute deadline for objecting is June 13, 2015.
If the client misses that deadline, he can still apply to CRA within one year of the deadline for an extension of time to object. The application must include the reasons he didn’t object before the deadline and be addressed to the Chief of Appeals in an Appeals Intake Centre. Also, he must demonstrate that:
› he was unable to object within the time limits;
› he was unable to instruct someone else to act for him;
› he had a “bona fide intention to object”;
› it would be just and equitable to extend the deadline; and
› the application was made as soon as circumstances permitted.
If CRA denies the client’s application, he can appeal to the Tax Court of Canada.
A recent GST case involved a Quebec business operating a seniors’ residence, which missed its deadline to object to an assessment. The business said it never received a notice of assessment, which had been dated June 3, 2013. While the notice had been mailed to the business, it failed to include the suite number of the firm in the mailing address.
The business’s controller testified that she only learned of the June assessment on September 16, 2013, due to a telephone conversation with the Revenu Quebec auditor assigned to the file. Unfortunately, this conversation took place after the 90-day deadline to object had already passed.
The business applied to CRA for an extension of time to file an objection, but was refused. So, the controller went to Tax Court, asking for an extension.
The court looked at whether the assessment was properly mailed. The controller testified the suite number was critical, since the business is located in a complex with approximately 20 tenants.
The office is on the 6th floor but the mailbox, which is used by about 30 companies in the taxpayer’s corporate group, is located on the main floor, along with many other mailboxes. In addition, the mailbox doesn’t state the business’ name: just the name of the group’s main company.
The Tax Court ruled the suite number was essential for the notice to be mailed correctly, and allowed the business to apply for an extension.
The message from this case is obvious: remind clients to look out for assessment notices. If they haven’t received one, they can follow up on the status of any missing assessments using the “My Account” service on CRA’s website.
Originally published in Advisor's Edge Report
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