Every year you have to file your income taxes in Canada. You’ll have to gather documents on your income and deductions, expenses and incentives, and format them according to the Canada Revenue Agency’s (CRA) standards.
You file your taxes and receive a Notice of Assessment within about eight weeks — but wait — something doesn’t look quite right.
When you filed, you did the math, and it doesn’t add up with what the CRA assessed. The good news? There is a way to file a dispute, thereby resolving issues and clarifying any questions.
So, whether you’re planning to dispute or simply want to understand how it works, this article is designed to guide your way through the dispute process.
Key Points You Should Know
- You can file a notice of objection for several reasons, including disagreements regarding your notice of assessment.
- Before filing a notice of objection, be sure to see if the issue can be resolved by speaking to a CRA representative (1-800-959-8281).
- You can file a notice of objection by completing the T400A, Notice of Objection – Income Tax Act form online through your MyAccount, by mail or by fax.
- Depending on how complex your case is, it can take up to 136 to 690 days to resolve.
What Is A CRA Notice Of Objection?
A notice of objection is a formal request to dispute a notice of assessment or determination. When you file an objection, it leads to a formal review of your assessment by the CRA. They will review all your information and determine whether your objection is approved.
You’ll need the T400A, Notice of Objection – Income Tax Act form to file a dispute. When you file your dispute, there are three key things you need to include:
- A description of each issue and reason for filing
- Specify the relief sought for each issue, in exact financial terms
- Provide the facts you’re using to substantiate each argument
Reasons You Can File A Notice of Objection
You can use this document to dispute several issues including your tax return amount and your benefits or credits amounts such as the Disability Tax Credit (DTC) or the Canada Child Benefit (CCB).
How To File A Notice Of Objection To Dispute Your Tax Return?
The first thing to do, before filing a Notice of Objection, is to take your time and redo your calculations. Ensure that there was no error on your part before you reach out.
Perhaps there is a new rule you didn’t know, or maybe you forgot to attach a receipt. In any case, the steps to handle the issue are as follows:
#1: Call The CRA
Many issues can be clarified easily, so the first step is to reach out directly. Use the toll-free number (1-800-959-8281) and speak to a representative. Perhaps it was a minor clerical error on the CRA’s part that can be easily fixed. You are entitled to understand the reasons for your taxes owing.
Tell them your concerns and ask if there is a misunderstanding. This initiates an informal inquiry and may resolve the problem without further issues. However, if you do not find a suitable resolution, you can move on to the next step.
#2: File A Dispute
| Online | Log into My Account for Individuals, or My Business Account and click “Register my formal dispute”. If you have an accountant or lawyer, they can access this via the “Represent a Client” portal. |
| By Mail | Complete the Form T400A, Objection – Income Tax Act, either via fillable PDF or printed and handwritten and mail it to: Chief of Appeals Appeals Intake Centre 1050 Notre Dame Avenue Sudbury ONP3A 5C1 |
| Fax | Complete the Form T400A, Objection – Income Tax Act and fax it to: 705-670-6649 or 1-866-443-4955604-587-2672 or 1-866-489-6832 |
You must submit your dispute within 90-days of your Notice of Assessment being mailed or one year after the tax filing deadline (wherever is later) to file a notice of objection.
#3: Complete The Assessment
When you file the claim, you get assigned an Appeals Officer to reassess the file. It allows you to clearly present your case and establish the facts that substantiate your claim. To ensure accuracy, keep all records (receipts, correspondence, etc.) and maintain a written journal that tracks your tax claim. The Assessor completes a review and then sends you a letter in the mail with the decision.
Possible Outcomes
The Appeals Officer can issue a range of decisions, but they fall into three categories. These include any of the following:
- Full agreement: The optimal outcome for the taxpayer means that after reassessment, the judge found your claim to be true. The reassessment gets removed and you get compensated accordingly (or the requirement to pay gets taken off your record).
- Partial acceptance: In this case, some of the taxpayer’s arguments were accepted, but not all. When this happens, the CRA issues a reassessment to the taxpayer and the accounts are processed accordingly.
- Complete rejection: This is when the CRA finds that your claim is unwarranted, and the CRA issues you a Notice of Reassessment. From there, you have 90 days to dispute the decision by filing a Notice of Appeal with the Tax Court of Canada, detailed in the next step.
What Can You Do If The CRA Rejects Your Notice Of Objection?
If you receive a denial of your Notice of Objection, you can still take your case to the Tax Court of Canada and file a Notice of Appeal.
The Tax Court of Canada will hear appeals using two different procedures:
Informal Procedure
The informal procedure is limited to cases where the taxes in dispute for each year are less than $25,000 or the loss in dispute is less than $50,000.
There is no filing fee for appeals following the informal procedure.
General Procedure
If you don’t qualify for the informal procedure, then the case follows the general procedure. The general procedure also has a filing fee that can cost between $250 and $550 depending on the amount being contested.
- Fee of $250: If the tax and penalty in dispute is below $50,000 and the contested loss is less than $100,000.
- Fee of $400: If the tax and penalty in dispute is between $50,000 and $149,000, and the contested loss is between $100,000 and $299,999.
- Fee of $550: If the tax and penalty in dispute is above $150,000 and the contested loss is over $300,000.
When Can You File A Notice Of Objection?
If you want to file an official Notice of Objection, you’ll have 90 days after your income tax assessment or one year after the tax filing deadline (wherever is later) to file a notice of objection.
If you’d like to object to your notice of reassessment, you’ll have 90 days from the date of your reassessment to file a notice of objection. Do note that if you miss either of these deadlines, you can apply for an extension. You’ll have one year after the objection deadline to make a request.
How Long Does It Take For The CRA To Process A Notice Of Objection?
Every objection is handled case-by-case. Depending on the complexity of the case, the time it takes to resolve each case will vary. The CRA categorizes each case by complexity level: low, medium, and high, and depending on which one yours falls under, it can take between 136 days to 690 to resolve.
Low Complexity
Objections in this category have an average turnaround rate of 165 days from the date of the objection. Usually, these involve tax credits, the Canada Child Benefit, disability tax credit, or a matter of a personal deduction. The most current data (2022-2023 fiscal year) shows that the CRA met its service standard in 62% of cases.
Medium Complexity
In this category, the average turnaround on objections, from the filing date, is 301 days. It usually involves issues with business expense claims, small and medium corporations, and complicated personal income tax issues. In this case, the CRA met service targets 74% of the time.
High Complexity
These cases have the longest turnaround times simply because they are so in-depth and require far more resources to complete. With a current turnaround average of 690 days, the CRA doesn’t specify its service standard rates for this category. These high-complexity files relate to large corporations, international currency matters, anti-avoidance assessments, or legal matters such as tax avoidance.
Bottom Line
In most cases, tax filing is a straightforward matter. You submit your income tax filing, receive a Notice of Assessment, and either receive a return or an amount owing. However, sometimes the CRA may come up with a different number than what you filed. If you disagree with their assessment you can file a notice of objection. If you plan to approach a dispute, do a cost-benefit analysis to determine if you will see a profit from the process or just incur some extra stress (and the risk of court costs).
Consult with a CPA or tax law expert to see if you have a worthy claim. If you find the fee of the consultation too high, the process of contesting your return won’t likely be worth it. However, if you are certain, then there are routes available to those willing to contest the tax agency’s decisions.
