Filing A Notice Of Objection To Dispute A Tax Return

Filing A Notice Of Objection To Dispute A Tax Return

Written by Corrina Murdoch
Fact-checked by Caitlin Wood
Last Updated March 16, 2022

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 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. 

What Is A CRA Notice Of Objection?

Before you take any steps, it’s important to understand that the CRA is a very large agency dealing with many requests, objections, and inquiries. Accordingly, they have developed a series of processes to manage the flow of information and efficiency of services. In this case, 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: 

  1. A description of each issue and reason for filing
  2. Specify the relief sought for each issue, in exact financial terms
  3. 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 a number of 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 actually resolve the problem without further issues. However, if you did not find a suitable resolution, you can move on to the next step. 

#2: File A Dispute

The next step is to file an objection using the T400A Notice of Objection form online using your CRA My Account and navigating to Register My Formal Dispute.

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. It’s your right to file yourself; however, if the situation is more nuanced, then you can hire either a Chartered Professional Accountant or a tax lawyer to review your paperwork.

#3: Complete The Assessment

When you file the claim, you get assigned an Appeals Officer to reassess the file. It gives you the opportunity 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 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: 

  1. 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). 
  2. 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. 
  3. Complete rejection: This is when the CRA finds that your claim is unwarranted, 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. 

#4: Tax Court of Canada 

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. For cases where GST is in question, the amount must be less than $50,000.

There is no filing fee for appeals following the informal procedure, and you can represent yourself or choose a professional. A Notice of Appeal is a written document and you must indicate clearly that you are choosing the informal procedure.

Once you’re done, send the notice by fax or electronically or through the mail. Electronic submissions don’t require paper copies usually, but the TCC may request them. 

General Procedure 

If you don’t qualify for the informal procedure, then the case follows the general route. In this, individuals can self-represent or hire a lawyer. Corporations must have a legal representative unless the court waives these rights. 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. 

The general procedure is a far more detailed process that comes with a higher price tag than the informal procedure. Once you file the dispute and it’s registered with the courts, then it becomes a matter of public record. At the end of the process, the court can order either party to pay the legal costs of the other, in whole or in part. So, if you don’t win the appeal, then you not only suffer the expense of the process, but you might have to pay the court costs to the CRA.

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. 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 categories 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 136 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 (2020-2021 fiscal year) shows that the CRA met its service standard in 76% of cases. 

Medium complexity 

In this category, the average turnaround on objections, from the filing date, is 284 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 71% 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

Notice Of Objection FAQs

Can I check the status of my objection?

Yes, you can check on the status of your objection. The easiest way is to look on your MyAccount with the CRA. Alternatively, you can call the office handling your file and ask for an update. 

When can you file a notice of objection? 

After you receive your notice of assessment, you have one year after your tax filing deadline to file a notice of objection. After you received your notice of reassessment, you have 90 days to file an objection if you do not agree with the reassessment. If by chance you miss either of these deadlines to object, you have a year after the deadline to apply for an extension.

What happens if I don’t agree with the re-assessment?

If you don’t agree with the results of your objection, you can take the matter to the Tax Court of Canada, the highest court on these matters. Their decision is final.

Do I have to pay the disputed amount if I file a notice of objection? 

Informal objections have no fees, while general procedure objections do have fees on a sliding scale. The higher the value of the dispute, the more you pay to have the court address your grievance. 

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.

Corrina Murdoch has been a dedicated freelance writer and editor for several years. With an academic background in the sciences and a penchant for mathematics, she seeks to provide readers with accurate, reliable information on important topics. Working as a print journalist for several years, Corrina expanded her reach into the digital sphere to help more people gain insight into the realm of finances. When she's not writing, you can find Corrina swimming and spending time with family.

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