– Your first step is to look closely at the Notice of Assessment and
determine exactly why the Canada Revenue Agency (CRA) says you owe more.
Did you really miscalculate an entry? Did you make a data entry error when
you filed your return? Double-check your figures. Sometimes the problem is
as simple as that, and you’ll just have to swallow your embarrassment and
pay up. Other times, the CRA may be disallowing tax credits or deductions.
If you’re not sure what the problem is, call the CRA to find out. Make sure
you have your tax return, the Notice of Assessment, and any other
supporting documents handy. Sometimes, the problem can be cleared up by
speaking with someone directly.
If calling the CRA doesn’t resolve things, you may still have a good reason
to object to the CRA’s assessment. And, as you’d expect, they have a form
for that. It’s called the “
T400A Objection – Income Tax Act,” or more commonly, a Notice of Objection.
If you plan to file the T400A, it’s crucially important to remember that
you have only 90 days from the date the CRA mailed the Notice of Assessment
to file a Notice of Objection, whether you actually received your
Assessment or not. Your Notice of Objection should include chapter and
verse about why you believe the CRA’s Assessment is incorrect. That
includes evidence that the CRA has made an error either in fact or in law.
And yes, if this sounds as if you are considered “guilty” until you can
prove your innocence, you’re right.
The CRA is considered to be in the right until proven wrong. And that means
that you still must pay any assessed amounts or face interest on overdue
amounts. If you have a balance owing for 2017, the CRA charges interest,
compounded daily, starting May 1, 2018, on any unpaid amounts owing for
2017. In addition, CRA charges interest on the penalties starting the day
after your filing due date. The rate of interest can change every three
months, depending on the CRA’s prescribed quarterly rate. For the second
quarter of 2018, it’s 6%.
In general, it makes sense to pay what the CRA says you owe, if only to
avoid that penalty interest from mounting up. If your Notice of Objection
deals with tax deductions, GST/HST, or withholding tax, the CRA can
continue to take steps to collect any balance owing, including seizing
assets or garnisheeing wages. If you pay now and then continue to fight the
assessment, which could take as long as a year to sort out, and
subsequently win, you’ll get your money back, with a little bit of
Filing a Notice of Objection can be complicated, with plenty of deadlines
and conditions attached. Doing it wrong can end up costing you not only
your original assessment but also other penalties and interest. If your
situation is complex, your best bet is to get advice from a tax lawyer or
other qualified financial or tax advisor to help you with the procedures
involved in objecting to an assessment.
Robyn Thompson, CFP, CIM, FCSI, is the founder of Castlemark Wealth Management, a
boutique financial advisory firm specializing in wealth management for high
net worth individuals and families. She is also listed as a
MoneySense Approved Financial Advisor. Contact her directly by phone at 416-828-7159, or by email at
email@example.com for a confidential planning consultation.
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