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Understanding Your Rights As A Taxpayer

By Evelyn Jacks

Probably the toughest thing about a relationship with the tax department is that you might feel things are a little stacked against you. After all, it's their playing field, their rules, and yes, they are calling the shots. But it's your money.

Taxpayers do have rights when it comes to their taxes. You cannot be "bullied" by CRA. You have the right to object and appeal arbitrary reassessments of your tax situation by the government.

In addition, you have the right to be treated fairly under the Income Tax Act. For this reason CRA has developed the "Taxpayer Relief Provisions".

Taxpayer Relief Provisions

Here is what you can request, under law, when a hardship strikes.

Cancelling of Penalties and Interest

You can ask the tax department to waive or cancel penalties and interest incurred under extraordinary circumstances beyond your control, like failure to file or pay due to a serious illness or death of a family member. In addition, you can ask for relief from penalties and interest if you suffered a hardship because of the actions of the tax department. For example:

  • The tax department made errors in processing your return. This is always the first line of defense when there are taxes in dispute: did you make the error, or did the tax department err? Both are possible, and this must be sorted out.
  • You were not being informed, within a reasonable time, that an amount was owing because of processing delays on the part of the tax department. Reasonableness is a grey area, but will be assessed on an individual basis.
  • You relied on government publications in filing your return; however there were errors in material, which led you to file returns or make payments based on the incorrect information.
  • Incorrect information was provided to you by the department, and you relied on that information in filing your return.
  • There were delays in providing information to you or in resolving an objection or an appeal, or in completing a tax audit.

Filing Extensions

You may file missed tax returns to request refunds owing and ask that deadlines be extended for certain elective provisions, such as pension income splitting. CRA will accept your late filed return and send you back any refund. You can request this for up to ten years.

For example: Zack missed filing his tax returns from 1998 to 2007. While it is too late to file his 1998 return (that had to be done by December 31, 2008) Zack can file returns from 1999 forward and claim his missed refunds. Interest on any tax overpayments, however, will only be paid by CRA from the later of the day after he overpaid his taxes, 31 days after the filing due date or the 31st day after he files his return.

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Adjustment for Errors and Omissions

You may ask CRA to authorize a reassessment of your taxes and credits and adjust your previously filed return for errors or omissions. If that results in a refund or a reduction in an amount payable, CRA will pay that to you. Voila-found money! And remember you can request these adjustments on an unlimited basis for the ten year period described above. However, again be warned that any time you open your return to scrutiny by the government a tax audit of other records or tax years can result.

Voluntary Compliance

So what happens when you haven't filed but you know you owe? The tax department will not charge gross negligence or tax evasion penalties if you file your returns voluntarily or report errors and omissions before they ask you. In other words, it pays to confess your sins before getting caught.

 

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Sure, it's difficult to be an expert at filing your income tax return – something you do only once a year – but once again Canada's most trusted tax author, Evelyn Jacks has come to the rescue with over 200 quick and easy Essential Tax Facts you need to know to get the job done and to your best advantage in 2011 and beyond. Click here to order the book.

 

 

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