Your role in expediting tax objections

The Canada Revenue Agency (CRA) is answering the Auditor General of Canada’s call to improve the income tax objections process. Find out what tax practitioners can do to ease the burden.

The Auditor General’s Fall 2016 report referred to a 2011 international benchmarking study by the United Kingdom’s tax authority, which showed that Canada took the longest time among seven countries to resolve objections (based on 2009 data). Canada took an average of 276 days, compared with an average of 70 days for the other six countries.

In a recent appearance before the House of Commons Standing Committee on Public Accounts, representatives from the Office of the Auditor General of Canada and the CRA discussed the Auditor General’s findings and recommendations for enhancing the CRA’s timeliness and overall service.

The CRA emphasized that it takes the Auditor General’s findings seriously and is working to implement all of the report’s recommendations. The CRA has started to implement a strategy to optimize its processes and use of resources to respond to taxpayers more quickly. This includes setting reasonable timeframes, developing service standards and learning from objections and appeals decisions.

On April 1, 2017, the CRA introduced a new process for resolving low-complexity objections, which represent about 60 per cent of objections received annually. These objections involve issues such as individual tax credits, personal deductions, Canada child benefit and disability tax credit.

With this new process, taxpayers and their representatives will be contacted within 30 days of filing an objection to acknowledge receipt and request any additional information needed. This way, files will be complete and ready to be worked on before they are assigned to an appeals officer, helping to improve the timeliness of CRA decisions. The CRA also introduced a new service standard calling for low-complexity objections to be resolved within 180 days, 80 per cent of the time. This standard will be revised as the inventory of objections decreases.

Among other actions, the CRA has enhanced its “feedback loop” to improve cross-agency communication of information on the outcome of objections, including why an objection was allowed in part or in full. Improving the feedback loop and learning lessons from what has happened is a key part of the CRA’s plan going forward.

CPA Canada’s Appeals Advisory Committee is also offering the CRA input on ways to speed up objection resolution and reduce the CRA’s backlog. Suggestions include introducing a fast-track approach for less complex objections and setting up a problem resolution helpline for objections that result from CRA clerical errors that are easy to correct.

Help stem the rising tide

The Auditor General’s report notes that 65 per cent of objections are fully or partially upheld, indicating that in the majority of cases, it was lack of information that resulted in a file being resolved at the objection stage rather than at the processing or audit stage. The CRA can provide better service, and taxpayers or their representatives can avoid an objection, if the information provided to the CRA when requested is clear and complete.

The CRA has updated its complaints and disputes webpage to communicate the best way for taxpayers and their representatives to resolve their issues. For example:

  • To avoid objections, new facts should be provided to the CRA before the assessment and, at the latest, after the assessment proposal is presented.
  • If new facts are produced after an objection has been made, the appeals officer may refer this information back to the reviewer or auditor for evaluation before dealing with the objection itself.

Some practitioners continue to believe that an objection will not be reviewed impartially unless they present new facts as part of their submission. As I explained in my earlier blog, appeals officers are mandated to review objections fairly and objectively, and new information is not needed for them to make their determinations. In fact, holding back information until the objection or appeal stage tends to be counterproductive.

With the CRA working to improve its overall service to help avoid or resolve more disputes before the objection stage, tax practitioners can help by communicating a taxpayer’s facts and their relevance early in the review or audit stages.

Keep the conversation going

What more can tax practitioners do to help ease the tax appeal burden? Post a comment below.

CPA Canada’s Tax Blog
is designed to create an exchange of ideas on tax policy and practice issues, and their impact on those who practise tax. Your comments can provide helpful input into the public interest advocacy positions developed by CPA Canada.

About the Author

Gabe Hayos, FCPA, FCA, ICD.D

Vice-president, Taxation, CPA Canada