A CRA Audit is often a lengthy and tedious process, but if an assessment is ultimately issued, that can be its own uphill battle! CRA’s dispute resolution process – also referred to as the Notice of Objections (generally “Objections”) process – often takes multiple years to complete, draining taxpayer time and resources along the way!

In this context, taxpayers need to know their right to by-pass the CRA Appeals process after 180 days (or 90 days in case of income tax matters), and bring their tax disputes directly to the Tax Court of Canada (“TCC”) for resolution!

Expected Processing Times for Tax Objections

CRA provides the expected processing time for dispute resolution on its official website (updated monthly), and these are based on the complexity and class of the Objections received by the CRA:

• Low Complexity – These Objections can include assessments for missing GST/HST Returns or individual tax credits. CRA aims to resolve these Objections within 180 calendar days from the date of receipt and targets to meet this standard in 80% cases.  The October 2021 data indicates that most of these low complexity GST/HST Objections were resolved within 183 days, with income tax Objections resolved within 121 days. The service standard was met 76% of the time.
• Medium Complexity – These Objections are the most common and can include issues with new housing rebates, GST input tax credits, and income tax issues regarding business expenses and more complex T1 or T2 issues. CRA aims to resolve these Objections within 365 calendar days in 80% cases. The October 2021 data indicates that GST/HST Objections were resolved within 418 days on average, with income tax Objections resolved within 299 days. The service standard was met 71% of the time.

• High Complexity – These Objections usually involve large corporations, complex business transactions, international transfer pricing, general anti-avoidance rule assessments and tax avoidance schemes. CRA aims to resolve this in up to 500 days for GST/HST matters and 690 for income tax matters. There is no data on actual resolution rates – although we recently had a large corporation GST Notice of Objection dealt with in just over 9 years!

Commentary

With these dates and times in mind, taxpayers ought to consider their rights in section 306 of the Excise Tax Act and subsection 169(1) of the Income Tax Act, which provide taxpayers with the right to appeal their matters directly to the TCC after 180 days (90 days in the case of an income tax Objection) from the date the Notice of Objection was filed (presuming the Minister has not dealt with the matter by then). This option does come with its own set of complexities like, Court timelines and of course, the cost involved in filing a Notice of Appeal

In practical terms, and with CRA often taking up to one year to just assign an Objection to an Appeals Officers, these provisions can be helpful to taxpayer just wishing to “get on” with their disputes.

This makes some additional sense in the GST/HST context, where to the disadvantage of taxpayers, CRA collections is entitled to collect on tax amounts owing, even during the Appeals stage. (This is different than the situation under the Income Tax Act).

Taxpayers not interested in moving forward to Court, but still wanting to expedite matters can also consider escalating matters by filing service complaints with CRA for undue delay – and potentially resulting in an expedited assignment.

Taxpayers facing processing delays can also seek professional assistance to assess their position and possibility of a relief, or to request CRA for expedited processing.  

In summary, the CRA Objections process is an uphill and lengthy battle. Taxpayers should weigh their options. Often, seeking direct relief from the Tax Court of Canada is the best step forward!

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