Books and Supporting Documentation

Every person who has to pay income tax, carries on business or makes source deductions must prepare and retain all records in respect thereof for six years following the year to which they relate. However, some “permanent” documents must be kept for a longer period.

Books and records may include documents that are not just financial or legal, i.e. books of account, vouchers, invoices, letters, agreements or memoranda, regardless of their format. These documents can be kept in paper or electronic readable format.

Notice of Objection

Taxpayers who object to a notice of assessment should first try to obtain additional explanations by contacting the tax authority office. They can also object to the assessment by completing the required forms or by writing to the Chief Appeals Officer of the CRA district office for their area or Revenu Québec office, depending on the circumstances.

A notice of objection must be filed by an individual by the later of the following:

• Within 12 months following the tax return filing due date (April 30 or June 15, depending on the circumstances); or
• Within 90 days following the date the notice of assessment to which the notice of objection relates was mailed.

Example: Mrs. Dunlop was supposed to file her 2022 return on April 30, 2023 but was unable to do so. On October 1, 2023, she files her income tax return for 2022. She receives a notice of assessment dated March 1, 2024 from the federal authorities and wants to object to it. She asks about the deadline for filing a notice of objection.

She can object no later than one year following the statutory filing date or 90 days following her notice of assessment. Therefore, Mrs. Dunlop has until May 30, 2024 to file a federal notice of objection with respect to her 2022 return.

A taxpayer can deduct for tax purposes all costs incurred to prepare and file a notice of objection to an assessment of income tax, interest or penalty. After going through the objection phase, a taxpayer can appeal to the Tax Court of Canada or the Court of Quebec.

Collection

Any tax liability arising from an assessment or a reassessment is payable immediately. However, the tax authorities do not generally institute legal proceedings within 90 days from the date of mailing such assessments. If a taxpayer is unable to pay an amount owing, arrangements may be made for payment thereof with the respective authorities.

No collection measures will be undertaken if an individual files a notice of objection or appeals to the courts. However, interest continues to be charged on the amount owing.

Fairness Measures

The CRA can cancel or waive in whole or in part penalties and interest levied pursuant to the Income Tax Act, the Excise Tax Act, and the Employment Insurance Act as well as with respect to CPP contributions to be paid.

These fairness measures apply when the taxpayer is unable to make a payment or comply with a requirement within the required time in extraordinary circumstances such as the following:

• A natural or human-made disaster, such as a flood or fire;
• Civil disturbances or disruptions in services, such as a postal strike;
• A serious illness or accident;
• Serious emotional or mental distress, such as death in the immediate family;
• Financial difficulties.

Errors in documentation made available to the public that result in taxpayers filing returns or making payments based on incorrect information may also justify applying the fairness measures.

To take advantage of these measures, taxpayers or their representatives must send a written request to the CRA setting out the circumstances justifying their application.

There are similar measures in Quebec.