Canada Revenue Agency - Taxpayer Relief Provisions

Taxpayer Relief Provisions

Taxpayer relief used to be called fairness programs. It is governed by some sections of the Income Tax Act and Excise Tax Act. It gives CRA the direction to cancel some penalties and interest, to pay out personal income tax refund after 3 years of the tax return being assessed, and to accept late-filed elections. CRA will excise their discretion when late filing is caused by extraordinary circumstances, such as flood or earthquake, by CRA delay or error, or by financial hardship. CRA published an Income Tax Information Circular, IC07-1, on this subject.

A taxpayer could request relief on a prescribed form. If the request is denied, a taxpayer could request a second review, which will be done by a higher rank official. If the request is still denied, a taxpayer could request a judicial review of the decision in the federal court, not tax court. The federal court will determine whether CRA excises its discretion reasonably. If not, the court will send the file back to CRA for reconsideration. The court rarely will make a decision for CRA because the discretion is with CRA and not the court. If a taxpayer is not happy with the judicial review decision, they could take it to the federal court of appeals.