The Truth and Myths Around the CRA’s Taxpayer Relief Program

There is quite a lot of information on the Internet around the Canada Revenue Agency’s (CRA) Taxpayer Relief Program (formerly known as fairness).  Understandably, there is also a lot of misinformation around this program.  After having spent almost 11 years working in the CRA – beginning as an entry-level collector and working my way up through the division to a team leader before taking my MBA and heading into the private sector –  I have learned quite a lot about how the Taxpayer Relief program actually works.Myth vs Reality

This post will identify the key objectives of the program straight from the CRA, and then highlights some common myths about the program and the actual fact about why it makes sense to invest considerable time and effort into an application, or engage the services of someone who knows the program inside and out.

The Taxpayer Relief program was set up to allow for the Minister of National Revenue to grant relief from penalty and/or interest when the following types of situations prevent a taxpayer (individual or corporation) from meeting their tax obligations:

  • extraordinary circumstances;
  • actions of the Canada Revenue Agency (CRA);
  • inability to pay or financial hardship;
  • other circumstances

The program distinguishes between “cancelling” and “waiving” of penalties and/or interest as the CRA understands that granting relief to a taxpayer only to see them smothering in penalties and interest again is an exercise in futility.  The term “cancel” refers to a penalty or interest amount that is assessed or charged for which relief is granted, in whole or in part, by the CRA.  The term “waive” refers to a penalty or interest amount that is not yet assessed or charged for which relief is granted, in whole or in part, by the CRA.

The term “Taxpayer” includes individual, employer or payer, corporation, partnership, organization, trust, estate, goods and services tax/harmonized sales tax (GST/HST) registrant or claimant.

Now you or your client has been charged penalties and / or interest and you want to know if you qualify.  Look no further than the CRA website, and their section on Taxpayer Relief, here.

Circumstances that may warrant relief include;

Extraordinary circumstances

Penalties or interest may be cancelled or waived in whole or in part when they result from circumstances beyond a taxpayer’s control.  Extraordinary circumstances that may have prevented a taxpayer from making a payment when due, filing a return on time, or otherwise complying with a tax obligation include, but are not limited to, the following examples:

  • natural or human-made disasters, such as a flood or fire;
  • civil disturbances or disruptions in services, such as a postal strike;
  • serious illness or accident; and
  • serious emotional or mental distress, such as death in the immediate family.

Actions of the CRA

The CRA may also cancel or waive penalties or interest when they result primarily from CRA actions, including:

  • processing delays that result in taxpayers not being informed, within a reasonable time, that an amount was owing;
  • errors in CRA material which led a taxpayer to file a return or make a payment based on incorrect information;
  • incorrect information provided to a taxpayer by the CRA (usually in writing);
  • errors in processing;
  • delays in providing information, resulting in taxpayers not being able to meet their tax obligations in a timely manner; and
  • undue delays in resolving an objection or an appeal, or in completing an audit.

Inability to pay or financial hardship

The CRA may, in circumstances where there is a confirmed inability to pay amounts owing, consider waiving or cancelling interest in whole or in part to enable taxpayers to pay their account. For example, this could occur when:

  • a collection has been suspended because of an inability to pay caused by the loss of employment and the taxpayer is experiencing financial hardship;
  • a taxpayer is unable to conclude a payment arrangement because the interest charges represent a significant portion of the payments; or
  • payment of the accumulated interest would cause a prolonged inability to provide basic necessities (financial hardship) such as food, medical help, transportation, or shelter; consideration may be given to cancelling all or part of the total accumulated interest.

Consideration would not generally be given to cancelling a penalty based on an inability to pay or financial hardship unless an extraordinary circumstance prevented compliance, or an exceptional situation existed. For example, when a business is experiencing extreme financial difficulty and enforcement of such penalties would jeopardize the continuity of its operations, the jobs of the employees, and the welfare of the community as a whole, consideration may be given to providing relief of the penalties.

Other circumstances

The CRA may also grant relief if a taxpayer’s circumstances do not fall within the situations described above.

The CRA expects these guidelines to be used when applying for relief and that the requests are made within the deadlines for requesting relief, which is limited to any period that ended within 10 years before the calendar year in which a request is submitted or an income tax return is filed.   The 10-year limitation period rolls forward every January 1st.

If filed using the correct form, with sufficient supporting documentation, a response from the Taxpayer Relief Program can take anywhere from 3 months to 2 years due to the amount of requests.  In order to ensure that you are making the best claim possible, you really should engage the services of a professional, as they would be able to assess whether or not your request is sufficient, and they would ensure that you meet all the other conditions which must be in place for the CRA to review and consider your application.

At the end of the day, if you have a reasonable chance of being successful under this program, the investment made to have it written, reviewed or monitored by an expert is a worthwhile expenditure.

Now let’s have a look at some common myths around this program which are floating around the Internet.

Myths:

Myth: That the CRA’s Taxpayer Relief program is a one time program and that you had better take your best shot the time you decide to apply.

Reality: Not true,  This program is available to all Canadians who have been charged penalties and / or interest and as such, they have the right to ask for relief each and every time it is warranted.  The Taxpayer Relief Group do not maintain collection inventories and as such they review each case on the merit of its submission without any influence from the permanent collections diary or the collector assigned to the case.

Myth: That the CRA’s Taxpayer Relief Program is used in order for the CRA and a taxpayer to negotiate a deal which would resolve the taxpayer’s debt issue by settling the debt and accepting less than the actual amount owed to them.

Reality: Never, ever, ever!  The CRA does NOT settle debts outside of bankruptcy or a proposal, and they certainly do not use the taxpayer relief program for this purpose.  As a matter of fact, I can speak of a first hand experience where a collector used the word “settle” in the permanent collection diary of a corporation which had paid a principle tax debt of $650,000, because they wanted to fight the $775,000 in penalties and interest through Taxpayer Relief.  The CRA sent back the $650,000 and re-opened negotiation with the corporation because they did not want to set the precedent of settling tax debts through the Taxpayer Relief Program.

Myth: I cannot afford to pay my taxes, so I am not going to file my tax return, and then when I have a debt, I can ask for relief because I had no money?

Reality:  Failure to file a tax return is a criminal offence which can result in prosecution, so you should always file, and be clear to the CRA upfront that money is tight.  But before an application is made to the Taxpayer Relief Program, all outstanding returns must be filed up to date, and all instalments must be accounted for.  Otherwise, the application is set aside until everything is current.

Myth:  Having a disability or illness from birth qualifies me for Taxpayer Relief.

Reality: Probably not.  If you have managed to conduct your affairs for a period of time without any tax issues, but then something happens which cases the accumulation of penalties and interest, you cannot use your disability or illness when applying for relief, unless something happened during the period in which the penalties and / or interest were applied as a result of a worsening of your disability / illness.  In that case, you would need to substantiate this with supporting letters from your doctors and specialists.  

Myth:  I met with someone who is going to write a letter to the CRA asking for relief and they have sent me the letter to review.  If I sign it, and they send it off, am I now being considered for relief?

Answer:  Not any more.   Years ago, taxpayers were able to send in letters to the fairness department which contained their reasons for asking for relief and some would include supporting documentation, while others would not.  However, since the CRA revamped the Taxpayer Relief Program, they require that the form RC4288 be included in the package or the claim will be rejected.

Myth:  I need to be pre-qualified for the CRA Taxpayer Relief Program.

Reality: No.  You can determine if you may qualify, or you can seek a professional to help you determine if you have grounds for relief, but there is no pre-qualification of this program.

Myth: If my claim is rejected, then I have to pay the penalties and interest.

Reality:  You should make arrangements to pay the penalties and interest in any case in order to stop the interest clock from ticking should the claim be denied – wherever possible, however, the Taxpayer Relief Program allows for a second-level review to be performed (usually with additional information provided) and there is an option for judicial review should the second level review be unfavourable.

 

So take some time to look around when you are considering an application under the Taxpayer Relief Program and make sure that if you engage someone you do so for the right reasons.

Advertisements

Author: Warren Orlans

Welcome to inTAXicating. My name is Warren Orlans and this is my blog. With over 17-years experience in the taxation industry, 11 of them working for the Canada Revenue Agency (CRA), and the rest working in the private sector at large financial institutions responsible for resolving tax issues for corporations and individuals and the Canadian lead for a large US bank on FATCA implementation. My tax career began pretty much out of university at the CRA, in Collections, where I moved up, across, over and up again through their division with stops in Enforcement, Taxpayer Relief (then Fairness), Audit, Directors Liability, Training, Mentoring, GST, GST/HST, Payroll, Corporate Tax, Personal tax, and probably much more. If you have a collections, compliance or audit issue with the CRA, inTAXicating is the place you need to contact. inTAXicating works in strategic partnership with amazing tax lawyers, insolvency practitioners, mortgage brokers, debt counselling experts and much more. When dealing with governments, knowledge is power. We possess strong understanding of government so we know what the next step is before the government does. When you have a collections problem with the CRA, do you hire a graphic artist? No, you get a former collector who trained the staff, and who worked as a resource officer for 5 years. Then you know you are on the right track to resolving your tax problem(s). Others offer suggestions. We offer solutions! info@intaxicating.ca

62 thoughts on “The Truth and Myths Around the CRA’s Taxpayer Relief Program”

    1. Hi D,

      Thanks for taking the time to make this comment.

      You are correct, that IC07-1 states that the RC4288 is not required, however, I have experienced and have been advised by folks inside the CRA that thy have rejected requests made through the Taxpayer Relief Program because the RC4288 was not attached. In one case, the rejection caused a portion of the penalties and interest under the request to become statute barred.

      It’s better to be safe that sorry, in my opinion.

      Regards,

      Warren

      Like

  1. I am currently in debt still form last years taxes. I was a commercial fisherman and work became scarce and I had to find another career where I am making very little and living pay check to pay check. I owe about 13,000 after penalties and I am just now starting to be able to start paying this debt back. However it will still be hard for me to pay this money back without giving up my basic necessities. Would this be qualifications for tax payer relief?

    Like

    1. Hello Jeremy,

      The lack of work and having to find a different source of income is not a situation which would warrant penalty and or interest relief, generally speaking, however, not being able to pay this back without having to give up the necessities of life – or financial hardship – would be a category which you could apply for relief under.

      Like

  2. Hello Warren. Your article was very helpful. Hypothetical Question. I was denied relief because I have equity in my home. If I were to pay off CRA by mortgaging my home I would have financial difficulty to provide the necessities. I also have run up credit card debt and personal loans to family members. Can these debts be subtracted from the equity in my home in order to determine ability to pay CRA. Thanks. Karl

    Like

    1. Hi Karl,

      Sorry this comment seems so far off from your original question, but if you applied for Taxpayer Relief based solely on financial hardship, then there is nothing you can do further in this area regarding your debt.

      Instead, you are better off taking this information, using it to make an arrangement with the CRA, then once the debt is paid off, apply for your level 2 review citing all the lengths you have to go to in order to clear it up.

      Hope that helped.

      Warren

      Like

  3. Have a friend who owes about 35,000. in back taxes, interest & penalties from about 25 to 30 years ago. A lot of under the table construction jobs. Gov’t finally caught up when he went on WCB. He is 64 and hasn’t been able to work for 6 years. Get’s by on small wcb amount and social services and kind family members. He will get an inheritance soon, that could pay it all off, but in 5 years or so he would be back needing $ from social services, if he lives that long. He has a very aggressive form of prostate cancer as well as osteoarthritis and depression. Don’t know if it is worthwhile telling him to see a lawyer. What are your thoughts?

    Like

    1. Hi Roger,

      Sorry for the late reply, I just saw this comment.

      I had to read through this a couple of times to see where your friend might have done something criminally wrong which would require him to seek a lawyer.

      Yes, he received a lot of cash under the table, and that is illegal but based on the length of time that this debt stems from I’m surprised that this debt would still be active unless he was making payments or the debt was growing.

      If your friend truly is unable to repay the debts due to lack of income and poor health, that information should be presented to the CRA and not only would they leave him alone (assuming that he’s not sitting on a large number of assets) and delay re-payment until the future or permanently, He would also get any withheld payments.

      Hope this helps!

      Like

  4. I went out of business went in to depression wife left me , filed my taxes late years later did not owe any money , revenue Canada has a lien on my house saying I owe money after they got all my returns from the accountant nothing was owing my gst hst was filed and I was owed 6000.00 in refund, it was filed annually cra came back to me and said because I didn’t file quarterly that all my credits got denied and I owe 290000.00 well I almost died when they told me that , I can’t imagine thinking I’m getting 6000 back and now it’s 290,000 and a lien on my house, what can I do this is insane , please help

    Like

    1. Hi Steve,

      Doesn’t make sense.

      Likely, the CRA assessed returns and just ignored the filing because they were not for the periods the CRA expected. By breaking them up and re-filing them it should fix the problem.

      To be sure, however, if you want to scan and email me copies of the notices / letters the CRA has sent to you, I can let you know what is going on and give you the steps to fix it yourself.

      You can send them to worlans@intaxicating.ca.

      Like

      1. I filed them quarterly but now they say it was filed too late and the credits was disallowed because of the time so they charged me the gst plus interest and penalty and disallowed all my credits, I could not file earlier because the accountant wanted money and cra has a lien on my house so I could not pay the accountant then the accountant decided to do it and asked cra to remove the lien so I can pay him but they have not,

        Like

  5. We went through the process of submitting a relief letter and our prayers were answered! They said they would cancel the interst and penalties from quite a few years and we are assuming this will get the debt to zero or very close to zero. however we have not received any assessments stating the revised amounts …it’s been 3 months now….how llong could this take? Wages are still garnished too that has yet to stop too. Appreciate your opinion.

    Like

  6. Hello,
    My Father passed away 7 years ago and left my oldest brother as the Executor to his will. We has sold one of my fathers houses to pay off some of his personal debt and my brother did not know to apply for a clearance letter. 7 years later now we are being held liable for my fathers debt from his 2005-06 taxes 17,000 with incurred interest and penalties of 10,000 none of us even know this debt existed and now i don’t think its fair to be charge the taxes and interested on a debt that we were unaware of that is almost years old and now ours…

    Like

    1. Hi Becky,

      This is a really unfortunate situation. How has it progressed?

      Unfortunately, one of the responsibilities of being an executor is to seek a clearance certificate from the CRA before distributing or selling any assets of the estate. In this situation, the CRA will always assess executor’s for the monies they would have otherwise collected.

      Was a taxpayer relief application ever forwarded?

      Are there other assets which your father owned which would be sold to pay back the CRA?

      Like

  7. Hi Warren,

    Sadly my mother in law passed away late last December. My wife was named as a joint beneficiary and sole executor.

    Due to her grief and difficulties from the banks, she was not able to file her final return until this November.

    The cra gives 6 months to make a final filing, after which they will charge a 5 percent penalty, and 1 percent per month there after, plus interest.

    6 months seems a very short amount of time for someone who just lost there mother, especially at a young age (my mother in law was in her 50s when she passed away)

    Based on my wife’s grief, Don you think she would have any success in requesting relief?

    Many thanks,

    Mikhail

    Like

    1. Hi Mikhail,

      It’s unlikely that relief would be provided unless there was a very special situation which prevented the filing of that final return for almost a year. If the final return was a credit return then there would likely be no penalties or interest charged.

      What happened when the return was filed?

      Like

      1. Good afternoon, Warren, and thank you for the reply.

        The final return was not a credit, in fact quite a large amount was owed. Approximately $200,000. Our accountant sent the final return and the cheque last month and we are now awaiting resposne from the CRA.

        Could an argument for relief be made for bad counsel? The lawyer we hired to help us with the process never mentioned this. Additionally, we did not know, and he did not tell us, that we could file a claim before the money to pay it was available. We had thought that we needed to have the funds avaliable. If we knew that we could simply file the claim before having the money availble ot pay it we certainly would have.

        Thank you,

        mikhail

        Like

  8. hi warren
    i have objection pertaining to the 2004 taxation year. as a result of review they decided to waive interest for the period from January 1 2009 to December 31 2014 pertaining to the balance owed for 2004, as there was undue delay on the part of the agency in finalizing the objection.

    now i would like to apply for taxpayer interest relief request to the chairperson of the the taxpayer relief provisions committee under
    (action of the CRA like undue delays in resolving an objection or an appeal, or in completing an audit.)

    am i doing right ? and still i have to fill up RC4288 E with the covering letter. because of they waive some years but how about from 2005 to 2008 and still 2015. notice of objection delay all process took 10 years.now i got letter.

    this is best website from you. i learn lot and help lots or others. all useful information.

    thank you

    Like

    1. Hi Dave,

      You are entitled to a level-2 Taxpayer Relief review and in doing so, I recommend following the same procedures as the first application and citing parts of the first review where you felt additional relief should have been provided. If in that first review, the reviewer cited reasons for additional relief not being warranted, I strongly recommend mentioning that, then why you feel it should have been granted and including new and or additional information to support that claim.

      Sometimes all it takes is some clarification.

      Good luck!

      Warren

      Like

  9. Hello Warren, I work in an entertainment industry and now CRA is after us for not claiming tips. CRA is going back from year 2012-2015 which I did not claim full tips. I send money to my parents every month as form of support due to their medical conditions and the fact that I am going back to school in September of next year. I don’t have the bill from CRA yet, but I am looking at more than 10k plus penalty and interest. I don’t have that money to pay my taxes back. Would this be considered as financial hardship? Thank you!

    Like

  10. Hi Warren,

    I read your article about tax payer relief, it was very informative, thank you. Are you able to to advise on the RC4288 form before I submit it to CRA (or know someone who can)?

    My case is simple – I’ve been reassessed on my 2011 & 2012 tax returns because of a tax shelter I participated in. I have just been informed now (Dec 2015) of the amounts I owe from those years, and I see CRA has added a healthy dose of interest on, which they calculated starting in 2011 and 2012. I can’t pay something I don’t know about, so my argument is based on the CRA’s processing delay which resulted in me not being informed until now about how much was owing.

    In your experience does a case like this have a high probability of having the interest eliminated/discounted? I have already paid for 2011 in full.

    Thanks for you help,

    Kris

    Like

    1. Hi Kris,

      A couple of things to comment on based on your question(s). First off, yes, I could review a Taxpayer Relief application and help with some edits, if needed. I have a lot of experience with them both while working for the CRA and in the many years since I left.

      I do, however, have some questions around your reason for applying for said relief. While CRA processing delays might be a reason to apply – it has taken them a while to get around to assessing people – the CRA has taken the position that people entering into a gifting arrangement knew it was not solely for the purpose of giving gifts, and thus are not looking favourably at taxpayers who say they didn’t know.

      I do think applying for Taxpayer Relief is an opportunity everyone should utilize if they qualify, but the approach should be a kind, cautious approach rather than approaching them as if it’s all their fault.

      If you wish to continue this discussion, please email me at worlans@intaxicating.ca

      Hope this helps

      Like

  11. Hi Warren,

    I have a job where I have access to a company truck, which I use as my primary (sole, in fact) vehicle for personal use: I have no other vehicle, and use it for personal errands, such as driving to and from work, getting groceries, going to the cottage, ect. They also provide me with a 407 transponder, which I use for personal use fairly frequently. I do not pay for gas or maintenance, and am therefore not reimbursed for anything. I also have a work smartphone which is my lone phone for personal use.

    I am now concerned that my employer has not been including these in my T4 as taxable benefits. (For instance the truck I drive is probably worth 40k, and I use it for thousands of personal kilometers every year and the amount in box 34 is only about $900).

    If my work has not been doing this properly, who is on the hook? Myself, or my employer? Am I able to claim relief for this??

    Thank you,

    Scott Hamilton

    Like

    1. Hi Scott,

      I am not an accountant, so I don’t want to comment on the amount in box 34, however, if the CRA determined that you were being given a taxable benefit and your employer had not been taking off the tax, then they would assess you. The would likely also assess your employer for failing to deduct and remit said tax.

      In the few cases I have seen where the CRA has re-assessed employees, the employer has picked up the employees share as well.

      If you are concerned about being reassessed, then I recommend having your accountant re-do your return(s) including the taxable benefit and if there is a significant difference, then you might want to consider an application through the CRA’s Voluntary Disclosure Program which allows you to claim income / file returns which were missed without being charged penalties.

      If you do not have an accountant, I work with one whom I very strongly recommend.

      Hope this helps.

      Like

  12. Hi Warren,

    I have an issue, I just wanted your opinion on it, I have worked in Canada from 2009-2012 and I have paid all my taxes to the government. My only problem is that I never filled my tax returns. I had no idea that i have to do them since I have paid my taxes to the government. Anyways I have learned recently that if you dont fill your taxes and you had more than 100,000$ in a different country then you will be paying $2500/year. This will be a great amount of money to pay in penalties. So I have applied for the VDP and I got a reply saying that I haven’t meet the condition because They have notified us through a thrid party that we should do my taxes coupe of years ago, but I wasnt notified in any way possible. Please let me know what should I do now.

    Thank you,

    Karim

    Like

  13. I’m not saying the CRA is perfect. There are some bad apples everywhere, just like there are bad apples who set up tax schemes and prey on the uneducated – taking their hard-earned money and then leaving them with a massive tax debt and no other options other than bankruptcy.

    Like

  14. Hi Warren,
    On your other post I saw this and wonder do most people in this situation have to go bankrupt or can the request for taxpayers relief for penalties and interest help? (Stating he was mislead and scammed)

    “I’m not saying the CRA is perfect. There are some bad apples everywhere, just like there are bad apples who set up tax schemes and prey on the uneducated – taking their hard-earned money and then leaving them with a massive tax debt and no other options other than bankruptcy.”

    My hubby was conned (with 224 others) and we are filing for tax court. It was suggested to also apply for this relief. Does this help him to stay out of collection? I’m confused why we need to do both at the same time. Doesn’t tax court freeze everything until that is settled?
    Sincerely,
    Angie

    Like

    1. Hi Angie,

      Just following up as it’s been a year since the gifting scheme became a hot topic and while the CRA has been proceeding slowly on reassessing taxpayers, isn’t it interesting to see that so-called tax solution firms are causing all the problems for participants.

      They take money, offer a service then send you to bankruptcy rather than looking at each situation on a case-by-case basis and explaining the facts.

      Taxpayer Relief is a separate program within the CRA which operates outside of collections, meaning the collections staff will not wait a year before taking collections actions. In fact the 2 divisions don’t speak at all.

      Additionally, while applying to tax court will cause the CRA to stay the proceedings (hold off on collection actions), once the appeal in tax court has been heard and a decision rendered, collections then takes actions, interest accumulates and the balance has just grown.

      It’s a lose-lose situation, and you are right… It sucks.

      Like

  15. Hi Warren,
    I am an RN worked for 31 years and filed on time every year. 2014 I was diagnosed with stage 3 breast cancer. I received chemo, major surgery and radiation. I am unable to do active duty nursing anymore. I have medical documents to back that up. My employer would not accommodate me. So I resigned for medical reasons. I’m 52. I took a lump sum from my pension. Paid off debt to be able to manage monthly expenses. My pension was taxed heavily at source and I just found out from my accountant I owe another 48,000 in income tax. I can’t afford to pay that. What can I do?

    Like

    1. Hello, Donna, So sorry for your struggles. My husband and I have been fighting the CRA over the lump sum penalties associated with cashing out his 27-year teacher’s pension which we were forced to access when our home renovation was abandoned in 2010 by a nasty contractor. We too were reassessed and the CRA demanded another $43,000.00 from us, which we did not have. Fortunately, we applied under the “caregiver benefits” and “disability tax credits” for our disabled son going back to 2007, which reduced the amount owing by half. We then applied for tax relief under “extraordinary circumstances” and “financial hardship” since my husband was unable to return to teaching under the new school boards rules as they considered him “retired” at 50. Since then, they have liened our family home in December 2014, which we have been fighting to complete while litigating against this builder since 2010. Despite receiving $3,000.00-$4,000.00 per year discharged by his remaining pension fund management, the CRA does NOT credit these funds against outstanding debt for another 18 months after they have been withdrawn from what remains of his managed pension fund.The amount the CRA leined us for was $21,000.00, and BEFORE final tax credits and tax relief had been processed. We actually owe $8,100.00, but the CRA will not adjust their lien amount and have indicated that the lien will remain registered at $21,000.00 until the $8,100.00 debt is cleared! Since 2010, we have required the support and advocacy of our Member of Parliament, but even they are powerless to get these individuals to address these injustices. In your case, I would apply asap for Tax Relief under “extraordinary circumstances” and “financial hardship” given that what happened to you was not under your ability to control. I would also apply to request that they cancel these penalties under the circumstances of your shortened career/income earning years due to illness. In our circumstance, they cared little that my husband resigned from his career, loosing all his benefits under duress. We have since reversed a provincial court decision at the Ontario Court of Appeal but remain without the funds to pay off any debts to the CRA or anyone else until we have a new trial on “damages” alone. I believe when one department of the CRA affirms repeatedly your request for “tax Relief” under “extraordinary circumstances” that the CRA should NOT penalize a cashed out pension as a single annual income. They should be forced to acknowledge the conditions under which you resigned that triggered this huge tax debt and adjust their tax penalties accordingly over several years and not all at once. This is very unfair and against common sense. All the best with your endeavors. The Scotts

      Like

    2. Hi Donna,

      Please accept my apologies for not seeing this sooner, however, I’m responding because I think the advice would be helpful for you, and anyone else reading, plus the comment below from Jeanie Scott touches on a similar situation.

      Let me first begin by saying that I’m sorry to hear that you’ve been having troubles with the CRA during what must be an extremely difficult time.

      My thoughts are similar to those of the Scotts’ below, however in addition to Taxpayer Relief and the Disability Tax Credit, it is extremely important to communicate to the CRA the details of your situation because based on that information the collections group would be able to accept a payment arrangement from you, and might even be able to suggest some avenues for you to take.

      For example, if you were unable to work, did not own any assets, were not going to be able to acquire or earn any assets going forward, the CRA would defer your debt because of your apparent inability to pay.

      They would require lots of paperwork, etc., and I hope that is not the case for you, but certainly the CRA collections can only work to help you based on the information they have / know and are able to justify / verify.

      Hope this helps.

      Like

  16. Hello Warren
    I was a young business man and was not wise, I didn’t do taxes for 6 years with my incorporation and now I owe over 100 K in corp taxes. Now for the past 3 years I have done on time and I have been faithfully paying them an agreed amount of 2 grand per month. I originally owed GST and Alberta a bunch of money as well but that is almost paid off. They demanded I pay GST and Alberta first but now Corp tax is not happy and coming after me. My accountant and I believe their next action will be to put a lean on my house and me me start payning myself a wage. My wife and I are 50/50 directors of the company and the only 2 who work for my incorporation. We are taking out of the corp in dividends but this seems to be an issue. I am trying to get a babysitter for my 2 young kids a few days a week so my wife can earn an extra 1000 per month so we can give them more.

    3 questions for you

    Is it possible to get my interest and late to file fees waved so the payment im making can make a difference in the principle I owe? The interest and fees are so much that they will not be happy with the 3 grand im giving them per month. Its as much as I can afford, any more and I wont be able to afford to live.

    If I can get a loan to help settle the debt would they accept less then I owe? If I could get a loan for 80 grand I would need half the 3 grand a month to pay off the loan, and id need the other half for staying current on my taxes.

    Do I have to switch to paying myself a wage if they tell me to? I’m afraid they are asking me to switch to paying myself a wage so they can garnish it. If I have to give them the 2 grand a month and they garnish wages it will force me into bankruptcy and I will not be able to afford to live.

    Thanks so much for having this page and help answer questions, you are awesome for doing this for people!

    Cheers
    Brad

    Like

    1. Hi Brad,

      A trustee is an option, but never the first choice I would ever suggest because the CRA has options available for people who do not have the ability to pay.

      First off, is the corporate tax balance a result of returns that your accountant filed or has the CRA assessed those T2 returns? If they have assessed the T2’s, then filing the correct returns would adjust the balance to the proper balance. On the outset, a T2 balance of over $100K would tell me that your business would have reported a profit over those years (using a 15% Corporate Tax rate) of around $900K.

      Even if that was the case but there is no money left over, the CRA will accept a payment arrangement for a lower amount based on your income and expenses plus a Taxpayer Relief application should be considered in order to reduce some of the penalties and / or interest or to ask the CRA to stop the interest from accruing because it limits your abilities to repay the balance.

      If you would like some more information, please email us at info@intaxicating.ca

      Hope this helps!

      Like

  17. I have been charged with fail to file , I was told to plead guilty or else, so now my name is all over the Internet , it’s not a criminal charge but now I can’t get a job
    , can this be removed off the internet

    Like

    1. Hi Slav,

      It can’t be removed from the Internet, but it will eventually fall off the first few pages of search engines as other more interesting articles are written.

      What I would do, however, is bring it up when you are going for a job interview as a “heads up” to the HR department and tell them the reasons behind the failure to file (FTF).

      If your actual FTF reasons are laziness, or you didn’t want to, I would recommend a story around either illness in the family, or the need to travel, or possibly a corrupt accountant / tax preparer.

      I would not wait for them to find it because that looks bad, but I would absolutely bring it up and address it right away because that shows responsibility and proactiveness.

      Hope that helps.

      Like

  18. I would like to know if omission of a slip T4 RSP (where 20% taxes has been taken off) due to non-receipt can be grounds for relief of penalties and interest. I also want to mention that I move residence and could be the reason I didn’t get the slip. I have been charged 20% Penalty based on the Gross amount of RSP withdrawn which I think is excessive considering I’ve been filing and paying my income taxes on time every year. Please help!

    Tina

    Like

    1. Hi Tina,

      The CRA does not normally give relief to taxpayers of interest and / or penalties in situations where they moved and did not provide the CRA with their new address. If, however, you moved – gave the CRA your new address – and they mailed a Notice of Assessment to your old address, then you do have some recourse.

      Wording a Taxpayer Relief application is very important for not only what you say, but what you should not say. You want to make your case without accidentally incriminating yourself.

      Hope this helps.

      Like

  19. I mistakenly deposited $112,000. from the sale of my house to my on-line RRSP acct. in Oct/16 it was meant to go into savings acct. My RRSP limit was only 42,000. creating an over contribution of $70,000. Realized my mistake two months later, I thought the best idea would be to roll everything over to a RIFF.
    I then sent a letter in Dec./16 to CRA explaining my mistake and requesting relief or waiver of tax and interest. Received a letter back in Feb.17, stating it was not a reasonable mistake. They are giving me to the end of March 2017 to pay the tax on the over contribution in both the RRSP and RIFF. CRA also told me to remove the over contribution from the RIFF or continue to be taxed by them. My bank will have withholding tax deducted at the source and I have to claim this money on next years income. I have made the money from the sale of my house taxable money by clicking on the wrong account to deposit my money. Would I be wasting my time applying for tax relief?
    Thanks

    Like

    1. Hi Beth,

      100% worth submitting a Taxpayer Relief application! I know we have spoken, and I want everyone to know that a well-written relief application gives you a 100% better chance of getting some penalty and / or interest relief over not submitting one at all.

      Like

  20. Hello Warren, I am an Aboriginal person and worked for a Native organization in Vancouver, BC.

    At the time, the employment organization said I wouldn’t have to pay tax because I am First Nations and that they set their system up so that I will be leased out to them by a leasing company situated on Native Reserve Land in Ontario.

    The organization would deduct a % of my bi-monthly cheque to help cover legal fees while they fought the government in court. As it turns out we lost and not only did I lose out on the Bi-monthly deductions for legal fees but now I owe back taxes for 2001- 2005 years of employment.

    I already received tax relief for this debt a few years ago but because my financial situation was not good at the time I could not make any payments.

    I want to start paying this debt now and I’m wondering if they’d grant me a second tax relief on this same debt?

    Any info. helps. Thanks

    Liked by 1 person

    1. Great question!

      First off, I’m sorry to hear about the financial struggles that you are experiencing.

      The Taxpayer Relief Program is meant to provide taxpayers with an opportunity to have penalties and / or interest charges reviewed when there are certain situations which the CRA outlines. Financial Hardship is one of them. So whether you received relief previously or not, you are entitled to apply again for relief, although this time, you will have to prove more and this time I strongly recommend that you ask for the CRA to stop charging interest on your debt going forward.

      You would need to make the case that based on your present and future financial situation, the levying of interest charges would make it impossible for you to pay back the debt.

      If you want to discuss further, please email me at info@intaxicating.ca.

      Hope this helps!

      Warren

      Like

  21. Hi Warren,

    I started contributing to my TFSA account back in 2009, and I made sure to make my annual contributions each year. In 2011, I left for France on a 6 month contract which ended up being renewed a few times, and next thing I know I was there until August 2016. During my time in France I was still contributing to my TFSA. In 2015, I looked into applying for non-residency status with Canada, which I received a response in September 2016 that I was indeed deemed a non-resident from 2011 until 2016. I have just received a TFSA assessment and they are charging me penalties and interest on the amounts that I contributed to my TFSA, the amount due is just over $19,000. I have never withdrawn from my TFSA account and that fine is much greater than the combined gains I have earned from my investments since 2009. Where do you think I stand in a chance to get these penalties and interest waived?
    P.S. I had no idea I was not allowed to contribute to my TFSA account while I was away.

    Best Regards,
    J

    Like

  22. Thank you for your question, J,

    For the benefit of anyone else in a similar situation, an individual can contribute to a TFSA only while he or she is a resident of Canada. Any contributions made while he or she is a non-resident are subject to a penalty tax of 1% per month.

    The penalty tax imposed on TFSA contributions made by non-residents is in addition to the tax on contributions in excess of the cumulative contribution limit as can be found in the CRA’s publication RC4466 (TFSA, Guide for Individuals).

    In your specific situation, it is highly unlikely that you would be entitled to relief of penalties and / or interest unless the funds you placed in your TFSA were automatically removed from your bank account, and you had an address here and all information relating to said transactions occurred without you knowing.

    I would, however, still strongly recommend putting together a case and submitting an application through the CRA’s Taxpayer Relief program because you just never know.

    If you wanted to draft up a letter and would like me to review and possibly edit it for you, please email me at info@intaxicating.ca and we can discuss further.

    Hope this helps!

    Regards,

    Warren

    Like

  23. I’m 5 years behind in filing taxes & I’m flying solo to get this done. The tax relief form RC2488 is for 3 years only. Now what do I do for the 1st 2 years? I can cut through doing my own taxes as it is only T4 slips and rent. I have the 1st 3 years done (not filed) I owe approximately $4000. As I lost my part time job the last 2 years I may have a refund (I have not done yet). I may have GST & Ontario tax refund as well. I just lost my Job end of January. Year 1 Feb before I was suppose to file, find out my daughter is being treated for cervical cancer she had kept secrete from family along with announcing she is pregnant and keeping baby while still on radiation pills. So begins my Topsy turvy emotional & mental ride and my financial situation to follow soon after. Me and my scramble eggs brain make it through just to year 2 I should be filing soon and I had full intentions too. My daughter ok and I have a healthy granddaughter. My oldest sister has 2 heat attacks and needs to be resuscitated. My 2 sisters and my daughter are my best friends (I have only the 1 child). I,m my sanity ride and back on the crazy train. I’m so stressed my nose would spontaneously squirt out blood. I take time off work to be with my sister in hospital. I just worried to extremes there after (still do) . My mom dies at 54 & her siblings in late 30’s to 40’s for heart & stroke. This did not help my mental state. Time passed and I have regained my sanity. It is Sept just before I now am 2 years behind in taxes and my 3rd is coming up. Again, full intentions of filing my taxes. That September phone call, my other sister calls me, she has cancer. This was the most horrify experience I have ever had. 1 1/2 years of emotional & mental torture. A month after she told me she had cancer, it was her on the couch or the hospital. She had to crawl to the washroom just 20 ft away more than I wish to mention. There was no option of a bucket list. Her kids went crazy for money and broke her heart. It was to the point her kids were not visiting. Mothers day her daughter went to hospital to see her (just 2 weeks or so before she died) for 2 minutes to yell at her for not having enough $ for her pay off her debts then stormed out. I watched my dying sister cry because her adult kids abandoned her in her last days. They had a great relationship prior her illness and before money became a part of the equation of her death. Somehow, my sister mustered up enough consciousness, the day before she died (May 2016) in hospice so repeatedly say “shoot me” while still in an unconscious state and body vibrating from the utmost pain (the nurse said she is experiencing the utmost physical, mental & emotional pain all at once). Those were her last words. This is only some of the horror of this story. It is June 2016. I’m a total basket case now. I’m 4 years behind in taxes. I’m broke and now thousands in debt. I never owned a credit card, I got one for while my sister was sick and dying. I owe $9000 on that now. I’m not complain, I was blessed to have spent so much time with her. Nearing the end of 2016, stilled messed up in the head I know I have to start taxes. I do the 1st 3 years of my taxes. I’m on financial panic now. I owe about $3500. I have always gotten a refund so I’m shocked. I hear from others we can get relief. I request tax relief form from Revenue Canada. They mail it to me. I’m determined now that I’m going to get all 5 years done coming April 2017. I was able to save $2000 to start payment plus put GST & Ontario tax refund to it along with relief/forgiveness and hoped to set up a payment plan for remaining owing. End of January 2017 I get laid off my job. Here I am. 5 years gone past for taxes and I have not filed one of them yet. I rent an apartment and live pay cheque to pay cheque. Ok with me. But now I have a huge credit card debt, back taxes and no job. I’m still messed up surrounding the circumstances of my sister’s death I only partially shared. Before writing this I called around for tax help. Cost me $850 just to file the 5 years. I just don’t have that. Because my taxes are so simple (T4 and rent receipt), I can do it myself. I just don’t know how or what form to complete & submit for relief/forgiveness/reduction or whatever it’s called for the whole 5 years. They have not contacted me. I admit it, I,m scared as heck but am ready to do this whatever the consequences. Time for me to pay the piper somehow, someway. I’n down to $1200 saved to pay taxes, EI is hard to survive on on I have caught up on my regular bills like hydro, phone ect.
    -$1200 cash
    – 5 years of tax to file (which I can do)
    -penalties and interest ready to slap me
    -no job & no other money
    -no idea what forms to fill out
    Any suggestions or input welcome/needed with open arms.
    Suzanne

    Like

    1. Hi Suzanne,

      I’m so sorry to hear about the struggles that you have had to endure over the past 4-5 years, and that you have been worrying about the CRA taxes / debts the entire time. This is actually quite a common occurrence, and the way to resolve it is actually quite simple. I’ll help you with this. First off, you need to prepare your tax returns. Then file them. Once they have been “posted” by the CRA, they will send you a Notice of Assessment, which details either your amount owing or the amount they are refunding you.
      If you owe money, we can apply for the relief of penalties, and / or interest, through the CRA’s Taxpayer Relief program. I can review the letter than you prepare, and to be honest, you pretty much wrote the letter in this comment.
      The CRA takes upwards of a year to review Taxpayer Relief applications so if you owe, we should set up a payment arrangement with the CRA that you can actually afford.

      I’ll email you offline to make sure you see this, but I’d be happy to review your tax returns to ensure that you’re claiming what you are entitled to, and that everything is okay. You should not be owing money other than the late filing penalties.

      Hope this helps!

      Warren

      Like

  24. Hello,

    I am a business owner and I hired 2 employees in October 2016, I do not pay myself. What I did not realize is that there was going to be remittence payments as I did not have an accountant at the time. This is going to be a smaller amount then what I have been reading in this thread but my business is a startup and still small and every last dollar counts. We have paid around $1000 to the CRA for late remittence payments. Since we learned about paying our remittence we have done so each month. To be honest we did not know about remittence payments before hiring our employees and even if we did we would of had a tough time paying them due to the extra cost on the business. Should I try to file to get this back or is there no chance and I should take it as a learning experience and move on. We are still tight on cash so the $1000 would look better in our account then the CRA’s.

    Thanks for your time,

    Greg

    Liked by 1 person

    1. Hi Greg,

      I feel that since you have corrected the issue, that you submite an application for Taxpayer Relief anyways.

      It is within your right, as a Canadian Taxpayer to do so, plus with a good application you might get some money back / have to pay less.

      In order to keep costs low, we can review your application and provide some thoughts, supports and edits for a very nominal fee.

      Let me know if you need more information or direction!
      You can email me directly here; tax@goldhar.ca

      Regards!

      Warren

      Like

  25. Hello Warren,

    Great post and the comments and your replies are very informative. I have a situation with excess RRSP contributions for tax years (2010-2015) and would like to get your thoughts.

    I had my bank setup for automatic RRSP contributions and at the same time, my company was also deducting and contributing to my RRSP, resulting in over contributions. Due to my lack of knowledge on these matters (I was doing my own tax filings using UFile), I did not realize this mistake. Recently when I started using a third-party income tax filing service, my consultant told me that we have to address this issue ASAP and we filed some forms for excess RRSP contributions.

    CRA then sent me some papers asking to withdraw some money from my RRSP accounts for each of the 6 tax years from 2010 to 2011.

    Then the CRA sent me an assessment that included “Net federal tax” + Penalties + “Arrears Interest” for each of the 6 years and asked me to pay it off in 2 weeks time.

    My current situation is that I lost my job in July’2017 (but I do get severance pay in monthly installments from my company). Since my excess RRSP contributions are due to lack of my knoweldge and awareness and the fact that I do not have a job now (I am 53 years old), would I have any chance to get waiver or cancellation of my penalties or interest.

    My penalties for 2010-2015 add up to $1190 plus interest adding to 1460. That is a total of $2650. My total payment back to CRA was about $10K. I want to get some relief from penalties & interest, what are my chances.

    Thank you!.

    Like

    1. I’m not 100% sure that you are entitled to relief based on what you wrote, however, I would always recommend putting in an application seeking relief anyways. If you are able to write a compelling piece and include supporting documentation explaining that you had your employer making contributions and at that time you asked your bank to stop but they did not, but the issue is that it was over 6-years and you would have received a slip from the bank and from your employer outlining the deductions, would you not?

      So make sure when you decide which way you want to position your argument, you ensure that you do not ruin your case by stating something which may not have been accurate or true. Stick to the facts!

      and good luck!

      Like

    1. Hi Jim,

      There are none. There used to be a 10-year statute of limitations on the collection of tax files – Marcovitch Decision – however all that occurred from that case was that the CRA had to initiate collections within a 10-year period, which means a phone call, sending (not necessarily receiving) of a letter, or a visit / filed call to the location / person owing the taxes.

      There is, however a statute of limitations for private collection agencies, but nothing for the CRA.

      Like

Would Love to Hear Your Thoughts

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s