There is quite a lot of information circulating regarding the Taxpayer relief program (previously termed “fairness provisions”). After 10 years of communicating with CRA on behalf of clients I hope to clear the air and highlight some of the common myths surrounding the program.
We often represent clients in preparing multiple years of tax work- bringing their tax filing up to date and current. The ideal outcome when working with a client is to process refunds for all years. However, this is not the case in all circumstances and taxes can be owed- which means interest and penalties can be substantial. In some cases a tax payer can claim relief through the CRA Taxpayer relief program.
The Tax payer relief program can apply when a taxpayer has not been able to meet tax obligations due to extraordinary circumstances such as financial hardship, disruptions in service such as a postal strike, an error in a CRA publication, or a disaster such as flood or fire.
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.
If you are charged with penalties and/ or interest and you want to know if you qualify. Please visit CRA website section on Taxpayer Relief.
Now let’s look at a few common myths floating around about the program.
Myth and Reality:
Myth: I have to pay the penalties and interest if my claim is rejected.
Reality: You should make arrangements to pay the penalties and interest in order to stop the interest clock from ticking should the claim be denied.
Myth: The CRA’s Taxpayer Relief program is a onetime program and that you had better take your best shot the time you decide to apply.
Reality: The 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 is done on a case by case basis with each case on the merit of its submission without any influence from the permanent collections diary or the collector assigned to the case.
Myth: 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! The CRA does NOT settle debts outside of bankruptcy or a proposal, and they do not use the taxpayer relief program for this purpose.
Myth: I cannot afford to pay my taxes; as a result, I am not going to file my tax return. I will file for relief against the resulting debt.
Reality: Failure to file a tax return is a criminal offence and can result in prosecution and/or fines. You should always file, and advise the CRA about your current financial situation in order to make arrangements to clear the debt. Once all outstanding returns are up to date, then you can apply for taxpayer relief. Otherwise, the application will be set aside until everything is current.
Myth: I need to be pre-qualified for the CRA Taxpayer Relief Program.
Reality: No. You can determine if you may qualify or seek professional help to determine if you have grounds for relief, but there is no pre-qualification of this program.
There are many more myths associated with the CRA Taxpayer Relief Program. However, at the end of the day you should seek to work with the right professional and ensure you engage their services for the right reasons.