CRA Tax Disputes
We represent clients who have tax disputes with the CRA during the assessment, audit or notice of objection stages. We work to present our client’s best position to the taxing authorities. We work to settle disputes at the earliest stages and to refine and narrow the matters at issue. We have an excellent track record at resolving tax disputes at the CRA administrative level.
Tax Court Defense
If the matter proceeds to Tax Court, we work effectively to persuade the Tax Court Judge that your best view of the law and the facts should prevail. We frequently settle our client's case before trial and we have a successful track record on the cases which do proceed to trial at Tax Court.
If you are unhappy with your result at Tax Court, you have a right to appeal the decision to the Federal Court of Appeal. It will not be a "fresh trial"; there are no witnesses ; it is essentially a review of the selected transcripts and documents previously submitted at the Tax Court to determine if the Tax Court made a serious error of law that would have changed the outcome.
Voluntary Disclosures (Tax Amnesty)
We can represent you, under the protection of Solicitor/Client Privilege, on a "no names basis", to make application under the Voluntary Disclosure Program (“VDP”). We will protect your rights to fair treatment, in accordance with the Principles of Natural Justice. We will advise you of the risks involved and help you decide if a VDP is in your best interest.
There is a lot of information, (and a lot of nonsense), on the Web about “tax amnesty” and the voluntary disclosure program. For example, notwithstanding that the phrase “tax amnesty” has become a very well recognized phrase, there is no real “tax amnesty” in Canada.
There is the Voluntary Disclosure Program that the CRA administers under the apparent authority of subsection 230(3.1). That subsection does permit the CRA to waive all or part of penalties and interest but does not permit any tax to be waived. Furthermore, there is no other section in the Income Tax Act that authorizes the Minister of National Revenue (or the CRA) to waive all or any part of tax which has been assessed.
Accordingly, there is no real “tax amnesty” in Canada. All that might truly be said is that there can be a “penalty and interest amnesty” in Canada.
You will also find, on the Web, commentators who warn of certain “dire” risks associated with a Voluntary Disclosure.
We agree that there are genuine risks, especially if you might be considered by the CRA to be a “tax evader”. Essentially, if it is possible that you might be charged with tax evasion, you are very much at risk if you voluntarily disclose to the CRA those facts that might help establish that you actually are a "tax evader".
Your particular situation is best discussed through an initial consultation under the protection of Solicitor-Client Privilege. Only a lawyer can offer you Solicitor-Client Privilege.
In every case, you must ensure that your VDP application meets all of the designated tests and that you will qualify for the relief offered. We can help ensure that you will qualify before disclosing any information that would identify you.
After all objection or appeal avenues to contest the assessment have been exhausted or have expired, and the assessment is fixed and final, a client may request relief of two types :
- A) from all or part of the interest and/or penalties, pursuant to subsection 230(3.1), or
- B) if the client is an individual or testamentary trust, a request to reopen up to ten years to permit a reduction in taxes owing, if the facts warrant it.
We can help you decide if this is a course you should take and we can file the applications on your behalf.
Tax Payment Arrangements
When the final amount payable becomes certain in amount, and it is no longer possible to obtain a better result, it is then necessary to arrange payment, if possible. Of course, the full amount is due and payable immediately and that is what the CRA prefers.
If payment in full is not possible, payment terms may be negotiated with the CRA collection officers within established guidelines. We can help you prepare your best proposal and negotiate a suitable payment arrangement.
Remember that the CRA views taxes, penalties and interest as equally payable and there is no difference between them in their mind, regardless of whether there is a difference in your mind. Furthermore, the CRA has the upper hand in most negotiations because they have extraordinary powers to collect and are subject only to public policy concerns, internal guidelines and any restrictions which might be applicable under the Bankruptcy and Insolvency Act ("BIA").
To obtain a suitable payment arrangement, you must be viewed as co-operating fully with the CRA collectors and usually you must agree to submit financial information which establishes that the payment terms you have proposed is the most you could afford. You can expect that the CRA will double check every one of your financial facts.
Settlement by Consumer Proposal or Voluntary Assignment in Bankruptcy
Sometimes, even the best payment terms will not resolve your tax debt simply because the debt is too large and you simply do not have the capacity to pay.
Although our focus is on resolving tax disputes, we often assist our clients in preparing Consumer Proposals under the Bankruptcy and Insolvency Act (“BIA”) and thereby settle all of their debts, including tax debts and all other debts, for a reasonable, all inclusive, settlement amount.
A settlement amount is most attractive to your creditors if all or a significant part of it can be paid at once with funds borrowed from financial institutions, friends, family or relatives. It may be acceptable to your creditors for you to propose payment over time from future earnings or a combination of both methods.
A Consumer Proposal must be accepted by the majority of your creditors (with certain statutory conditions) and, in any event, cannot exceed a 60 month payment plan.
We can also represent you with a Voluntary Assignment in Bankruptcy if that option makes economic sense to you.
There are many misconceptions about a Consumer Proposal and about an Assignment in Bankruptcy under the BIA and we can help you understand the process and your rights and obligations. If there are significant tax debts involved, there are special statutory considerations under the BIA and the Income Tax Act, and the advice of a tax lawyer is highly recommended, before you see a Trustee in Bankruptcy. This is because the Trustee, no matter how sympathetic, does not actually represent your interests; the Trustee is a neutral party and cannot give you advice to protect your interests.
Discussions about a Consumer Proposal or a Voluntary Assignment in Bankruptcy are best suited to the protection of Solicitor/Client Privilege.