Tag Archives: CRA Taxpayer Relief

Essential Information for Canadian Taxpayer Relief

Any sensible person would never want to suffer from tax debt that is uncontrollable and the best way to avoid paying of interest and penalty on your taxes are to pay them on time. There are however times when seeking Canadian taxpayer relief becomes out of control when an individual is forced to pay interest and penalties along with the accrued tax return amount.

Depending solely on these circumstances, the CRA allows relief for taxpayers. This relief allows waiving off any additional interest or penalty that adds up on the original tax amount. There are also ways through which the original tax amount can be paid in easy installments throughout the year. Under Canadian taxpayer relief provisions, the taxpayer is allowed a period of 10 years in which he or she can make a relief request provided that their situation comply with the allowed provisions under which Canadian taxpayer relief is granted.

It should be remembered that CRA very exhaustively and comprehensively confirms on whether a Canadian taxpayer reliefrequest complies with the stated situations of relief. There are certain situations that render a taxpayer as being eligible for CRA taxpayer relief. These situations include

– Extraordinary Circumstances

– Financial Hardship

– CRA’s Action

Extraordinary circumstances refer to situations that are beyond the control of a taxpayer, rather any individual. Any such occurrence that acts as a hindrance for a taxpayer towards payment of taxes such as a natural disaster, serious kind of illness, services disruptions of any kind such as a postal strike, etc can be waived of by the CRA.

Financial hardships also make an individual eligible for Canadian taxpayer relief provision, however CRA will to an extended limit confirm on the inability of a taxpayer to pay and only after confirmation will it waive off the excess interest and penalty on the tax amount. Not every financial inability is entertained in this regard whatsoever, except those that cause inability to provide even the very basic necessity of life such as food, clothing and shelter.

Another Canadian taxpayer relief provision that allows waiving off penalty and interest is due to the doing of the CRA itself. For example any interest or penalty that is imposed on a taxpayer which resulted due to a late processing by the CRA or delay in informing the taxpayer about the tax is also waived off by the CRA.

Other than the defined reasons there can be other circumstances in which the Canadian taxpayer relief can also levy however the provided reasoning should be truly justified. Also in order to consider the taxpayer relief request, the Canada Revenue Agency considers certain factors that contribute towards the decision of accepting or rejecting the request.

These factors include

– Tax compliance history

– Whether the existing arrears amount is knowingly allowed to exist

– If previous tax affairs were handled with a reasonable amount of care and

– The appropriateness of the taken actions.

Whatever the action may be, it is totally on the discretion of CRA to grant or refuse Canadian taxpayer relief request and it is in no way bound by the grant relief provision.

Summary

The CRA under the grant relief provision reserves the rights to waive off penalty and interest levied on taxpayers provided they qualify for it based on the specified rules. Taxpayers supported by the Canadian taxpayer relief program can prove their inability to pay and avail the provision for themselves.

What is a Canadian Taxpayer Relief

Canadian Taxpayer relief refers to reaching a negotiating with the CRA where the debt issue is resolved through waiving or cancelling off the interest or penalty amount from the actual payable taxes of a debtor. Canadian taxpayer relief program was designed to offer relief to taxpayers who were unable to pay their tax debt s owing to

– Any extraordinary circumstances

– An action of the CRA (Canada Revenue Agency)

– Financial hardships resulting in inability to pay off debts

– Other similar circumstances

Canadian tax relief for a debtor is specified differently under cancelling of the debt and wavering of the tax debt. By cancelling of a tax debt it is meant that the already levied penalty or interest on a taxpayer is cancelled either in whole or partially, however wavering of taxpayer debt allows amnesty or relief from a future interest or penalty that will be levied.

As listed above one way of Canadian taxpayer relief is wavering or cancelling of interest and penalty owing to extraordinary circumstances. These extraordinary circumstances include

– occurrence of an accident or any illness

– facing disasters that are either natural or manmade such as floods, fires, etc

– any civil disturbance incidence that cause disruptions in any one or many services such as strikes in postal service and

– Severe mental or emotional distress such as death of a close or immediate member of the family.

Further on actions of the CRA that allow Canadian taxpayer relief include

– Any error present in the CRA material that resulted in a taxpayer filing a return of any payment that was based on any incorrect information

– Any processing delays that resulted in not informing of the taxpayer and the assigned time of paying owed amount was over.

– Processing error

– Any incorrect information to a taxpayer usually in writing by CRA

– Any undue delay in audit completion or resolving of an appeal or objection

– Any information delays that hinder taxpayer from paying his dues on time.

These are the conditions besides proved inability to pay taxes and other circumstances that make a taxpayer eligible for Canadian tax relief.

There is a common misconception that taxpayer relief can be obtained only once and so giving it the best shot once is always a good idea. This is not true as tax relief can be applied for by individuals as many times as they are warranted for it. That is when any of the above mentioned conditions are present Canadian taxpayer relief can be applied for.

Also applying for a Canadian taxpayer relief through not filing the tax returns initially and then later on proving bankruptcy or inability to pay will not render a taxpayer eligible for the Canadian tax relief. Not filing taxes is an offense and can be prosecuted. It is essential to file all outstanding returns before filing for the Canadian taxpayer relief program as it will not be considered until everything is up to current.

Also any birth disability with an individual will not make him eligible for a Canadian taxpayer relief program as if he or she has managed to pull it this far they can do it in future as well. Since filing for taxpayer relief is a very complex process, hiring the service of a tax expert company such as Tax SOS will help you in following the right direction and ultimately success in getting the Canadian tax relief if you qualify for it.

Summary

Canadian taxpayer relief program was designed to relieve tax debtors from paying interest and penalties that are levied on them that were either due to an error of the CRA, inability to pay off, an extraordinary occurrence or some other circumstances. CRA allows tax relief to any individual as many times as he proved to be worthy of it.

What can be claimed as Taxpayer Relief Help?

Taxpayer relief help can be given in conditions where some actions of the CRA have come in the way of the taxpayer’s obligations. Other conditions that apply for seeking taxpayer relief help could be inability to pay on part of the taxpayer due to financial hardship and through circumstances arising out of natural calamities or civil disturbances and disruptions.

CRA may cancel or waive certain penalties and interest charges when they affect a taxpayer’s ability to pay the taxes resulting mainly from actions of the Agency itself such as delays in processing. Such delays may result in the taxpayers not getting informed within a reasonable time period, stating the amount of tax to be paid. The delay in the relaying of information can result in the taxpayers not being able to pay their taxes within the time limit allowed.

The actions of CRA could also be erroneous, leading a taxpayer to file the tax return or make payments, guided by information which may be incorrect. The errors also could be in the processing of the notices. Other actions of the CRA that could have an impact on the taxpayer relief help would be a delay in the resolution of an appeal or a Notice of Objection or in the completion of a tax audit.

CRA also considers waiving or cancelling the interest charges and penalties where an inability is proven and confirmed by the taxpayer who may be experiencing financial hardship. In these cases, the penalties could be waived or cancelled in part or in whole towards their tax obligations. CRA reviews the case if the taxpayer is not able to make the tax payments or negotiate payment plan schedules as the interest charges make up a considerable portion of the payment amount.

As a part of the taxpayer relief help, CRA will assess that the accumulated interest payment would result in an extended inability on the part of the taxpayer, resulting in financial hardship and a burden on the provision of basic necessities like food, medical help and conveyance or shelter expenses. In such cases, taxpayer relief help is provided by considering cancellation of all or a portion of the entire accumulated interest amount.

It has to be noted that CRA would not consider a cancellation of a penalty as a result of the taxpayer being unable to pay the taxes because of financial hardship, unless it can be proved that it was due to extraordinary circumstances which prevented tax compliance. This could be because of natural disasters or in special cases where a business experiences severe financial difficulty. Enforcement of penalties would affect the continuity of that business’ operations, resulting in the employees losing their jobs or the community’s welfare being jeopardised. In these cases, penalties could be waived as taxpayer relief help.

It is a wrong notion on the part of some Canadians that the taxpayer relief help is a program that is allowed on a one-time basis. This is not true, as all residents who have been charged interest or penalties carry the right to seek relief every time that it is warranted. The taxpayer relief help group does not maintain any inventory of collections and it will review cases on their submission merit and not by any influence of a collection diary.

Eligibility Criteria for the Taxpayer Relief

If you want to consider sending out an application under the Taxpayer Relief Program in Canada, you have to first think in terms of hiring some professional consultants who can help you go through with it. This should be done even when you find a lot of information on the web around CRA’s Taxpayer Relief Program which was previously referred to as the Fairness Program.

Not everyone who reads the information on taxpayer relief scheme can understand it thoroughly. The information could turn very easily into misinformation around this program. It is the experienced tax accounting firms who can interpret all the details concerning the taxpayer relief program.

The important objectives of the taxpayer relief program are worth going through after investing time and effort into their application. It is better, still, to employ the service experts who know the program, in and out.

The Taxpayer Relief Program in Canada was created to enable the Minister of National Revenue to offer relief schemes from penalty and interest charges when certain circumstances held a taxpayer back from meeting the tax obligations. The taxpayers could be individuals or business corporations. The term `taxpayer’ also includes employers or payors, partnerships, organisations, trusts, estates, Goods & Services Tax (GST) and Harmonized Sales Tax (HST) claimants or registrants.

These exceptional situations could be broadly categorised as:

Inability to pay the taxes on account of financial hardship.
Certain actions taken by the CRA; those were of an erroneous nature.
Extra ordinary circumstances such as acts of nature of Force Majeure.
Other Circumstances.

The taxpayer relief program makes a distinction between the cancellation and the waiver of the penalties and interest charges. The justification behind this was provided by the CRA as it understood that the granting of relief to a taxpayer was redundant if the same taxpayer was burdened by interest and penalties, making the whole relief scheme a futile exercise. The term `cancellation’ refers to penalties and interest amounts after they are assessed or charged, towards which the relief is provided in whole or in part by the CRA.

The extraordinary circumstances cover penalties and interest charges that are either cancelled or waived in part or in whole when they are affected by circumstances beyond the control of the taxpayers. These extraordinary circumstances may prevent taxpayers from paying their taxes when they fall due, preventing them from filing their tax returns in time or complying with the tax obligations. These circumstances include natural or man-made disasters like a fire or a flood. They may include civil disturbances with services being disrupted. There may be circumstances like a serious ailment or an accident that causes partial or permanent disability. The circumstances also include severe emotional and mental distress that may arise out of certain events that occur in a family such as a death in the immediate family.

A response from the CRA concerning the Taxpayer Relief Program may take anywhere from three months to a couple of years depending on the number of request applications that fall due. It is, therefore, advisable, to engage the services of tax professionals as they will be in the best position to assess whether your request is adequate or not. This makes it worthwhile before you file the application for the review and consideration of the CRA.

Taxpayer Relief on Account of Natural Disasters

Many Canadians are not aware that taxpayer relief could be available to them in circumstances where the taxpayers are late when filing their GST returns or in remitting the required GST as a result of the disruptions that are caused by natural calamities and disasters.

Natural disasters could strike anywhere. You can take the example of the worst flooding that Alberta was affected a while ago. It is important to note that, as far as tax obligations are concerned, if you are unable to fulfill your tax obligations due to any natural disaster like flooding, taxpayer relief may be available to you from the CRA.

The Canada Revenue Agency has also reminded the taxpayers in the country of the availability of the provisions of taxpayer relief to them in respect of the flooding some seven months ago. There is a taxpayer relief provided for corporations who were unable to file the T2 taxation returns. The taxpayer relief provisions are available to all the taxpayers and they will include individuals, organizations, partnerships, trusts and also the GST/HST registrants.

In normal circumstances, when a taxpayer does not file the tax returns and remit the correct sum of taxes to the CRA as it is required by law, he or she is going to be subject to a specific penalty of a fixed sum along with the interest charges on the balance of the tax amount outstanding. The taxpayer relief provisions allow for the cancellation or the waiver of interest and the penalties in part or in full.

The cancellation will refer to the interest and the penalties which have already been assessed for which the taxpayer relief is granted while the waiver will refer to the interest and the penalties that have not been assessed yet for which the relief is granted. The taxpayer relief provisions are not restricted to any particular situation although CRA has made it clear in its publications that the provisions will apply in three broad categories. These are:

Circumstances which are beyond the control of the taxpayer including events such as natural disasters.
Errors or mistakes committed on part of the CRA’s actions.
Inability to pay by the taxpayer on account of financial hardship.

The taxpayer relief provisions are not applied by the CRA automatically. The taxpayer has to request the application of these provisions as per the category of the `Circumstance’ and it has to be applied on CRA’s required form along with the contact information, Social Insurance Number or the GST/HST Registration Number, the taxation years that are involved, giving full details of the facts and the reasons behind the Circumstance. The details will have to include how the circumstance has had an impact on your ability to meet the tax obligations with relevant documentation as a support. It has to be accompanied by planned steps that will be taken to resolve the inability to comply.

For taxpayer relief periods, initially CRA allowed only past ten years of tax owing and would disallow relief request for any tax debts owed more than ten years ago. Recent court case changed the direction and forced CRA to extend the time period to more than ten years. However, the penalties or interest relief only applies to last ten year taxes owed although the tax debts was started more than ten years ago.

Taxpayer Relief in Canada

Taxpayer relief was set up in Canada to allow for the National Revenue Minister to extend relief to the taxpayers from interest charges or penalties in certain situations. These kinds of situations are deemed to prevent individual or business corporations from fulfilling their tax obligations. The special conditions for qualifying for taxpayer relief are extra-ordinary circumstances, other circumstances, or proven inability to pay their taxes on account of financial hardship.

Taxpayer relief will distinguish between waiving or cancelling any penalties and interest charges. Cancellation refers to an interest charge or a penalty which is assessed and the relief may be granted in part or in full by the CRA. Waiver refers to an interest amount or a penalty charge that has not been assessed yet or charged for which relief may be provided in part or in full by the CRA.

Taxpayer relief applies to an individual, employer, corporation, partnership, organisation, trust, or estate as well as to Goods & Services Tax and Harmonised Sales Tax registrant and claimant. The interest charges or the penalties may be cancelled or waived in part or in whole when a taxpayer can prove that the inability to pay is as a result of circumstances beyond his or her control.

Extraordinary circumstances that prevent a taxpayer from filing his or her tax returns may include conditions like man-made or natural disasters like a fire or a flood, civil disturbances or service disruptions. They may also be due to a serious accident or health impairment. Conditions of emotional stress may also qualify such as acute mental distress resulting after a death in the taxpayer’s immediate family. In all these conditions, taxpayer relief will apply.

Some actions by the CRA may also help qualify for a taxpayer relief. The CRA may waive or cancel interest and penalties if they result mainly from CRA actions such as a processing delay which results in taxpayers not getting informed about the tax dues within a specified reasonable time. The actions may also include errors in CRA notices which may lead the taxpayers to file returns on such incorrect notices.

The CRA will grant taxpayer relief by accepting circumstances in which the inability to pay the taxes is confirmed by the taxpayers. Collection of taxes could be suspended temporarily by the CRA as a result of an inability by the taxpayer who has lost employment and is currently going through financial hardship. In such cases, accumulated interest may be waived because of a prolonged case of the taxpayer’s inability to file tax returns due to financial hardship. The financial difficulties may arise out of necessities like food and medical expenses in the absence of a job. It may also be due to other expenses like conveyance and shelter.

Taxpayer relief is available to all people living in Canada who have been charged interest penalties. The Relief Group does not maintain any inventory for collections and reviews each case on its submission merit without being influenced from the collections diary of the tax collector who has been assigned to a particular case.