CRA says that I owe tax… Am I too late to challenge it?

If you receive a notice of assessment from the Canada Revenue Agency, the clock is ticking on your right to challenge the CRA’s decision. The CRA does not always assess taxpayers correctly. Taxpayers have the right to object if they disagree with the amount of tax, interest, or penalties the CRA has assessed. But it is important to act fast.

Within 90 days of the date that CRA sent you the notice of assessment, you must file your notice of objection. The CRA’s website provides information on how you can file an objection.

If you miss the 90-day deadline, you can apply for an extension of time. You must do so within one further year. The Income Tax Act and the Excise Tax Act contain certain requirements for granting extensions of time, including that you apply for the extension of time as soon as circumstances permit. Of course, it is preferable to file your objection before 90 days so that you don’t need an extension of time.

If you miss the 1-year deadline to apply for an extension, the Tax Court of Canada cannot grant you another extension. Practically speaking, you can no longer challenge the CRA’s decision about what you owe.

Similar deadlines apply when the CRA makes a decision about your objection. If the CRA rejects your objection, you have 90 days to appeal to the Tax Court of Canada. Again, if you miss this deadline, you can request an extension but must meet certain criteria in the legislation.

It is crucial to challenge an incorrect CRA assessment in a timely way. If you wait, you can be stuck with the CRA’s calculation of how much tax, penalties, and interest you owe.