June 4, 2024
Didn’t file your taxes on time – or made a mistake in your tax filings? All might not be lost. There is the possibility of relief from the Canada Revenue Agency (CRA). Here are three routes that could get you there.
1. Voluntary Disclosure Program (VDP)
The first and most accessible is the VDP.
Who can apply? Generally, most taxpayers and tax registrants (individuals, partnerships, trusts and corporations) can apply for relief under the VDP. However, to be eligible for the VDP you must meet all these five conditions:
When can you apply? The CRA will consider a request only if it relates to a tax year or fiscal period ending in any of the 10 calendar years before the year in which you make a request. For example, a request made in 2024 must relate to a penalty for a tax year or fiscal period ending in 2014 or later. Situations that might be eligible for the VDP include when you:
How do you apply? It’s best to use Form RC199, Voluntary Disclosures Program (VDP) Application. You can alternatively also send a letter by providing the same information on Form RC199 and ensuring:
What relief can you seek? That depends:
The CRA can consider a range of factors in whether and what relief to grant:
2. Request for Taxpayer Relief from Interest & Penalties
A second route is via a request for relief from interest and penalties that apply. Notably, you can access this route even after CRA takes enforcement action against you or a third party related to you.
Who can apply? Taxpayers can apply when events beyond their control prevent them from meeting their tax obligations.
When can you apply? The CRA can grant relief from penalty or interest when the taxpayer was prevented from meeting their tax obligations by:
How do you apply? You must provide a detailed, complete, and accurate description of your circumstances to explain why you’re requesting relief and explain how your circumstances prevented you from making a payment when due, filing a return on time or otherwise meeting your tax obligations. The CRA recommends you submit your request for relief using Form RC4288, Request for Taxpayer Relief – Cancel or Waive Penalties and Interest. Form RC7288 also exists for Selected Listed Financial Institutions – Request for Taxpayer Relief – Cancel or Waive Penalties or Interest Related to the GST/HST or the QST, or Charges Related to the QST
When circumstances beyond your control, actions by the CRA, an inability to pay, or financial hardship prevent you from meeting your tax obligations, the CRA will consider several factors when determining whether to cancel or waive penalties and interest:
What relief can you seek? The CRA will cancel the relevant penalties and interest from your account and will generally issue a refund for any of the cancelled penalties and interest you paid. However, if you have debts from other tax years, other related tax accounts or outstanding tax returns, CRA could apply your refund to other debts or hold it until you file any past due returns.
3. Remission
A third route to relief is remission. However, remission is discretionary and CRA will only consider it in “exceptional circumstances” so it’s rarely granted. CRA examines each request to determine if a remission review is appropriate in the circumstances. If so, CRA undertakes an in-depth review process. Very few requests result in remission being granted.
Who can apply? Any taxpayer can request a remission review. To be eligible apply, you must meet these criteria:
When can you apply? Generally, before you apply you must pursue and conclude all other options available at the CRA or under statute to address the amount(s) you owe before requesting remission. Situations that constitute exceptional circumstances could include:
However, CRA will not typically undertake a review where:
How do you apply? You can apply by submitting a letter or, in the case of a remission review on the basis of financial hardship by submitting Form RC921 Request for a Remission Review – Financial Disclosure Form for Individuals. It’s important that you include any and all relevant documentation in your request. The CRA reviews remission requests on the broad terms set out in section 23 of the Financial Administration Act, in particular whether collection of the tax or other debt or enforcement of the interest or penalty is unreasonable or unjust, or if remission is otherwise in the public interest. Only the Governor in Council can issue a remission order. If the CRA decides your circumstances could warrant remission, it will send your request to the Minister of National Revenue who might make a recommendation to the Governor in Council for a decision Notably, requesting a remission review generally does not stop collection actions. In addition, interest will continue to accrue on outstanding amount(s).
What relief can you seek? If remission is granted, the CRA will apply a credit in the specified amount to your account. If the credit results in a refund, that refund will first be applied to any other amounts you owe or are about to owe. A remission order does not result in a reassessment. The Financial Administration Act doesn’t permit refund interest on remitted amounts.
Please contact your McInnes Cooper lawyer or any member of our Tax Solutions Team @ McInnes Cooper to discuss whether – and how – you can apply for taxpayer relief.
McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.
© McInnes Cooper, 2024. All rights reserved. McInnes Cooper owns the copyright in this document. You may reproduce and distribute this document in its entirety as long as you do not alter the form or the content and you give McInnes Cooper credit for it. You must obtain McInnes Cooper’s consent for any other form of reproduction or distribution. Email us at [email protected] to request our consent.
Dec 4, 2024
Maximum penalties under the Underused Housing Tax Act (UHTA) are significant: initial penalties for a single taxation year can be as high as…
Nov 26, 2024
Understanding the taxation of Indigenous Peoples’ governments and structuring of their economic development initiatives is more relevant than…
Dec 12, 2023
Updated April 16, 2024. If you’re a trustee of a trust that might no longer serve its purpose or is sitting idle, now’s the time to…
Sep 29, 2023
Updated February 9, 2024. On December 15, 2023, Bill C-56, the Affordable Housing and Groceries Act, became law, giving developers of…
Sep 20, 2023
Can a business providing both exempt supplies and taxable supplies of goods and services claim Input Tax Credits (ITCs) under the Excise Tax Act…
Apr 25, 2023
Most initially believed the Underused Housing Tax Act would impose reporting and tax obligations only on non-Canadian and non-permanent…
Jan 19, 2023
Updated December 2, 2024. Beginning December 31, 2022, both Canadian and non-Canadian trustees, partners of a partnership, private…
Jul 12, 2022
Lawyers and accountants advise clients on options for organizing their personal and business affairs in a tax-efficient way. Clients enter into…
Jun 24, 2021
Many employers use equity compensation plans like employee stock option plans to attract, motivate, and retain talent. One reason stock options…
Mar 31, 2021
Close to five million Canadians who didn’t usually work from home, did so in 2020 because of the COVID-19 pandemic. Even as public health…
Feb 12, 2021
Estate planning is a customized process; the goal is to create a plan that’s best for a person’s unique situation. And while all estate…
Dec 7, 2020
All trusts that continue to be in effect past December 31, 2020, will be subject to new reporting requirements and harsh non-compliance…
Jan 30, 2020
NOTE: The new tax rules for employee stock option plans take effect on July 1, 2021. Learn more at Limited Options: New Employee Stock Option…
Aug 28, 2017
Recently, the Federal Court of Appeal confirmed that a tax debtor’s bankruptcy does not extinguish the federal Crown’s priority to proceeds…
Jan 20, 2017
Connections between Canadians and the U.S. have never been as numerous or transparent as they are now: many Canadians own U.S. property, have…
Sep 12, 2016
On September 9, 2016, the Supreme Court of Canada decided in Musqueam Indian Band v. Musqueam Indian Band (Board of Review) that an Indian band…
Oct 23, 2015
Subsection 55(2) of the Income Tax Act (Canada) is an anti-avoidance provision intended to prevent capital gains stripping by deeming an…
Oct 23, 2015
Incorporation offers legal advantages to sole proprietors of small businesses, including certain tax advantages. However, when a corporation…
May 22, 2014
Updated February 17, 2021. Trusts offer a very useful estate planning solution for a wide variety of special estate planning situations.…
Subscribe to McInnes Cooper to stay current with our leading insights on legal updates, trends, news, events, and services.