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INCOME TAX ASSESSMENTS OBJECTIONS AND APPEALS

INCOME TAX ASSESSMENTS OBJECTIONS AND APPEALS. Robert B. Hayhoe (416.595.8174) CGA Ontario Public Practitioners’ Convention Saturday, September 23, 2000. REPRESENTATION. Audit Objection Tax Court Hiring Lawyers. TAX TREAMENT OF REPRESENTATION EXPENSES.

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INCOME TAX ASSESSMENTS OBJECTIONS AND APPEALS

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  1. INCOME TAX ASSESSMENTS OBJECTIONS AND APPEALS Robert B. Hayhoe (416.595.8174) CGA Ontario Public Practitioners’ Convention Saturday, September 23, 2000

  2. REPRESENTATION • Audit • Objection • Tax Court • Hiring Lawyers

  3. TAX TREAMENT OF REPRESENTATION EXPENSES • ITA s.60(o) makes objection and appeal expenses deductible • ITA s.56(1)(l) includes legal costs awarded by court in income

  4. WHAT IS APPEALABLE? • Assessments and determinations • Nil assessments not appealable • Loss Determinations • Interest and Penalties

  5. THE NOTICE OF OBJECTION- Time Limit • For individuals and testamentary trusts, the later of: • 90 days from mailing of notice of assessment • one year from balance due date • For all other taxpayers: • 90 days from mailing of notice of assessment • Discretionary permission to late-file

  6. THE NOTICE OF OBJECTION- Form Of Notice And Service • T400A form suggested • Registered mail not required but suggested • Must be signed by individual taxpayer or authorized representative

  7. THE NOTICE OF OBJECTION- Statement Of Facts And Reasons • Substance of the Objection • Should set out enough facts and analysis to support the allowance of the objection • note potential application of 163.2 penalties

  8. THE NOTICE OF OBJECTION- The Minister’s Response • Chief of Appeals • appeals officer assigned • Letters and Meetings • limit client contact • Tight deadlines on taxpayers • No deadlines on CCRA • 90 day appeal to Tax Court of Canada

  9. THE NOTICE OF OBJECTION- Late Filed Notices of Objection • Discretionary application to CCRA • Conditions for late filing: • within the time limit, the taxpayer either intended to appeal or could not act • just and equitable • application as soon as possible (no later than one year after ordinary deadline) • Refusal can be appealed to TCC

  10. TCC PROCEDURES Informal Procedure General Procedure

  11. GENERAL PROCEDURE • Larger cases • Only lawyers may represent taxpayers • Right of appeal to FCA • Higher costs awards

  12. TCC INFORMAL PROCEDURE- When it Applies • Appeals may be brought as Informal if any of the following applies: • federal tax and penalties are less than $12,000 • loss of less than $24,000 • interest only • tax over $12,000 or loss over $24,000 is waived • Crown may apply to move a case up to general procedure

  13. TCC INFORMAL PROCEDURE- Representation • Unrepresented individuals • Individuals represented by agents • Individuals represented by lawyers • Corporations represented by lawyers

  14. TCC ONUS OF PROOF • Taxpayer must prove that assessment is wrong • Complicated rules on how to meet onus • For Informal Procedure appeals: • just prove the case! • Minister bears the onus to justify penalties or late assessment

  15. POWERS OF THE TCC • Confirm assessment • Vacate assessment • Vary assessment • No power to increase assessment

  16. INSTITUTING A TCC APPEAL • File Notice of Appeal with TCC • must be received within 90 days of confirmation • set out facts and reasons for appeal

  17. LATE FILED TCC APPEALS • May be permitted by application to TCC • Conditions for late filing: • within the time limit, the taxpayer either intended to appeal or could not act • just and equitable • application as soon as possible (no later than one year after ordinary deadline) • reasonable grounds for the appeal

  18. THE CROWN’S TCC REPLY • Sets out the government position in the appeal • Basis for settlement discussions

  19. TCC EXPERT WITNESSES • An individual with special expertise who can express an opinion to help the court • complicated rules on how to deal with experts • hire a lawyer

  20. SETTLING TCC APPEALS • Majority of TCC appeals settle • Settlement must be based on facts and law • Crown is not permitted to settle on a “saw-off” basis • usually possible to agree on facts to support settlement

  21. TCC DISCOVERY • There is no examination for discovery in the Informal Procedure • Request all CCRA documents pursuant to “Appeals Renewal Initiative” • audit notes and report • appeals notes and report

  22. TCC INFORMAL PROCEDURE HEARING • Set by Court or at request of parties • Formerly a backlog - now very fast

  23. TCC PRESENTATION ORDER • Ordinary case: • opening statements • taxpayer’s evidence • Crown evidence • taxpayer argument • Crown argument • taxpayer reply • May be reversed if only issue is penalties

  24. TCC INFORMAL PROCEDURE- Judgment and Appeal • Usually judgment within 90 days • No appeal right • Right to Federal Court of Appeal judicial review • only designed to correct serious and obvious errors

  25. TCC INFORMAL PROCEDURE COSTS • CCRA success results in no costs award • Taxpayer success may result in disbursements and legal fees • Court will not award fees charged by agent

  26. INCOME TAX ASSESSMENTS OBJECTIONS AND APPEALS Robert B. Hayhoe (416.595.8174) CGA Ontario Public Practitioners’ Convention Saturday, September 23, 2000

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