The Tax Payer Relief program is offered by the CRA and offers taxpayers an avenue to have all or a portion of the penalties and interest owed, with respect to a tax debt, cancelled. Not everyone qualifies or will be approved for CRA taxpayer relief. A CRA taxpayer relief must be compelling and include evidence to support that the reason the application being made is valid enough for the CRA to consider waiving part or all of the penalties and interest.
In order to apply for CRA taxpayer relief, the tax debt in question must involve penalties and interest. The CRA will under no circumstances reduce the size of the actual tax debt and CRA taxpayer relief will only deal with penalties and interest if approved. There are specific reasons that CRA taxpayer relief may be granted, here are some examples:
Extraordinary circumstances are one reason that a CRA taxpayer relief application may be granted. Extraordinary circumstances include: fire, flood or some other natural disaster outside of the taxpayer’s control. If a taxpayer’s basement flooded and all of their records were destroyed preventing them from filing their tax return on time, this may be grounds for CRA taxpayer relief for extraordinary circumstances under the Tax Payer Relief Program. The taxpayer would need to include evidence that in fact an extraordinary circumstance did occur and this evidence should be included with the application.
An error on the part of the CRA is another reason that an application for taxpayer relief may be granted by the CRA. If a taxpayer can show that their tax return was sent on time but it was misplaced by the CRA internally so that the actual file date of the return reflects on the CRA’s system as it being received late resulting in a penalty; this may be considered a valid reason to grant CRA taxpayer relief. In this circumstance, one way to prove that the CRA did receive the tax filing on time would be if it was sent by registered mail and the taxpayer had a record of the tracking number.
Financial hardship is a common reason why taxpayers who have been assessed on interest and penalty may find it challenging to repay the CRA. If a taxpayer can show that they are suffering from legitimate financial hardship and prove it, the CRA may grant relief of interest and penalties. Proof could include a budget and evidence of the amount of expenses claimed in the budget like rent, utilities etc. The CRA will accept evidence as it relates to repayment of consumer debt to substantiate financial hardship. The CRA will only look at your income balanced against your cost of living.
Other circumstances where the CRA may grant interest and penalty relief under that Tax Payer Relief Program would be a medical problem. If you can substantiate that a medical problem or death of an immediate relative contributed to your late filing or non-disclosing of information, the CRA may grant relief of some or all of the interest and penalties as it relates to your tax debt.
An application for CRA taxpayer relief should be made on your behalf by a professional who specializes in the area. This is because a CRA taxpayer relief application should be robust and cover all of the basis points. Should it be rejected, you only have one opportunity to rebut the decision and then after that the only recourse would be to go to tax court.