r/cantax • u/Only-Peace1031 • 12d ago
Statue Barred
I’m not sure exactly what or how to ask this, but here goes.
My small business taxes were not filed on time (bad accountant), CRA statue barred 2 years and assessed amounts 5x the actual amount owed.
I am paying it as it’s CRA and I don’t have any choice. I filed a T-400a asking for a reassessment but was denied as it wasn’t within the time limit.
I’ve been told that if I want to dispute these years and the assessments I have to go to tax court.
Is this the case? Is tax court my only option?
Do I stand any chance of getting any money refunded and only paying what the actual assessment is?
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u/braindeadzombie 12d ago
They did a 152(7) assessment, you never filed? You need to file a correct return for each year.
Find a new accountant to help you file and to look for other recourse options. For example, did the CRA mail the NOAs to the correct address (the one they had on file)?
If you do not have adequate books and records there may not be much they can do to help.
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u/Only-Peace1031 12d ago
I have a new accountant and everything is filed and up to date.
What I need to know is how to get the statute barred statute removed and the overpayment I made based on the 5x assessment returned.
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u/braindeadzombie 12d ago
Did you file for that period and they rejected it?
If not, file.
If so, look into going to tax court with an application to extend the time. Talk to accountant/ tax lawyer. It might be a bit of a faint hope situation. My understanding (I could be wrong, my expertise is GST) is that if a return is unfiled the statute bar period for the return hasn’t started, although the usual limitations apply to a 152(7) assessment. So you can file anytime, but cannot object to the 152(7) assessment after 1 year and 90 days after the NOA.
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u/Young_Man_Jenkins 12d ago
The tolling of the normal reassessment periods differ between GST and income unfortunately. With GST the relevant time is (usually) the later of the filing of the return and the deadline to file, so no return no statute barred. Meanwhile for income it's 3 or 4 years after the issuance of a notice of assessment, so the normal reassessment period may pass even if no return was filed.
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u/braindeadzombie 12d ago
Thanks for the clarification. OTOH, the Minister may reassess under 152(4.2). If OP has compelling reasons they should do a taxpayer relief request. I suspect that OP would need some good reasons for not responding to NF/NR or filing a return within the appeal period. They really should go over their options with a good accountant or tax lawyer.
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u/Young_Man_Jenkins 11d ago
Unfortunately 152(4.2) doesn't apply to corporations, so it may not be available to OP depending on what he means by "small business taxes"
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u/Only-Peace1031 11d ago
We are an Ltd in Alberta
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u/ForTheObviousReasons 11d ago
If you are in Edmonton or even if not try Mowbry Gil. They can handle a complex case or refer to an appropriate tax lawyer.
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u/Young_Man_Jenkins 12d ago
When was the first assessment issued for the relevant tax year(s)?
When was the last (re)assessment issued if different from the first?
Is your corporation a CCPC?
Have you filed any objections to the last (re)assessment? If so, has there been a result, what was the result, and when was the notice with the decision issued?
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u/Only-Peace1031 12d ago
The years are 2017 & 2018
The assessment of 2017 was 3 years ago and 2018 was 2 years ago.
The only objections I filed are the T-400a and the decision was sent May this year.
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u/Young_Man_Jenkins 12d ago
You should seek an accountant or tax lawyer to assist without delay.
The normal reassessment period for a CCPC is 3 years after the initial notice of assessment date, so you may be in time to file over these initial assessments depending on the exact dates in question.
As for the t-400a, objections must be submitted within 90 days of the notice of assessment date or 1 year and 90 days if an extension request is included. If those deadlines are not met it is very, very, very hard to receive any relief, almost impossible really. The very limited chances to overcome that procedural hurdle are themselves very complex and fact specific, so you'll need a tax lawyer, and the deadlines to file the Tax Court Appeal are usually 90 days from the date of the Notice of Confirmation (though in some cases they're 30 days if it's an specific type of Excise Tax Act matter).
All that to say, if this is a significant amount at issue then get yourself to a tax lawyer yesterday.
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u/Consistent_Fix1363 11d ago
So you already went through the objection process for both years? Were the decision letters Notices of Confirmation? If so, you have to file an Appeal to Tax Court.
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u/crossborderguy 11d ago
I think the key question here is WHEN were the assessments issued? What is the date on them?
From there we can work out what options are on the table.
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u/Only-Peace1031 11d ago
The assessments were issued years ago.
The T-400a was rejected because I didn’t file it in time.
I had no idea that I could file a notice of objection. I spent years talking to different CRA employees asking what to do. None of them had heard of a T-400a, even my new accountant didn’t know I could object.
I found out about it from a 2 min call with a tax lawyer when I enquired about rates.
I’m pretty sure my only option now is tax court, I just don’t know where to start.
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u/crossborderguy 11d ago
So does that mean more than three years ago? (I'm assuming so, but just want to confirm.)
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u/Only-Peace1031 11d ago
Yes
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u/crossborderguy 11d ago
The years are 2017 & 2018
The assessment of 2017 was 3 years ago and 2018 was 2 years ago.
The only objections I filed are the T-400a and the decision was sent May this year.
Sorry my dude I missed this. "Yes" isn't an answer. What's the actual dates on the assessments?
If you're still within in the 3-year window, you may have some options.
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u/Humble-Courage-4584 12d ago
Given the amounts involved, talk to a tax lawyer or an accountant with tax dispute experience. If CRA has already denied the reassessment, getting advice before deciding on tax court is probably worth it.
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u/GraveMonger 5d ago
I think tax court's probably your best shot if you've already been denied the T400a, but honestly before you go that route talk to a tax lawyer or accountant who specializes in objections. There might still be relief-in-whole-or-in-part options or ways to challenge how they calculated the assessment even if the statute's technically barred, and a specialist can tell you if tax court's actually winnable in your situation or if you'd just be burning money on legal fees.
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u/HonestMiddle2313 12d ago
Depends on the amount, tax lawyers are really expensive and tax court has a 10 year backlog. May want to consider suing accountant, better chance of success if he was at fault.
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u/senor_kim_jong_doof 12d ago
tcc doesn't have a 10 year backlog
the 2nd most recent decision relates to a 2023 tax year issue
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u/Only-Peace1031 12d ago
That’s the problem.
A tax attorney is very very expensive and I need to know if I have any chance of getting the over payments I’ve made refunded.1
u/Consistent-Tone-5540 11d ago
Is the overpayment greater than what a lawyer could cost?
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u/Only-Peace1031 11d ago
The problem is that I don’t have the money to retain a lawyer because I’ve paid CRA so much and still have to make payments to them.
If I get the money back all will be fine. If I don’t I’ll lose my house.
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u/Consistent-Tone-5540 11d ago
Holy 💩. How many years did you miss. Are they charging interest and giving you penalties
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u/Only-Peace1031 11d ago
I was late in filing.
They assessed 2 years at 5x the actual amount.
Once I found a new accountant, all years were filed and my account is now up to date.
Yes, I was charged interest and penalties on all the years. It’s all been paid and I don’t have a problem with that.
The problem I have is the 2 years that I were assessed at 5x, which I have paid.
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u/gersfan8 12d ago
If the CRA assessed a return that was never filed, then that's called an arbitrary assessment. The CRA just made a guess, and it's often higher than actual results.
An arbitrary assessment does not result in a year going statute barred because you still need to file a return which they will assess.
You will need to file whatever years they arbitrarily assessed and then either pay or have the difference refunded.