OVERVIEW

The Taxpayer Relief program is a CRA initiative that allows qualified taxpayers the ability to cancel or waive any penalties and/or interest that have accrued on their account if they meet certain reasonable cause criteria.

If the taxpayer meets the reasonable cause criteria standards set forth by the CRA, they must then fill out a Taxpayer Relief Request form, or RC4288. After this is completed and sent to the pertinent intake office, the taxpayer must await the approval of their proposal by the CRA.

OUR PROMISE

Best Canadian Tax (BCT) promises to use our years of tax experience to expedite a “Taxpayer Relief Request“ in a timely and succinct manner, thereby saving our clients both time and money. Our rigorous procedures and standards allow us to submit tax relief requests that are devoid of many of the pitfalls inexperienced taxpayers fall victim to everyday. Allow us to relieve the tension and stress of dealing with the CRA alone.

Don’t allow penalties and interest to accumulate on your tax debt without attempting to negotiate with the CRA. Call BCT to get a free consultation that will outline your options and get the expert advice you need to deal with your tax problems.

INTEREST AND PENALTIES

Interest

Interest begins to accrue on any unfulfilled taxpayer account starting May 1st of the year the taxes were supposed to be filed. This interest is compounded daily upon both the principal, and any of the penalties associated with previous non- payment. The CRA charges an interest rate usually between 3%-5%, but can can be subject to change every 3 months.

Penalties

Late-Filing Penalty (Failure to File)

A “late-filing” penalty is assessed on any taxpayer account that is not returned on time to the CRA. The penalty for such an action is 5% of the balanced owed, plus 1% for every additional month the filing is late. This fee can be applied for a period of up to 12 months.

If the taxpayer has been late to file for numerous years, the CRA can opt to charge a 10% penalty on the total amount owed, plus an additional 2% for every month thereafter for up to 20 months.

Repeated Failure to Report Income Penalty

If a taxpayer has repeatedly failed to provide an accurate report of their income for numerous years, the CRA can charge a penalty that is effective at both the provincial and federal level. The penalty for such an act is 10% of the unreported amount at the provincial level, plus another 10% at the federal level, thus accumulating to 20% of the unreported amount.

False Statement or Omissions Penalty

If a taxpayer is caught falsifying their tax statements by reporting illegitimate omissions or credits, they are subject to a penalty. This penalty is either $100, or 50% of the understated tax/overstated credit amount—whichever is higher.

Interest and Penalties can be waived or cancelled if the taxpayer meets certain reasonable cause criteria outlined in the Taxpayer Relief Request form, or RC428. For more information on how to waive accumulated interest and penalties, call Best Canadian Tax for a free consultation with a tax expert.

REASONABLE CAUSE CRITERIA

Extraordinary Circumstances

The CRA can waive or cancel any penalties and interest if they result from circumstances outside the taxpayer’s control. This includes some of the following scenarios:

• Civil disturbances / disruptions in services (e.g. a postal strike)
• Natural / Manmade Disasters (e.g. floods and fires)
• Serious illness or accidents (e.g. prolonged hospitalization)
• Serious emotional distress (e.g. death in the family)

Actions of the CRA

Penalties and interest can be waived or cancelled if they result from the actions of the CRA itself. This includes:

• Processing delays that result in an untimely correspondence with the taxpayer
• Errors in CRA material that lend themselves to confusion on the part of the taxpayer
• Incorrect information provided to a taxpayer
• Errors in processing
• Delays in providing pertinent information to the taxpayer
• Undue delays in resolving an objection, appeal or audit

Financial Hardship (Inability to Pay)

The CRA can waive or cancel any penalties and interest when the taxpayer can provide proof of an inability to pay. This can occur when:

• Loss of employment places the taxpayer in financial hardship
• The taxpayer is unable to meet a payment arrangement because of a high proportion of interest on their account
• The payment of interest and/or penalties causes the taxpayer to be unable to provide basic necessities for themselves,    such as food, shelter, medical needs, and transportation.