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DRAFT OBJECTING TO OR APPEALING AN ASSESSMENT OR REASSESSMENT OF TAX A. DECISION TO OBJECT TO OR APPEAL AN ASSESSMENT OR REASSESSMENT OF TAX After the CRA completes its initial assessment of a tax return, the taxpayer will receive a Notice of Assessment, usually within two or three months. Most returns are processed in this manner until such time as a more thorough examination of selected returns is conducted. Depending upon the taxpayer, the CRA has either three or four years to audit a return and reassess the taxpayer. Most disputes relate to a misunderstanding of the facts or a lack of information provided to the CRA. If taxpayers disagree with the initial assessment or a later reassessment of tax, interest and/or penalties, before formally filing an objection they should contact the CRA to discuss the matter directly with the officials concerned to obtain an explanation. It is usually beneficial to clarify the facts before employing the formal objection procedure . Often the proposed change or error can be easily resolved or corrected by telephone or letter or, if necessary, an informal hearing with CRA officials. Many other disputes are settled at this stage when the taxpayer provides additional facts and supporting evidence. This may save both the taxpayer and the Crown the needless delay and expense of litigation, and perhaps arrive at a mutually acceptable solution or settlement. The CRA has stated that it is eager to discuss disputed assessments with the view to resolving them quickly. Canadians have the right to dispute an income tax assessment by filing a Notice of Objection and have it formally reconsidered by CRA Appeals Branch officials . The decision to formally object to an assessment or reassessment, or to proceed with an appeal, may depend on some of the following factors : Are the matters at issue important to the taxpayer? Will they have a long-term effect? Will the item recur? In rare instances, where the proposed adjustments may not be significant to the taxpayer, but could be to the industry or a broad segment of the community, the taxpayer may feel a responsibility to others in the industry/taxpayer sector to object. Is the amount at stake sufficient to warrant an objection or appeal, keeping in mind the potential legal and filing costs? Is the taxpayer concerned about the privacy of business or personal information? Taxpayers may be concerned that an objection may reopen the taxation year for 1
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review, as nothing in the Act prevents the Minister from reconsidering the taxation year to which the objection has been made and issuing a new reassessment which increases the taxpayer’s overall tax for that year. However, unless the circumstances are unusual, the CRA tends to restrict its review of the taxpayer’s file to the issues raised in the Notice of Objection. B. NOTICE OF OBJECTION - ITA 165-166.2
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This note was uploaded on 02/19/2012 for the course ACCT 4454 taught by Professor Barry during the Spring '12 term at Saint Mary's University Texas.

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