I have written before about the Tax Court’s tendency to give a liberal interpretation to what constitutes a “notice of objection”. I am a little surprised, then, that the CRA made an application to quash the appeal of the taxpayers in Xu v HMK, 2022 TCC 108. The CRA audited the taxpayers’ claim for a housing rebate and demanded additional documentation. The taxpayers missed the deadline imposed, and so the CRA reassessed them to deny the rebate. The taxpayers sent a letter to the auditor a few days later apologizing for missing the deadline, providing most of the documents that had been requested and asking for a “re-assessment of case #50499531”. The CRA acknowledged receipt of the letter but then did nothing with it. Was the taxpayers’ letter an objection although it did not refer to the reassessment? (One wonders whether the taxpayers had even received the reassessment by the time they sent their letter.)
The Court concluded that the letter was a valid objection:
[26] This Court fundamentally upholds that taxpayers should attend to their tax affairs and be responsive to audits, requests, reassessments and the like. Likewise, the Minister shall not be prejudiced by unilateral omissions, ignorance or carelessness of taxpayers. By similar measure, prejudice cannot occur where active engagement, receipt and acknowledgment of the very thing sought in the time demanded occurs. Weighing the rights and wrongs is not necessary. The Minister was not confused, prejudiced or blindsided. Her agents simply closed the file and put away all recollection of the dispute when swearing affidavits before this Court. While ignoring those facts was an option in late 2019, and 2020 and during the COVID pandemic, it is not now.
In my article on tips and tricks for objections, I recommend using the CRA’s form for an objection even though it is not prescribed (the law does not require taxpayers to use the form to make an objection). At the very least, a taxpayer’s objection should state that it is a notice of objection, and it should specifically refer to the reassessment(s) in dispute. By following these recommendations, taxpayers can avoid having their objections tossed into a bureaucratic memory hole.
