Tax Debt You Can’t Pay

Know all about taxpayer relief application from our expert Toronto income tax lawyers

When, due to certain personal misfortune or other circumstances that are beyond control, a taxpayer is unable to meet the deadline for tax payment or filing of tax returns or any other rules of the CRA, there will be penalties or interest that will be charged by the CRA to the taxpayer.  However, in such a situation, a taxpayer can submit a taxpayer relief application (fairness application) to reduce or eliminate the penalties and interest owing to the Canadian tax department. Our Toronto income tax lawyers are experienced in preparing taxpayer relief applications for our clients and they will guide you in every step of the process.

An application for taxpayer relief requires extensive submissions and is granted for certain specific reasons. A taxpayer relief application is allowed in situations such as when there is a health/medical problem of a family member or death of a family member or when an error has occurred on the part of the CRA. This includes errors in material provided to the public, disruption in services, undue delays in resolving an objection, delay in completing an audit or errors or delays in providing information to the taxpayer by the CRA. A taxpayer relief application can also be granted in case of extraordinary circumstances like natural or man-made disasters (such as fire or an ice storm). If a taxpayer is unable to pay the taxes owing due to financial hardship, it is also a ground for granting a taxpayer relief application. Usually relief is not provided because of financial hardship unless the situation is accompanied by extraordinary circumstances.  For example when a business is facing financial difficulty such that the enforcement of penalties will result in the loss of employments of its workers or would totally jeopardize the continuity of the business then consideration may be given to providing relief of the penalties. The CRA is very reluctant to grant an application on this basis and demands extensive submissions, even though the courts have confirmed that financial hardship is a ground for relief. Our expert Canadian income tax lawyers will prepare a detailed submission detailing the grounds for relief and also specify exactly how the facts qualify under the CRA policy. Our Toronto income tax lawyers will also provide backup evidence (such as medical reports) where available.

The provision of taxpayer relief application is an attempt by the CRA to improve the fairness of the tax system but this relief is not automatic. For example, if a taxpayer can show that he was unable to file on time due to extraordinary circumstances such as illness or death, interest and penalties may be waived but the taxpayer will have to submit receipts and backup information to support this claim.  Contact our Toronto income tax lawyers for interest and penalty relief and other income tax help.