Tax Litigation in the Time of Corona: Avoiding the Pitfalls of Filing Deadlines

With all the sudden changes to tax filings and delays in non-essential services it may be easy to just assume that everything in the world of tax is put off a few months. However, it is important to be attentive when the Government says you owe taxes, or else you may end up losing your opportunity to fight those claims. We at Patterson Law put together a quick summary of the current state of tax litigation, so you can be on top of the important dates that may affect your matters.

Audits

The Canada Revenue Agency (CRA) has announced that they will “generally not contact small or medium (SME) businesses to initiate any post-assessment GST/HST or income tax audits until further notice.” The exceptions outlined are limited to high risk or exceptional cases, and cases where taxpayer interaction is required before a payout. Finally they stated that other audits are temporarily suspended. There is therefore, a small possibility that larger businesses and small to medium business in exceptional cases may still be the target of an audit.   ­

Collections

The CRA has stated that collection activities on new debts are suspended until the CRA advises otherwise. The CRA has also promised that there will be flexibility in payment arrangements with no further details. There has however, been no definition of what constitutes a new debt for these purposes. In addition, compliance and remittances from banks and employers under third party demands are currently suspended until further notice. It may be beneficial to seek tax advice on what actions should be taken prior to these collections activities being reinstated.

Objections

The CRA has announced that notices of objection due on or after March 18^th, 2020 are being held in abeyance (postponed) until June 30^th, 2020. Collections for these accounts will be held off till that date as well. This does not include objections over “critical services” including entitlement to credits and benefits, which are not delayed.  

A taxpayer unable to file a return or payment by the tax-filing and payment deadlines because of COVID-19 can request the cancellation of penalty and interest charged to their account. Penalties and interest will not be charged if the new deadlines that the government has announced to tax-filing and payments are met. When the CRA resumes its business operations, the Taxpayer Relief Program, which can waive interest and penalties in exceptional circumstances, will review requests related to COVID-19 on a priority basis.

A taxpayer may seek an extension of time for filing an obligation that has expired, within one year of the filing deadline. If an extension is not filed, then the objection will be barred by statute. Taxpayers should be cognizant of these deadlines to ensure that an otherwise discoverable filing deadline is not missed during this pandemic, as it will prevent them from making that objection in the future.

Court Filings

The Tax Court of Canada (TCC) courtrooms and registry offices have been closed until further notice. All judicial sittings and conference calls scheduled prior to May 29, 2020 are cancelled; those scheduled for 29, 2020 and later are still scheduled to proceed, subject to further directions from the Court before or on May 20, 2020. For procedural purposes and orders and directions, the period beginning March 16 and ending 60 days after the court reopens is excluded from the calculation of timelines in the court process.

However, the time for filing appeals and for the Crown to reply to appeals has not been extended. The TCC has ordered that:

all Notices of Appeal filed beginning March 16, 2020, and ending on the day that is 60 days after the TCC and its offices reopen for business operations shall be treated as including an Application for Extension of Time to Appeal brought on the exceptional grounds that the COVID-19 pandemic and the closure of the Registry prevented the timely filing of a Notice of Appeal.

The TCC has been clear that they hope parties will consent to extensions on time for the Crown’s reply and that the taxpayer’s extension for appeal will be considered without a separate motion in certain circumstances. Without a guaranteed extension notice taxpayers must be aware that appeals must be received by the TCC within 90 days of the CRA’s decision (a notice of reassessment or a notice of confirmation). Therefore, it is advisable to speak with your lawyer if you intend to appeal a decision by the CRA to comply with the 90 day timeline.   

Tax litigation can be extremely complicated and at Patterson Law our goal is to make things easier for you and your business. We are more than happy to help you with your tax litigation needs and have experienced professionals available to discuss your matters with you. Please contact s for a consult at (902) 405-8000.

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer or other professional. For specific technical or legal advice on the information provided and related topics, please contact the author.  This article was written by Adam Norton.