Taxpayer Relief Program
Interest and Penalties
The Canada Revenue Agency (“CRA“) charges taxpayers who fail to pay their tax debts on time daily compounded interest on their outstanding tax debts. The CRA can also charge taxpayers penalties for filing their taxes late. If you are faced with large tax debts and interests and penalties that continue to accumulate, you may feel like there is nothing you can do to change your situation and get out of your tax debt. However, the Canadian government has incorporated provisions in the Canadian tax laws that permit the CRA to reduce or entirely remove interest and penalties in certain circumstances.
Voluntary Disclosures Program
One way of reducing interest and penalties is through the Voluntary Disclosure Program, which allows taxpayers to voluntarily come forward and declare previously undeclared income to the CRA. If you are interested in learning about the CRA’s Voluntary Disclosure Program, check out our blog post on the program here.
Taxpayer Relief Program
Another way of reducing interest and penalties is through the Taxpayer Relief Program. The Taxpayer Relief Program allows the CRA discretion to waive interest and penalties in certain circumstances. The CRA does not have the discretion to alter the principal tax through this program. It is only the interest and the penalties that can be reduced or forgiven through this program.
Qualifications for the Taxpayer Relief Program
The Taxpayer Relief Program is only available in certain situations. The CRA will only grant interest and penalty relief in certain situations where circumstances beyond a taxpayer’s control prevented them from paying or filing their taxes on time. While the CRA has the discretion to accept circumstances other than the ones below, the Taxpayer Relief Program is generally available under these three circumstances:
- Extraordinary circumstances (If the interest or penalties arose due to circumstances beyond the taxpayer’s reasonable control. This could include, for example, death, severe illness, natural disaster, accidents or mental distress)
- Significant financial hardship (If the tax debt to the CRA, including its interest and penalties, is causing substantial financial hardship on the taxpayer, or if the taxpayer has shown an inability to pay the tax debt due to financial hardship)
- Actions of the CRA (If the CRA’s actions, for example, processing delays or errors, have caused or contributed to the interest or penalties)
Filing a Request for Taxpayer Relief
To qualify for the Taxpayer Relief Program, you must apply to receive taxpayer relief by completing and filing the RC4288 form with the CRA. It is crucial to understand that the CRA wants its tax debts paid in full, including interest and penalties. Interest and penalties have been put in place to ensure taxpayers comply with Canadian tax laws and to encourage taxpayers to pay and file their taxes on time. For this reason, the CRA expects specific proof and a solid case before accepting a request for taxpayer relief and reducing or removing interest and penalties for taxpayers. An application for Taxpayer Relief must correctly set out the grounds under which the relief is being requested. The application must also set out why the relief request is valid, and supporting documentation and evidence must also be provided.
Professional Legal Help With Taxpayer Relief Program
If you want to be accepted into the CRA’s Taxpayer Relief Program, our lawyers have the skills and experience necessary to give you the best chance of having your application accepted. CRA processes are complex and confusing, and the CRA will seek every opportunity to deny your relief application. Our lawyers will review your specific situation, prepare your written submissions, complete the RC4288 form on your behalf, and represent you against the CRA through the entire process. Contact us today to find out how we can help you successfully apply and get accepted to the Taxpayer Relief Program.
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By Kaveh Rezaei – Attorney at KR Law Firm
**Disclaimer
This article contains information of a general nature only and does not constitute legal advice. All legal matters have their own specific and unique facts and will differ from each other. If you have a specific legal question, it may be appropriate to seek the services of a lawyer.
