Excise Taxes and Special Levies Memoranda Series

X6-3 Objections and Appeals

September 2013

NOTE: This version replaces the one dated September 1999 entitled Objections and Appeals for Other Taxes.

Disclaimer:
The information in this memorandum is for reference purposes only and does not replace the law found in the Act or its regulations. Should there be any discrepancy between the information in this memorandum and that contained in the Act or its regulations, the legislative provisions apply. As the information in this publication may not completely address your particular situation, you may wish to refer to the Act or appropriate regulation, or call 1-866-330-3304 for additional information.

Objection process

Assessments and determinations

1. Under subsections 81.1(1) ^{Footnote 1} and 81.1(2), the Canada Revenue Agency (CRA) has the authority to assess or reassess any tax payable, penalty or interest, or any other sum that is payable under the Act. The CRA may even assess a person further for the same circumstances or reassess a person for any matter covered by an assessment. In general, assessments must be made within a four year limitation period.

2. Persons may be eligible to apply to the CRA for refunds for tax paid on amounts that became refundable in certain circumstances such as tax paid in error, bad debts, specific purchases of gasoline, and exports. In general, there is a two year time limit for filing a refund application. The CRA reviews the applications and, in each case, makes a determination.

3. When an assessment or determination is completed, the CRA issues a notice of assessment, as stated in subsection 81.13(1), or a notice of determination, as per subsection 72(6). Such notices state the outstanding amount of tax owing by the person or owing to the person.

4. Persons who disagree with a notice of assessment or a notice of reassessment are encouraged to contact the nearest CRA tax services office to discuss any issues surrounding the assessment in an effort to resolve those issues, and thereby avoid having to initiate the formal objection process.

Formal objection

5. The Act provides for a formal objection process for persons who disagree with a notice of assessment or notice of determination. The formal objection process commences with the filing of a notice of objection, which results in an impartial review by CRA's Appeals office, and can lead to appeals to the Canadian International Trade Tribunal (CITT), the Federal Court and the Supreme Court of Canada.

Filing a notice of objection

6. Under sections 81.15 and 81.17, persons who disagree with a notice of assessment or a notice of determination may file a notice of objection with the CRA within 90 days after the date the notice of assessment or notice of determination was sent. Form E413, Notice of Objection (Excise Tax Act), must be completed and mailed to the following address:

Chief of Appeals
Appeals Intake Centre
1050 Notre Dame Avenue
Sudbury ON  P3A 5C1

7. The notice of objection must set out the reasons for the objection and provide all the relevant facts in detail. In addition, letters, invoices or any other documents supporting the objection should be submitted. It is also helpful if a copy of the disputed notice of assessment or notice of determination accompanies the notice of objection.

8. If a person is objecting to more than one assessment or determination, a separate notice of objection must be filed for each disputed assessment or determination. If the facts and reasons are identical for more than one assessment or determination, this may be indicated on each notice of objection and one statement of facts may be submitted.

Purchaser objections and appeals

9. Under section 81.33, a purchaser of goods may, in their own name and in substitution for the vendor (i.e., the supplier), object to a notice of assessment, reassessment or determination that was issued to a supplier regarding transactions they had, or the purchaser may apply for an extension of the time limit to object or appeal. To allow the purchaser to pursue an objection or appeal, and to receive payment as a result of the objection or appeal, the supplier must assign their rights to the purchaser by completing Form E432, Assignment of Rights to Object or Appeal under the Excise Tax Act.

10. As per subsection 81.33(5), the purchaser may object to a notice of assessment, reassessment or determination without obtaining the assignment from the supplier after the expiration of the 90 day period from the date of the notice issued to the supplier, but before the expiration of a period of 120 days from the date of the notice.

11. To pursue an objection or an appeal, whether or not the supplier assigned their rights, the purchaser must complete Form E414, Notice of Objection – Purchaser, and mail it within 120 days of the date on the notice issued to the supplier. The form must be mailed to the appeals intake centre mentioned in paragraph 6.

Process of a notice of objection

12. Notices of objection are date stamped as they arrive at the CRA appeals intake centre. However, notices sent by first class mail or its equivalent are deemed to have been received on the date they were mailed.

13. After receiving the notice of objection, the appeals intake centre sends either a letter of acknowledgement or a letter informing the person that the objection is invalid (e.g., the objection was not filed within 90 days).

14. The Appeals officer reviews the objection and contacts the person or the person's representative to discuss the matter. When requested to do so, persons should provide additional documentation promptly to allow for the quick resolution of the objection.

15. To ensure that the reasons behind the assessments are understood and to provide an open exchange of information, documents pertaining to the issues in dispute are offered to the person at the outset of the objection stage. In addition, the person is informed of any discussions held between the Appeals officer and the assessing area about the disputed assessment or determination.

Results of decision

16. After considering all the facts and reasons, a decision respecting the assessment or determination is made by the Appeals office with one of the following results:

(a) the objection is allowed in full – This means that the amount in dispute in the assessment or determination is reversed. This may occur, for example, where the person submits additional information or conclusive arguments that the CRA did not have when the original assessment or determination was made.

(b) the objection is allowed in part – This means the disputed dollar amount of the assessment or determination is adjusted, and a notice of reassessment or another notice of determination is issued. This occurs, for example, where the Appeals office decides that the person is correct on some points raised in the objection, but not all.

(c) the objection is not allowed – This means that the assessment or determination under objection is upheld. Confirmation occurs when a person cannot demonstrate that the original assessment or determination was incorrect.

Issuance of a notice of decision

17. Subsection 81.15(5), in the case of an objection to a notice of assessment or a notice of reassessment, and subsection 81.17(5), in the case of an objection to a notice of determination, state that after reconsideration, the CRA will issue a notice of decision (a notice that the assessment or determination is confirmed), which will include the following information:

• the date of the decision;
• in the case of an assessment, the amount owing or overpayment by the person objecting, where the CRA varies the assessment or makes a reassessment;
• in the case of a determination, the amount payable, if any, to the person objecting;
• a brief explanation of the decision; and
• the period within which an appeal may be instituted under section 81.19 or 81.2.

18. The CRA also arranges to make any required adjustments to the person's account.

Extension of time limit to object

19. The 90-day time limit for filing a notice of objection to an assessment or determination cannot be extended by the CRA. However, persons may apply for an extension of the time limit as follows:

• under subsection 81.32(1), they can apply to the Canadian International Trade Tribunal (the CITT), except where the assessment has been made under Part I of the Act entitled "Insurance Premiums Other Than Marine" or to the Federal Court;
• under subsection 81.32(3), they can apply to the Federal Court where the assessment has been made under Part I of the Act or the appeal is made to the Federal Court.

20. Any application to the CITT or the Federal Court must be filed within one year after the expiration of the 90-day time limit for objecting to an assessment or determination.

21. As per subsection 81.32(2), when applying to the CITT for an extension of the time limit to object, three copies of the application must be filed with the CITT. When applying to the Federal Court, subsection 81.32(4) states that a notice of application must be filed with that court and a copy of the notice must also be filed with the Deputy Attorney General of Canada at least 14 days before the date that application is to be heard.

22. The CITT or the Federal Court will grant an order to extend the time only if the following conditions are met:

• it has not previously made an order extending that time; and
• it is satisfied that:
  • the person demonstrates that, given the reasons set out in the application and the circumstances of the case, it is just and equitable to grant the application for an extension of time;
  • if it had not been for the circumstances included in the application, an objection would have been made within that time;
  • the person demonstrates that the application was made as soon as circumstances permitted it to be made; and
  • there are reasonable grounds for the objection or appeal.

Appeal process

23. The Act provides for a formal appeal process for persons who disagree with the CRA's decision regarding an objection. Issues relating to taxes imposed under the Act (other than the tax imposed on certain insurance premiums under Part I entitled "Insurance Premiums Other Than Marine" or the GST/HST imposed under Part IX) may be appealed to the CITT or to the Federal Court. An appeal in respect of tax assessed under Part I may be made only to the Federal Court.

Direct appeal

24. Under section 81.21, a person may request consent from the CRA to appeal directly to the CITT or to the Federal Court, and waive the right to a reconsideration of the assessment or determination (i.e., the objection process). A request for a direct appeal to the CITT or to the Federal Court may be made in the notice of objection or in a separate document filed at the same time.

25. After considering the request, the CRA may consent to the direct appeal. If the CRA consents, a copy of the notice of objection is filed with the CITT or the Federal Court, and a notice of this action is sent to the person. If the CRA does not consent, the objection is processed in the normal manner.

Canadian International Trade Tribunal

26. According to section 81.19, a person may appeal an assessment or determination to the CITT within 90 days of the date the notice of decision was sent. In some cases, appeals to the CITT may be resolved quickly and informally since the CITT does not have to adhere strictly to all technical rules of evidence.

27. If the CRA has not issued a notice of decision within 180 days from the date a person filed the notice of objection to an assessment or a determination, subsection 81.22(1) states that this person may appeal to the CITT.

Federal Court

28. According to section 81.2, a person may bypass the CITT and appeal an assessment or determination directly to the Federal Court within 90 days of the date the notice of decision regarding the objection was mailed. The Federal Court is a higher level of court than the CITT, and the technical rules are more formal.

29. A person who disagrees with the decision of the CITT may appeal to the Federal Court within 120 days of the date the CITT issues its decision, as per subsection 81.24.

30. In addition, a person who has objected to an assessment or a determination may appeal to the Federal Court under subsection 81.22(2), if the CRA has not issued a decision regarding the objection within 180 days from the date the person filed the notice of objection.

Reference by the CRA

31. Under section 81.36, the CRA may refer any question of law, fact or mixed law and fact to the Federal Court for hearing and determination.

32. A reference to the Federal Court will set out the following information:

• the question to be determined;
• the names of any specific persons that the CRA seeks to have bound by the determination; and
• the facts and arguments on which the CRA intends to rely at the hearing.

33. A copy of the reference will be served by the CRA on the persons, if any, named in the reference and on any other persons who, in the opinion of the Court, are likely to be affected by the determination of the question set out in the reference.

34. If a reference is made to the Court, and the Court believes that persons other than those named in the reference are likely to be affected by the determination of the question, but that their identity is unknown or not readily ascertainable, it may direct that a notice of reference be given in such a manner that it will most likely come to the attention of those other persons.

35. The period that begins on the day the CRA institutes proceedings in the Court to have a question determined and ends on the day the question is finally determined will not count in determining:

• the time within which a notice of objection must be served by any person who is also served with a copy of the reference or who appears as a party at a hearing to determine the question;
• the time within which any such person may initiate an appeal; or
• the time within which any such person may commence proceedings to recover any tax, penalty, interest or other sum payable under this Act.

36. A determination of the Federal Court in relation to a reference is, subject to an appeal, final and binding on any person who is served with a copy of the reference or who appears as a party at the hearing to determine the question.

Reference under joint agreement

37. Under subsection 81.37(1), if the CRA and a person agree in writing that a question of law, fact or mixed law and fact should be determined by the Federal Court, that question will be determined by that Court under subsection 17(3) of the Federal Courts Act.

38. Subsection 81.37(2) states that, where paragraph 37 applies, time limitations are suspended. Therefore, the period beginning on the day proceedings are instituted in the Court, to have a question determined, and ending on the day the question is finally determined will not count in determining:

• the time within which a notice of objection must be served by the person who agreed to refer the question or any person who appears as a party at the hearing to determine the question;
• the time within which an appeal must be instituted by any such person; or
• the time within which proceedings to recover any tax, penalty, interest or other sum payable under this Act must be commenced by any such person.

Extension of time limit to appeal

39. A person who has not appealed within the 90-day time limit may apply to the CITT or the Federal Court for an extension of time to appeal. The conditions that must be met before an extension of time is granted to appeal are the same as those for an extension of time to object outlined in paragraph 22.

Federal Court of Appeal

40. Judgments of the Federal Court may be appealed to the Federal Court of Appeal within 30 days of the date of the Federal Court's pronouncement of judgment. It should be noted that the months of July and August are excluded from this 30 day calculation.

Supreme Court of Canada

41. Judgments of the Federal Court of Appeal may be appealed to the Supreme Court of Canada by requesting leave to appeal. The Supreme Court may grant leave to appeal if it feels that it should hear the case because of its national significance or the importance of the legal issues. Applications for leave to appeal must be filed within 60 days after the date of the judgment of the Federal Court of Appeal.

Amounts in dispute

42. According to subsection 86(5), if a person files an objection, the CRA cannot take collection action on amounts in dispute until 90 days after the notice of decision is sent to that person. However, interest and penalty continue to accrue on any amount owing.

43. In the case of an appeal, and according to subsection 86(6), no collection action can be taken on the amounts in dispute until the day on which a copy of the decision of the Tribunal is sent to the person or the day the judgment of the Court is rendered or the person discontinues the appeal. Interest and penalty continue to accrue on any amount owing.

44. Section 80.1 states that no collection action will be taken on any amount under objection or appeal where the person provides satisfactory security to the CRA for the payment of the amount. Security will be surrendered if the dispute is resolved in the person's favour.

Enquiries

All excise taxes and special levies memoranda are available on the CRA Web site at www.cra.gc.ca/etsl.