Don’t

Represent your client in court if the disputed amount is less than $12,000.

Why?

If you know more about the case than the client, you should be testifying. The client can self-represent. She goes on the stand, tells her story, and then asks witnesses for evidence that bolsters her case. You want to be one of those witnesses.

Don’t

Use third-party evidence.

Example

During testimony, accountant James Rhodes once saw a spouse speak to things she heard her husband say. “The judge said, ‘Your husband should have been here today,” and didn’t attend “because his evidence would hurt your case,” says Rhodes, who adds her testimony was dismissed as hearsay.

Why?

It will be dismissed as hearsay unless that person actually takes the stand.

Cooperate with CRA.

Why?

“If there was an audit and you didn’t give CRA what they asked for, they may come back with a proposed assessment that would have looked very different if you had provided all the information.”

–Bruce Ball, CA, national tax partner with BDO Canada LLP

So that means:

If your client missed a deduction in 2012, her filing deadline would be April 30, 2013. If she filed in April 2013 and got her Notice of Assessment in June, the 90-day period from the assessment would expire in September 2013. But she’d be within one year of her filing deadline until April 30, 2014, and could file a Notice of Objection until then.

File a Notice of Objection (Notice of Objection is form T400A) for each affected tax year, not just the year in which the disputed amount occurred.

Why?

If the matter is recurring, it could remain unresolved when the next tax season comes along. So be proactive.

Forgot a deduction?

If it’s been fewer than three years, ask CRA to allow it retroactively.

If CRA disputes the validity of the deduction, the client must file a Notice of Objection. He has 90 days from the date on the assessment, or one year from the filing due date, to do so (whichever’s longer).

It should say: “It wasn’t your fault I missed the deduction, but I object because the assessment was wrong due to the missed deduction.”

Our sources: Bruce Ball, national tax partner, BDO Canada LLP, Toronto; Gerald Grenon, partner, KPMG Law LLP, Calgary; Paul Lynch, CA, KPMG, Ottawa, Ont.; James Rhodes, TaxationLawyers, Kitchener, Ont.

Appeal a tax ruling

Appeal if the judge made an error of law (e.g., there was an actual mistake in the judge’s ruling). You’re more likely to be successful.

don’t

Appeal on the basis of fact (e.g., you claim an event never took place). “You can’t say, ‘I wasn’t the guy holding the gun’ if the court ruled you were the guy holding the gun.” – Gerald Grenon, KPMG

A cost-benefit analysis, factoring in the low success rate.

Between 2002 and 2006, the tax court:

allowed 18% of appeals it heard Of the allowed, 83% ruled in favour of the Crown and 17% in favour of the taxpayer
rejected 47%
allowed 35% in part (the taxpayer won a portion of her case)

Source: Data compiled by Paul Lynch, KPMG LLP partner, tax, during his 18 years at the CRA.