Tax Court case shows consequences of missing — or ignoring — CRA mail

As advisors, we are bombarded with e-mails every day — from market reports and fund company webinar invitations to client queries and economic updates. With so much information crowding our inboxes, it’s possible we may miss an important email once in a while.

But doing so can be costly, especially if that missed email is from the Canada Revenue Agency. You see, the CRA assumes you’ve received their email unless you can prove otherwise.

A recent tax case (DiPierdomenico v. The King, 2023 TCC 146) decided in September dealt with a taxpayer who claimed never to have received various CRA notices dealing with reassessments for multiple tax years.

The taxpayer is a Canada Post mail carrier who had also owned a nail salon. The CRA audited that business and the taxpayer was sent notices of reassessment for his 2011, 2012, 2013, 2015 and 2016 tax years. The taxpayer didn’t file notices of objection in time to challenge those reassessments, and he also missed the deadlines to apply for extensions.

Under the Income Tax Act, the deadline for individual taxpayers to file an objection is one year from the normal filing due date or 90 days after the date printed on the notice of reassessment, whichever is later. If a taxpayer misses the deadline, they can still apply to the CRA for an extension within one year of the deadline. That application must include the reasons they didn’t object before the deadline and should be addressed to the Chief of Appeals at an Appeals Intake Centre.

Should the CRA deny the application or if the taxpayer doesn’t receive a response from the CRA within 90 days, the taxpayer may further appeal to the Tax Court of Canada.

In the recent case, the CRA testified that on July 4, 2016, it sent notices of reassessment by mail to the taxpayer for the 2011, 2012 and 2013 tax years. The taxpayer claimed he never received them, and that he only found out about them after retaining a tax accountant in late 2019. The accountant, who represented the taxpayer in court, filed an application on June 9, 2022 for a time extension to object to those reassessments.

The taxpayer’s argument was that he simply did not receive the notices of reassessment. He testified that CRA correspondence was “sporadic at best” but was unable to produce copies or records of any such correspondence.

The judge wondered whether the taxpayer had received any mail from the CRA and, if he did, when. He also wondered whether the taxpayer received any mail from other senders.

After confirming that the taxpayer’s address on file was correct and that, because he had objected to each of the reassessments, he must have received them, the judge said the taxpayer’s allegation “lacked any factual foundation, which is strange, particularly as the [taxpayer] himself is a mail carrier.”

The taxpayer’s notice of objection wasn’t filed until January 2017, well beyond the 90-day deadline. A week later, the CRA wrote to the taxpayer informing him that his notice of objection wasn’t valid, as it was late. The letter went on to say that the taxpayer had one year from the expiration of the 90-day period to apply to the CRA for a time extension to serve a notice of objection.

While the taxpayer did, ultimately, file an application with the CRA for an extension of time to object, he waited until May 2018 to do so, which was beyond the one-year extension period (which expired on Oct. 3, 2017).

As for the 2015 and 2016 tax years, the CRA says it sent notices of reassessment to the taxpayer via email in 2021 and 2020, respectively. The CRA sent those notices via email because on March 10, 2020, the taxpayer authorized the CRA to do so by enrolling in the CRA’s My Account system.

The judge ruled that because the taxpayer failed to file applications for extensions by their respective deadlines, the Tax Court was unable to grant the extensions requested for all five years under reassessment. Thus, the taxpayer was effectively precluded from disputing any of those reassessments — a seemingly harsh result that demonstrates what can happen if you miss (or ignore) a CRA email.

Jamie Golombek

Tax & Estate

Managing Director, Tax and Estate Planning, CIBC Private Wealth Team Jamie Golombek is Managing Director, Tax and Estate Planning with CIBC in Toronto. As a member of the CIBC Private Wealth team, Jamie works closely with advisors from across CIBC to support their clients and deliver integrated financial planning and strong advisory solutions. He joined the firm in 2008 after 12 years with a global investment company, where he was involved in both internal and external consulting on all areas of taxation and estate planning. Jamie has also worked for Deloitte as a tax specialist in the Toronto office, where he specialized in both personal and corporate tax planning. Jamie is quoted frequently in the national media as an expert on taxation. He writes a weekly column called “Tax Expert,” in the National Post, has appeared as a guest on BNN, CTV News, and The National, and for several years was a regular personal finance guest on The Marilyn Denis Show. He received his B.Com. from McGill University, earned his CPA designation in Ontario and qualified as a US CPA in Illinois. He has also obtained his Certified Financial Planning (CFP) and Chartered Life Underwriting (CLU) designations. In 2023, Jamie was named a CPA Ontario Fellow. The FCPA is the highest distinction that can be bestowed upon a CPA who brings distinction to themselves and to their profession through leadership and achievement in their professional, community or personal lives. Jamie is a past chair of the Investment Funds Institute of Canada’s Tax Working Group. He is also a member of CPA Ontario, the Illinois CPA Society, the Estate Planning Council of Toronto, the Canadian Tax Foundation and the Society of Trust and Estate Practitioners. For nearly two decades, Jamie taught an MBA course in Personal Finance at the Schulich School of Business at York University in Toronto.