The Taxpayer Relief program allows the Canada Revenue Agency to grant relief from penalties if the request is made within 10 years from the end of the calendar year in which the tax year or fiscal period at issue ended and the circumstance falls into one of four categories:
- Extraordinary circumstances
When penalties or interest result from circumstances beyond the taxpayer’s control and which may have prevented the taxpayer from making a payment when due, filing a return on time, or otherwise complying with a tax obligation.
- natural or human-made disasters, such as a flood or fire;
- civil disturbances or disruptions in services, such as a postal strike;
- serious illness or accident; and serious emotional or mental distress, such as death in the immediate family.
- actions of the Canada Revenue Agency (CRA);
- inability to pay or financial hardship;
- other circumstances
The CRA may also cancel or waive penalties or interest when they result primarily from CRA actions, including:
- processing delays that result in taxpayers not being informed (within a reasonable time) that an amount was owing;
- errors in CRA material which led a taxpayer to file a return or make a payment based on incorrect information;
- incorrect information provided to a taxpayer by the CRA (usually in writing);
- errors in processing;
- delays in providing information, resulting in taxpayers not being able to meet their tax obligations in a timely manner
- undue delays in resolving an objection or an appeal, or in completing an audit.
In circumstances where there is a confirmed inability to pay amounts owing, the CRA can consider waiving or canceling interest in whole or in part to enable taxpayers to pay their account including:
- when collection has been suspended because of an inability to pay caused by the loss of employment and the taxpayer is experiencing financial hardship;
- when the taxpayer is unable to conclude a payment arrangement because the interest charges represent a significant portion of the payments; or
- when payment of the accumulated interest would cause a prolonged inability to provide basic necessities (financial hardship) such as food, medical help, transportation, or shelter; consideration may be given to canceling all or part of the total accumulated interest.
The CRA can also grant relief if a taxpayer’s circumstances do not fall within the situations noted above.
It should be noted that a Taxpayer Relief request can take anywhere from several months to several years to be fully resolved.
Finally, it should also be noted that the use of the word CANCEL refers to an amount for which relief is granted while WAIVE refers to an amount not yet assessed for which relief is granted.