When you can’t meet your tax obligations – the CRA’s Taxpayer Relief Program

The forest fires affecting Northern Alberta and the Canada’s Revenue Agency’s (CRA’s) offer of administrative tax relief to those affected by the fires and evacuations has highlighted a federal government program, which few taxpayers are aware – the CRA’s Taxpayer Relief Program. In a nutshell, that program offers relief from interest charges, penalties, and collection actions for those who are unable, due to circumstances outside their control, from fulfilling their tax filing and/or payment obligations.

The most publicized instances in which such relief is offered by the federal government (and, usually, by the government in the particular province affected) occurs in instances of a disaster, whether natural or man-made. Those are not, however, the only circumstances in which relief can be made available. Such administrative relief can also be provided where the taxpayer has experienced serious illness or an accident, or a death in his or her immediate family, or is suffering from significant financial hardship. Whatever the reason for the application, it’s important to note that only interest and penalty charges can be waived. The Minister has no authority, no matter how dire the circumstances, to waive the payment of actual taxes owed.

Whether the inability to meet tax obligations arises from disasters affecting thousands of taxpayers or from individual circumstances, the process by which a request for relief is made is the same. The CRA issues a prescribed from – RC4288, Request for Taxpayer Relief, which can be found on the CRA website at www.cra-arc.gc.ca/E/pbg/tf/rc4288/README.html. While use of the form is not mandatory – a letter to the CRA will also suffice – using the prescribed form will ensure that all of the information needed by the CRA to make a decision, on the request for relief, is provided. For each request, that information includes:

• the taxpayer’s name, address, and telephone number;
• the taxpayer’s social insurance number (SIN), account number, partnership number, trust account number, business number (BN), or any other identification number assigned to the taxpayer by the CRA;
• the tax year(s) or fiscal period(s) involved;
• the facts and reasons supporting that the interest or penalty were mainly caused by factors beyond the taxpayer’s control;
• an explanation of how the circumstances affected the taxpayer’s ability to meet his or her tax obligations;
• the facts and reasons supporting the inability to pay the penalties or interest assessed or charged, or to be assessed or charged;
• any relevant documentation; and
• a complete history of events including any measures that have been taken (e.g., payments and payment arrangements, and when they were taken to resolve the non-compliance.

If the taxpayer’s request for relief relates to financial hardship, he or she must provide full financial disclosure, including statements of income and expenses. All relief requests are to be sent to a particular Tax Processing Centre, depending on where the taxpayer lives. A listing of the addresses of all the Centres is available on the CRA website at www.cra-arc.gc.ca/gncy/cmplntsdspts/sbmtrqst-eng.html, and the same information is included on the RC4288 form. The request cannot be e-mailed, as the CRA does not communicate taxpayer-specific information by e-mail.

Each relief request is assigned to a CRA official, who may, if necessary, contact the taxpayer to obtain clarification of the information provided, or to seek additional information. In any case, a determination will be made deciding whether the taxpayer’s request for interest or penalty relief is to be approved in full, approved in part, or denied, based on the following considerations:

• the taxpayer’s history of compliance with his or her tax obligations;
• whether or not the taxpayer knowingly allowed an arrears balance to exist upon which arrears interest has accrued;
• whether or not the taxpayer exercised a reasonable amount of care in conducting his or her tax affairs, and whether or not negligence or carelessness has been demonstrated; and
• whether or not the taxpayer acted quickly to remedy any delay or omission.

The final decision will be communicated to the taxpayer, with reasons provided where the request is only partially approved, or is denied. At the same time, the taxpayer will be provided with information outlining their options if the taxpayer does not agree with the decision made by the CRA.

More information on the Taxpayer Relief Program can be found on the CRA website at www.cra-arc.gc.ca/taxpayerrelief/.