The CRA taxpayer relief provisions can cancel or waive penalties and interest. They do not cancel tax. When events beyond your control prevent you from meeting your tax obligations, the Canada Revenue Agency may cancel or waive the penalties and interest. Its own errors and delays can qualify too. When the problem is that you cannot pay, the CRA’s page says it may waive or cancel interest. The answer comes back in a decision letter.
That is the limit, and you should know it before you apply. What follows is what to send, how long you wait, and what to do with the letter when it comes, yes or no.
The tax stays
Relief is for penalties and interest. The CRA’s who-can-apply page says the following do not qualify for relief under the Taxpayer Relief Provisions:
- assessed tax
- penalties and interest outside the 10-year period
- penalties where the CRA has no legislative authority, for example the GST/HST gross negligence penalty charged under section 285 of the Excise Tax Act
- administrative charges such as bank chargeback fees
The same page adds a line people skip. Meeting the criteria “does not guarantee that relief will be granted.” Anyone who tells you a relief request is a sure thing is selling you something.
The four grounds, and the papers for each
The CRA’s page lists the common situations.
| Situation | The CRA’s examples |
|---|---|
| Extraordinary circumstances | A flood or fire, a postal strike, serious illness or accident, death in the immediate family |
| Financial hardship | You cannot pay due to financial hardship; interest charges make up a major amount of what is due and you are unable to make a reasonable payment arrangement |
| Actions of the CRA | Incorrect information provided to you by the CRA; errors in processing; undue delays in resolving an objection or an appeal, or in completing an audit |
| Other circumstances | Circumstances that do not fall within the three above |
What to attach depends on the situation. The CRA’s how-to-apply page says to attach documentation as it relates to your situation. Some of what it lists:
- for a death: a death certificate or obituary
- for illness: a doctor’s certificate or letter with the type of illness and the length of treatment, and hospital dates
- for a disaster: insurance statements, and a fire, police or other disturbance report
- for the CRA’s own errors: correspondence from the CRA, or notes of telephone conversations
- for hardship, individuals may need to provide an income and expense statement, for example Form RC376, and bank and credit card statements for the most recent 3 months
Read the hardship row twice. The CRA says that once it has confirmed you cannot pay, it “may waive or cancel interest in whole or in part to allow you to pay your debt.” The aim is a balance you can pay. It is not a clean slate.
A business makes the hardship case on different terms. The CRA’s test is that paying the interest would put at risk “the continuity of business operations, employees’ jobs, and the welfare of the community as a whole.” The papers include a statement of earnings, a statement of expenses, and a corporate balance sheet with details of assets and liabilities.
The 10-year window
The window is set in the Income Tax Act, subsection 220(3.1). For penalties, the CRA considers only a tax year or fiscal period that ended in the 10 calendar years before the year you ask. For interest, it considers only the amounts that accrued in those same 10 calendar years. The CRA’s own example: a request made in 2023 must relate to a penalty for a tax year ending in 2013 or later.
Interest that accrued before the window does not qualify.
If old penalties are tied to returns you never filed, do not wait for a better month to start.
What the officer weighs
The decision is not only about the event. The CRA’s after-you-apply page names four things it looks at:
- your filing and payment history
- whether you knowingly let a balance owing sit and build interest
- whether you took reasonable care in managing your tax affairs
- whether you acted quickly to correct any delay or omission
Look at the fourth one. A request that tells the story of the fire and stops there leaves it unanswered. What did you do once it was over, and when? Put that in writing too. Write it before you send the request, not after a refusal.
Sending the request
Individuals apply online through My Account, under “Request relief of penalties and interest”. A business uses My Business Account. By mail or courier, the CRA says to download and complete Form RC4288, Request for Taxpayer Relief. The form’s address page sends requests from Ontario residents to the Prince Edward Island Tax Centre in Summerside.
The CRA asks for a detailed, complete and accurate description of what happened. It also asks how that stopped you paying, filing or meeting the obligation on time. It also asks for the tax years or fiscal periods involved. Give dates. The form’s own example is a fire on April 29 that destroyed the books before the April 30 filing deadline. One line, two dates, and the officer can check it.
While you wait, interest runs
This is the part that costs money. The CRA states that interest “will continue to accrue on any amount owing” while your request is reviewed. It also states that full or partial payment “will contribute to reducing the amount of interest charged.” If you have made payments toward the amount owing, the cancelled interest may be refunded.
How long is the wait? The CRA’s main relief page gives a current average processing time of approximately 16 months. It says a request may take less or more time, depending on how complex it is and how complete the documents are. You can follow it with the Progress Tracker in My Account, My Business Account or Represent a Client.
If the same assessment is under objection or appeal, the CRA will not make a final relief decision until that is resolved and all rights of appeal have expired.
The letter says yes
The approved penalties and interest are cancelled from your account. The CRA will generally refund any of them you already paid. The CRA says that if you have debts from other tax years, other related tax accounts or outstanding tax returns, the following could happen:
- your refund could be applied to other debts
- your refund could be held until you file any past due returns
So an approval on a single tax year does not mean money in your hand. Not if other years are open or unfiled. The late filing penalty calculator on this site puts a rough figure on what each late year has added.
The letter says no
A refusal is not the last word. The CRA sets out two recourse options. It recommends the first one before the second.
Second administrative review. You ask the CRA to look again, online or by letter. Form RC4288 has a section for it: Section 5, “Previous decision”, which asks for the case number from the decision letter, if known. Give the reasons you disagree. The CRA’s examples are information that was not considered, or facts that were missing or misinterpreted. Add any relevant new documents or facts. The CRA states that “none of the officials involved in the first review will conduct the second review.”
Judicial review at the Federal Court. If you believe the decision was not fair and reasonable, you can apply to the Federal Court. The CRA says you must do it within 30 calendar days of the date you received the decision.
Write the date the letter arrived on the envelope. Keep the envelope.
When relief is the wrong tool
Relief answers one question. Should these penalties and interest stand? If your problem is a different one, the CRA itself lists other options:
- the assessment is wrong: file a formal objection to the assessment
- a past return had errors, or a return was never filed: a voluntary disclosure may fix it, and may bring relief with it
- you need to correct errors: change your personal income tax return or your corporate tax return
- you want a refund on a year past the normal three-year period: the CRA lists “filing an income tax return to refund or reduce the amount payable beyond the normal three-year period” among the other options that may better fit your situation
And if the tax itself is more than you can pay? No relief request touches it. The federal bankruptcy regulator, on its page that compares debt solutions, says a proposal that is accepted and completed releases you, in law, from the debts it included. The same page names Licensed Insolvency Trustees as “the only professionals able to offer this service.” Which tax debts a filing includes, and how the CRA votes on it, is covered on the page about a consumer proposal with CRA debt in it.
Before you choose
Before you send a relief request, list what else is open: unfiled returns, an HST account, payroll source deductions, a garnishment, a director’s liability question. In our view, those are best looked at together, before anything is filed. The page on tax debt relief options in Ontario takes them as one file.
Every file is different. A relief request that worked for your brother-in-law tells you nothing about yours. Bring the decision letter, or the date you plan to apply, to the first conversation, and tell us at the start if any years are unfiled. The consultation is free. Call 647-276-8844, or set up a debt relief consultation online.
Questions people ask
Can the CRA forgive the tax itself under the relief provisions?
No. Assessed tax is on the CRA’s own list of things that do not qualify. Relief reaches penalties and interest only.
How long does a taxpayer relief request take?
The CRA’s main relief page gives a current average of approximately 16 months. Yours may take less or more. Interest keeps accruing on the balance in the meantime.
Can I apply again after the CRA says no?
Yes. Ask for a second administrative review, online or by letter. On Form RC4288, that is Section 5, “Previous decision”: a request to reconsider a previous taxpayer relief decision. None of the officials from the first review conduct it. After that, you can apply to the Federal Court for judicial review within 30 calendar days of receiving a decision.
What is the CRA three-year rule, and is it the same as the 10-year limit?
No. The 10-year limit sets how far back a request for relief of penalties and interest can reach. The three-year period is a different rule. The CRA lists filing a return “to refund or reduce the amount payable beyond the normal three-year period” among its other options, apart from relief of penalties and interest.
Should I pay while the request is reviewed?
The CRA says that full or partial payment of the amount owing will contribute to reducing the interest charged. If interest you paid is later cancelled, it may be refunded. What you can afford to pay, and what to pay first, depends on the rest of your file.
Where we fit
Get Total Debt Relief is a debt consulting and representation firm, not a Licensed Insolvency Trustee. Only a Licensed Insolvency Trustee can file your documents for a consumer proposal or a bankruptcy with the Superintendent of Bankruptcy. However, he is not the only one you should get your information from. Unlike a Trustee, we look to preserve your equities and assets, not liquidate them. What we do is make sure you only pay what you have to pay, not what someone thinks you can pay. We use every tool available to make sure you protect your home, your business and other equities as well as Spousal rights. Once you’re ready to move forward with whichever process you choose, that’s when it’s time to move on to the selection of a Trustee. Please keep in mind that if for any reason, you have to deal with a legal matter during your Bankruptcy or Proposal, a Trustee can NEVER legally represent you. However, he CAN act against you. Choose your representation wisely!
DISCLOSURE:
Get Total Debt Relief is a debt consulting and representation firm. We are not a Licensed Insolvency Trustee, and we are not connected to the Canada Revenue Agency or any government body.
Only a Licensed Insolvency Trustee can file your documents for a consumer proposal or a bankruptcy with the Superintendent of Bankruptcy.
OUR SERVICE:
However, any Trustee you choose can’t legally represent you over your Creditors nor can he give you any advice that will benefit you over your Creditors. The Trustee’s job is to maximize how much he can get from you and your estate for the benefit of your Creditors and the more he collects in a Proposal, the more he makes.
What we do is the work before the filing and the path you choose will come from the advice and information that goes with it. More importantly, we use tools that are not available to the Trustee because of who’s interests he represents. We go through your whole situation with you. We answer your questions, for as long as it takes and as many times as you need to ask them. Every consultation is free and if or when you decide to move forward, you’ll know which option best suits you, your family and or your business. And, unlike the Trustee, we will NEVER use the information you’ve given us against you in Court. The bottom line is that we don’t look to liquidate your assets and equities, we look to protect them.