Canada Revenue Agency (CRA) released guidance on "bulk" taxpayer relief requests as well as taxpayer relief for "extreme weather events." CRA makes specific reference to the "unprecedented floods in British Columbia and Eastern Canada." Taxpayers, including individuals, businesses and first responders, may fail to meet their tax filings obligations as a result. According to CRA:

When an extraordinary event (for example, natural disaster) has prevented many taxpayers from meeting their tax obligations, the minister may issue a news release to announce that special consideration will be given to providing relief, such as a waiver or cancellation of penalty and interest charges on late tax remittances or late filing of a return. In such cases, taxpayers need to ask to get relief.

Bulk Taxpayer Relief Request

A bulk request refers to a representative submitting one taxpayer relief application on behalf of multiple taxpayers based on "common reasons and similar facts." An example would be the British Columbia floods. In this instance, related delays filing tax returns and paying tax owing can result in penalties and interest. Interest will accrue as long as there are penalties and tax owing.

CRA will accept a bulk taxpayer request for relief from penalties and interest for consideration under the following conditions:

  • The request describes common reasons for seeking relief;
  • The facts and circumstances apply to all taxpayers; and
  • No taxpayer-specific information is required to render a decision.

Taxpayer relief is generally granted when the following types of situations prevent a taxpayer from meeting their tax obligations:

  • extraordinary circumstances;
  • actions of the CRA;
  • inability to pay or financial hardship;
  • other circumstances

If a bulk taxpayer relief request was submitted for a group affected by the BC floods, it would presumably be based upon facts establishing extraordinary circumstances and inability to pay or financial hardship. Per CRA policy, extraordinary circumstances that prevent a taxpayer from meeting tax obligations include "natural or human-made disasters, such as flood or fire." A taxpayer's inability to pay or financial hardship must be linked to extraordinary circumstances.

In general, CRA has the discretion to provide taxpayer relief from penalties and interest pursuant to subsection 220(3.1) of Canada's Income Tax Act. The request must be made within 10 years of the tax year at issue (Bozzer v. Canada, 2011 FCA 186 (CanLII)). If the request is accepted, relief will be provided for penalties and interest accrued during the preceding 10 years. Guidance is provided per IC07-1R1 Taxpayer Relief Provisions.

A detailed request should be submitted to CRA with the official form RC4288 Request for Taxpayer Relief – Cancel or Waive Penalties or Interest, plus an attached detailed written submission advocating in favour of relief. In addition, form RC376, Taxpayer Relief Request – Statement of Income and Expenses and Assets and Liabilities for Individuals should be submitted if the request for relief is based on financial hardship.

An expertly prepared request will include all of the relevant facts with specific reference to related policy, legislation and case law. If the initial application fails a second request can be submitted for further review. Also, a taxpayer can apply to the Federal Court for judicial review of CRA's decision (see Towers v. The Queen, (1993), 94 D.T.C. 6118 (F.C.T.D.)).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.