There are several types of penalties to individuals from CRA:
- late-filing penalty
- Repeated failure to report income penalty
- false statements or omissions penalty
Most likely the last one is a killer as it is always the 50% of the understated tax and/or the overstated credits related to the false statement or omission. This means, for example, if you claimed $10,000 expenses as gifts to your client in your tax return (so that you saved $5,000 tax owing) and eventually the expense has been disallowed after an audit, you will need to pay back the $5,000 tax first followed by $2,500 penalty, plus interest of the $5,000. Many times the taxpayers do not afford such a large amount of penalty immediately so here comes the taxpayer relief provisions.
The Canada Revenue Agency (CRA) administers legislation that gives the Minister of National Revenue discretion to:
- cancel or waive penalties or interest
- accept certain late, amended, or revoked income tax elections
- issue a refund or make an adjustment to refund or reduce tax payable beyond the normal three-year period for an individual, a graduated rate estate, and for certain tax years, a testamentary trust
So what we do is to represent you to discuss with CRA trying to find a mitigation path. Our professionals have expertise in a number of different fields so you can rest assured your case is being handled efficiently and we can see it through to a satisfactory conclusion.