26 November 2018 Ministerial Correspondence 2018-0776571M4 - Fraudulent investment - recourse

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Request for T1-Adjustment that was previously denied.

Position: Recourse options explained.

November 26, 2018

XXXXXXXXXX

Dear XXXXXXXXXX:

Thank you for your correspondence about the losses you incurred as a result of a fraudulent investment scheme. Thank you also for your understanding regarding the delay of this response.

I regret to hear of the challenges you are facing. The income tax consequences pertaining to a failed investment where a taxpayer is a victim of fraud or a scam can be determined only after a complete review of all the relevant facts and circumstances of each particular situation. Therefore, each individual taxpayer must present the facts of their situation to the Canada Revenue Agency (CRA). While the confidentiality provisions of the Income Tax Act prevent me from discussing the affairs of other taxpayers with you, I assure you that the CRA is committed to applying the tax laws consistently and fairly.

If you feel the CRA has misinterpreted the facts of your tax situation or applied the law incorrectly, the CRA has several measures in place to give you the opportunity to resolve complaints and disputes and to offer you relief. You can find information about these measures at canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints-disputes.

One of these measures is filing a notice of objection. A notice of objection gives you an opportunity to have your say about your notice of assessment, reassessment, determination, or redetermination. When you file an objection, the CRA reviews all the information you provided before making a final decision about your case. Objections are an important way of making sure that Canada’s tax laws are administered fairly and responsibly. They allow taxpayers to get a formal and impartial review of an assessment, determination, or decision that the CRA made. However, there are time limits on when a notice of objection can be filed. Generally, the deadline for filing an objection is whichever of these two dates is later:

• one year after the tax-filing deadline for the income tax and benefit return; or
• 90 days from the date of the notice of assessment or determination.

Another measure is the taxpayer relief provisions. Under the taxpayer relief provisions, the CRA may, in some cases, authorize a reassessment or redetermination for an individual beyond the normal three-year reassessment period where the adjustment would result in a refund or a reduction in an amount payable (for example, on a T1-adjustment request the taxpayer made) and accept certain late, amended, or revoked elections. The individual must make all requests within a ten-year time limit. Under the taxpayer relief provisions, the CRA may also provide interest and penalty relief in situations where a taxpayer has a confirmed inability to pay or is experiencing financial hardship related to a balance owed to the CRA.

There is no right of objection or appeal for a taxpayer to dispute a decision made under the taxpayer relief provisions (for example, if you have requested an adjustment to your return for a year beyond the normal three-year reassessment period). However, if you believe that discretion has not been properly exercised, you can ask that another delegated official from the tax services office or the tax centre reconsider the original decision made under the taxpayer relief provisions and review the situation again. The second review is an independent review of the original decision. CRA officials not involved in the first review and decision will do the second review. During the second review, you will have the opportunity to provide additional information for the CRA’s consideration. In your request for a second administrative review, you should explain in detail the reasons why you disagree with the original decision and include any new relevant information not considered.

You can find information on how to request a second review of a decision under the taxpayer relief provisions at canada.ca/en/revenue-agency/services/forms-publications/publications/ic07-1r1/taxpayer-relief-provisions-1r1 by selecting “Redress – Second administrative review” in Part V.

Thank you again for writing. I trust the information I have provided is helpful.

Sincerely,

The Honourable Diane Lebouthillier
Minister of National Revenue

Pamela Burnley
613-670-9027
2018-077657