Factors used in arriving at the decision

Where circumstances beyond your control, actions of the Canada Revenue Agency (CRA), or inability to pay or financial hardship has prevented you from complying with your tax obligations, the following factors will be considered when determining whether or not the CRA will cancel or waive penalties or interest:

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

Third-party actions

You are generally considered to be responsible for errors or delays made by a third party acting on your behalf for tax related matters. A third party who receives a fee and gives incorrect advice, or makes arithmetic or accounting errors, is usually regarded as being responsible to their client for any penalty and interest charged because of their actions. However, there may be exceptional situations when it may be appropriate for the CRA to provide relief because of third-party errors or delays.

For example, it may be appropriate to consider granting relief from penalties and interest, in whole or in part, when an extraordinary circumstance beyond the control of a taxpayer's representative or actions of the CRA (as described under Circumstances that may warrant relief) have prevented the taxpayer from meeting their tax obligations.

Specific penalty and interest information

• For information about accrued arrears interest, please see Limitation period.
• For information about the goods and services tax/harmonized sales tax (GST/HST), please see GST/HST Memorandum 16.3 - Cancellation or waiver of penalties and interest.
• Please see the Information Circular IC07-1R1, Taxpayer relief provisions reference indicated for information on the following topics:
  • False statements or omissions penalty and third-party civil penalties - paragraph 37
  • Administrative charge on dishonoured payments – paragraph 40
  • Employment Insurance premiums and Canada Pension Plan contributions – paragraph 41
  • Voluntary disclosures program – paragraphs 42 and 43

Notifying you of the decision

Once the review is complete, we will notify you of our decision in writing. Your request may be approved, partially approved, or denied. If your request is partially approved or denied, our written notification will also advise you what you can do if you do not agree with the CRA decision.

Information specific to requests that are granted

When the CRA has made a decision to grant your request for relief, please see paragraphs 90 to 99 of Information Circular IC07-1R1 for information dealing with the rules about:

• Reductions in refunds;
• Refund interest;
• Application of refund to other debts; and
• Refund withheld until outstanding returns are filed.

Right of objection

If penalty or interest amounts have been cancelled or waived in whole or in part, there is no right of formal objection to dispute the resulting assessment or reassessment. However, if you disagree with the CRA's decision you can request a second administrative review.

Second administrative review

If you believe the CRA did not properly exercise its discretion in considering your request, you can ask for a second review. You may request a second review by writing to the address provided in the decision letter you received in reply to your first request for relief, or by writing to the Intake Centre responsible for your province or territory of residence.

A second review request requires the following:

• the reasons why you disagree with the CRA's decision, e.g., not all information was considered, certain facts or details were missing or misinterpreted or not considered in their proper context; and
• any relevant new documents, new facts, or correspondence

To maintain impartiality and transparency, the second review will not be conducted by the CRA official involved in the first review and decision.

The CRA may still uphold its previous decision following a second review of your request for relief. If you feel that the discretion was not properly exercised during the second review, you can apply to the Federal Court for a judicial review of the CRA decision within 30 days of the date you received the CRA second review decision.

Related topics

• Cancel or waive penalties or interest
• Late, amended, or revoked elections
• Refund or reduce the amount payable beyond the normal three-year period