(a) Where additional documentation becomes available after an objection is with the appeals officer, must that officer review and analyze the additional documentation, or should it be sent to Audit for review and, if so, to the original auditor – and does the taxpayer have a say?
(b) If the appeals officer has a discretion whether or not to review significant additional documentation, how should this discretion be exercised?
(c) If there is a further review by Audit, is Appeals required to share this second report on the supplemental documentation with the taxpayer?
CRA responded:
(a) … Upon receipt of the additional information/documents from a taxpayer, Appeals will review the documents and determine whether further audit work, examination or analysis is required. If audit assistance is required, a referral will be addressed to the responsible TSO. Once a referral for an objection has been received, Audit will advise the appeals officer of the name of the auditor who has been assigned the review and will establish a reasonable timeframe for completing the review.
(b) In situations where specific documents or information was requested by the auditor, but only provided by the taxpayer at the objection stage, the appeals officer is required to make a referral to audit … [although] the GST/HST Refund Integrity Program is excluded from this mandatory referral process … .
Situations where a referral to Audit is discretionary include, but are not limited, to:
- Where the net tax was estimated due to insufficient books and records;
- Where the input tax credits were disallowed as the accounting records and/or documentation were not provided;
- Where the new information provided for review is substantial;
- Where an on-site visit is warranted to verify certain facts provided by the taxpayer;
- Where the objection relates to an initial assessment concerning issues of prior years' returns currently being considered by Audit.
(c) Where an appeals officer makes a referral of an objection to Audit, Appeals will advise the objector or authorized representative that their file has been referred back to Audit and will assure them that the decision on the review will be the responsibility of Appeals. Appeals will conduct a follow-up every 30 days with the auditor. Upon receipt of audit findings, Appeals will review and consider the recommendation from Audit and will discuss it with the objector or authorized representative. Appeals may share the second auditor’s report addressing the submission of the supplemental documentation with the taxpayer, if requested, so the taxpayer can address any concerns.
