The Canada Revenue Agency is reminding taxpayers that they only have until December 31 to review their records and send in their requests for adjustments under the fairness provisions for the 1985 to 1994 taxation years. After that, a budget amendment will cutoff complaints about those years.
The fairness provisions were introduced in the early 1990s to give the CRA the flexibility to help clients who, because of extraordinary circumstances, are unable to meet their tax or duty obligations.
Extraordinary circumstances include situations such as: a disaster (e.g. a flood or a fire); an error in a CRA publication; a disruption in services such as a postal strike; and financial hardship.
The current rules provide the minister with discretion to:
- cancel or waive penalties and interest;
- accept late-filed, amended, or revoked income tax elections; and
- issue income tax refunds beyond the normal three-year period (individuals and testamentary trusts only) for the 1985 and subsequent taxation years.
The 1985 base year had not changed since the fairness provisions were introduced. However, under the proposed amendment, announced in the March 2004 federal budget, the minister’s discretion in such cases will only apply for requests that are for a taxation year ending in the 10 previous calendar years. Effective Jan. 1, 2005, for example, a request made in 2005 will only be accepted for 1995 and subsequent taxation years.
The CRA says that the proposed amendment will help improve the administration of the fairness process.