Taxpayer relief

What the CRA may consider

The CRA groups relief requests into a few situations. Extraordinary circumstances include a flood or fire, a postal strike, a serious illness or accident, or serious emotional or mental distress such as a death in the immediate family. Financial hardship can support relief from interest when you cannot pay. Actions of the CRA, such as processing delays or incorrect information it gave you, can also qualify. Other circumstances may be considered too.

Relief covers penalties and interest, not the underlying tax. You still owe the tax itself, and interest keeps accruing on an unpaid balance while a request is under review.

An illustrative example

Suppose an Ontario sole proprietor is hospitalized for several weeks in April and files a return two months late. The illustrative balance owing is $4,000, so a late-filing penalty applies and interest runs on the unpaid amount. The owner could ask the CRA to cancel both, explaining how the illness prevented filing and sending a doctor’s letter that gives the dates of treatment and recovery.

The request is stronger if the return was filed promptly once the person was able. The CRA looks at your filing and payment history, whether you took reasonable care with your tax affairs, and whether you acted quickly to fix the delay.

What does not qualify and how to ask

Requests have a time limit. For penalties, the tax year or period must end in one of the 10 calendar years before the year you ask, and interest is considered only if it accrued in that window. Some charges are outside the program, including the GST/HST gross negligence penalty and administrative charges such as bank chargeback fees.

You can apply through My Account or My Business Account, or by mail on Form RC4288. Explain what happened, show how it stopped you meeting the obligation, and attach evidence. If the CRA refuses, you can ask for a second administrative review by different officials, and judicial review at the Federal Court has a short 30-day window. Disputing an assessment is a different process, covered under notice of objection.

What to discuss with your accountant

Bring dates, the notices that show the penalties and interest, and documents that support your reason, such as medical letters, insurance statements or CRA correspondence. Ask whether relief, a correction to the return or a disclosure under the Voluntary Disclosures Program fits better. Ask too whether filing and paying what you can now would reduce the interest while the request is reviewed. If a representative’s error contributed, say so, but note that you are generally responsible for your representative’s mistakes.