2024 Alberta CPA Roundtable, Q.3

Where a taxpayer has fled an objection, income tax collection is generally suspended during the objection period unless the taxpayer is a large corporation or the objection involves certain trust accounts (e.g., source deductions and GST/HST).

Is there a process to request a stay on collection while a notice of objection is still being decided by Appeals especially where collection action or provision of security would create undue hardship for the taxpayer?

CRA responded:

As regards the collection of trust funds such as payroll source deductions and GST/ HST amounts owing, the only statutory authority that exists which provides for the postponement of collection action on amounts owing on an appealed assessment fall under subsections 314(2) and 315(3) of the Excise Tax Act (the ETA). …

The Income Tax Act (ITA), Employment Insurance Act (EIA), and Canada Pension Plan (CPP) which govern the withholding, remittance, and collection of payroll/source deduction amounts, contain no statutory analogue to the ETA provisions which would allow for the postponement of collection of amounts owing which are under appeal or objection. …

Where the taxpayer has made … arrangements [with CRA collections], CRA collections does have the administrative authority to withdraw any collection actions such as garnishment, so long as the payment arrangement remains in good standing.

Is there a process to request a stay on collection while a notice of objection is still being decided by Appeals especially where collection action or provision of security would create undue hardship for the taxpayer?

CRA responded:

As regards the collection of trust funds such as payroll source deductions and GST/ HST amounts owing, the only statutory authority that exists which provides for the postponement of collection action on amounts owing on an appealed assessment fall under subsections 314(2) and 315(3) of the Excise Tax Act (the ETA). These provisions are specific to GST/HST amounts:

• Subsection 314(2) of the ETA allows for the Minister to postpone collection action on amounts owing where the taxpayer provides security “…in an amount and a form satisfactory to the Minister…” in lieu of payment, where the taxpayer has objected to or appealed the amounts assessed
• Subsection 315(3) of the ETA allows for the Minister to postpone collection of GST/ HST amounts owing without accepting security, where the taxpayer has objected to or appealed the amounts assessed. Any postponement under this subsection requires approval of the appropriate delegated authority …

Specific to the postponement of GST/HST amounts owing which have been objected to, where the taxpayer is unable to provide security in a form and amount satisfactory to the Minister, postponement will only be considered where:

• the registrant remains current with tax compliance requirements for all associated accounts
• the GST/HST amounts in dispute have not already been collected by the registrant
• at all times during the objection and/or appeal, the business remains in good financial standing
• the registrant provides relevant information after an assessment is raised that may result in the assessment being overturned
• the registrant’s objection and/or appeal identifies reasonable differences in the interpretation of the legislation
• the registrant has Canadian-based assets

The decision to postpone collection action without the acceptance of security is a local business decision made on a case-by-case basis, based on the facts of each specific account.

Should a taxpayer’s request for postponement be denied by the CRA, the taxpayer may seek judicial review of the Minister’s decision in the Federal Court of Canada.