Do I Have to Pay the Disputed Tax While My CRA Objection Is Being Reviewed in Canada?
This answer covers Canadian federal tax law, which applies in every province.
Generally, no. You do not have to pay disputed income tax until the objection review is complete. That protection does not cover amounts you were required to withhold and remit, which must still be paid on time.
After you serve a notice of objection, the Minister cannot take collection action on the disputed amount until 90 days after the decision confirming or varying the assessment is sent. The CRA says it normally postpones collection until 90 days after it sends its decision. If you appeal to the Tax Court, collection of the disputed amount is barred until the Court's decision is mailed or you discontinue, but not for withheld amounts or certain other assessments.
Interest keeps accruing on disputed income tax during an objection, and paying all or part of it stops further interest on the amount paid. If the CRA agrees with you, that payment is refunded. Exceptions exist: large corporations and certain tax shelter cases may have to pay one-half of the assessed amount within 90 days, and GST/HST works differently because the CRA can keep collecting while an objection is pending. Whether any of this applies to you depends on your facts, so confirm with a lawyer or accountant.
Key takeaways
- Generally you do not have to pay disputed income tax until the objection review is complete, but amounts you had to withhold and remit must still be paid on time.
- After an objection is served, collection of the disputed amount is generally paused until 90 days after the decision confirming or varying the assessment is sent.
- Paying all or part of the disputed amount stops further interest on what you paid, and the payment is refunded if the CRA agrees with you.
- GST/HST differs from income tax because the CRA can keep collecting while a GST/HST objection is pending.