Notice of Objection

A Notice of Objection is the formal first step in the CRA's dispute resolution process, allowing a taxpayer — including a corporation — to challenge a Notice of Assessment or Reassessment that they believe is incorrect. Filing a Notice of Objection preserves the taxpayer's rights to have the disputed amount reviewed by the CRA's Appeals division, and, if necessary, to appeal further to the Tax Court of Canada.

The deadline for filing a Notice of Objection is 90 days from the date of the Notice of Assessment or Reassessment (for corporations with no more than $250,000 of taxable income, the deadline may be extended to one year from the tax return filing deadline for the relevant year). Missing this deadline can be fatal to the taxpayer's ability to challenge the assessment, although late-filing applications can sometimes be granted under limited circumstances.

In a business sale context, Notices of Objection are relevant in two ways. First, if the CRA challenges add-backs, LCGE claims, or transaction pricing after the sale, the seller needs to understand this process to respond within the applicable deadlines. Second, a buyer conducting due diligence will ask whether the target company has any outstanding Notices of Objection or appeals, as an unresolved dispute with the CRA represents a contingent liability that could affect post-closing tax obligations — and should be addressed in the representations and warranties of the purchase agreement.

See also: Representations and Warranties, Indemnification, Due Diligence, LCGE.