After a Denied Objection: Next Steps to Appeal or Settle with CRA – A Complete Guide by a Montreal CPA Firm Near You

Introduction

When you file a Notice of Objection, you expect CRA’s Appeals Division to fairly review your case and correct any errors made during the audit. But sometimes CRA confirms the reassessment, rejects your evidence, upholds penalties, or issues only partial relief. Many taxpayers mistakenly believe that a denied objection is the end of the road. It is not. You still have powerful rights—including appealing to the Tax Court of Canada, negotiating settlements, or securing relief through other legal channels. This guide explains what to do immediately after CRA denies your objection and how to protect yourself from unfair tax debt.

Legal and Regulatory Framework

The objection and appeal process is governed by the Income Tax Act, the Excise Tax Act (GST/HST), and the Tax Administration Act (Quebec). After CRA denies an objection (via a Notice of Confirmation), you have 90 days to file an appeal with the Tax Court of Canada. If CRA fails to respond to an objection within 90 days, you may also appeal directly. CRA Appeals is required to conduct an independent review, but once a Confirmation is issued, further administrative resolution at CRA is rarely possible—legal appeal becomes the next step.

Key Court Decisions

In Hickman Motors v. Canada, the Supreme Court held that CRA Appeals must act independently from auditors; failures can be challenged in court. In Barejo v. Canada, Tax Court reinterpreted CRA’s position, demonstrating the court’s power to overturn unfair reassessments. In LeBlanc v. Canada, the taxpayer successfully reversed CRA assumptions with proper evidence. These cases show that CRA is not the final authority—Tax Court can and often does reverse unfair decisions.

Why CRA Denies Objections

Objections are typically denied when: evidence is missing or unorganized, CRA believes expenses are personal or undocumented, bank deposits appear unreported, real estate transactions are misclassified, ITCs lack required documentation, CRA interprets the law differently, penalties are justified in their view, or the Appeals Officer accepts the auditor’s assumptions. Many denials result from incomplete submissions, not because the taxpayer is wrong.

Next Steps After a Denied Objection

1. File a Notice of Appeal (Within 90 Days)

This is the most powerful step. A Notice of Appeal moves the case to the Tax Court of Canada for an independent review. Missing the 90-day deadline can forfeit your legal rights.

2. Choose the Right Procedure

• Informal Procedure: For disputes under $25,000 per year.

• General Procedure: For larger, complex disputes requiring legal arguments or witnesses.

3. Gather All Evidence

Tax Court expects complete documentation: receipts, bank statements, contracts, invoices, loan agreements, financial statements, travel logs, and audit correspondence.

4. Strengthen Your Case

Rewrite your arguments with clarity, cite jurisprudence, and prepare fact-based narrative timelines. Weak objections often become strong appeals with proper structure.

5. Consider Negotiated Settlements

CRA sometimes negotiates during Appeals or right before trial. Many cases settle when CRA sees a strong legal position.

6. Explore Taxpayer Relief

Even if CRA denies your objection, penalties and interest may still be removed through a separate Taxpayer Relief application.

7. Correct Underlying Filings

If CRA reassessed due to documentation issues, you may resubmit missing receipts or corrected calculations during the appeal.

Special Considerations for GST/HST and Payroll

Income tax collections pause during objection and appeal, but GST/HST and payroll debts do not. You may need to negotiate payment arrangements or request collections holds while pursuing appeal.

If You Missed the 90-Day Appeal Deadline

All is not lost. You may apply for:

• Request to Extend Time to Appeal

• Demonstrating: (1) intention to appeal, (2) valid reasons for missing the deadline, (3) arguable case, and (4) no prejudice to CRA
  Tax Court judges grant extensions when justified.

When to Settle Instead of Appealing

Settlement may be the best option if: documentation is weak, the disputed amount is low, CRA has strong legal arguments, or the cost of trial exceeds the benefit. A CPA can assess whether settlement or appeal is best.

When to Appeal to Tax Court Aggressively

Appeal aggressively when CRA: relied on assumptions instead of evidence, misapplied tax law, denied legitimate expenses or ITCs, reclassified capital gains as business income improperly, applied gross negligence penalties without proof, rejected reasonable explanations, or ignored documents in the objection file.

Mackisen Strategy

At Mackisen CPA Montreal, we evaluate every denied objection strategically. We analyze CRA’s reasons, reconstruct missing documents, build detailed evidence packages, draft powerful Notice of Appeal submissions, negotiate settlements, and collaborate with tax lawyers when needed. We also protect clients from collections during the appeal process.

Real Client Experience

A Montreal contractor overturned a denied objection by winning at Tax Court through our reconstructed bank records. A landlord restored $30,000 in denied expenses after CRA Appeals ignored key receipts. An investor reversed a capital gains reclassification after Tax Court accepted our intention-based argument. A business owner had gross negligence penalties removed through a strong appeal.

Common Questions

Is a denied objection final? No—Tax Court is the next step. Do I need a lawyer? Recommended for large or complex cases. Will CRA negotiate after a denial? Sometimes—especially before trial. Does filing an appeal stop collections? Yes, for income tax only.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal fights denied objections with strategic appeals, strong evidence, and experienced representation. We ensure CRA decisions are fair, accurate, and legally defensible.