Taxpayer Relief Applications (Penalty Waiver Requests)

Introduction
Understanding taxpayer relief applications penalty waiver requests is essential for individuals, businesses, corporations and self-employed professionals who face tax penalties or interest charges from CRA or Revenu Québec. Even when taxes are owed, the law allows taxpayers to request full or partial cancellation of penalties and interest when circumstances justify relief. This process—commonly known as a fairness request—can reduce thousands of dollars in charges. But success depends on proper evidence, timelines, and legal arguments. Many applications are denied simply because they are poorly prepared. This guide explains everything you need to know about taxpayer relief applications penalty waiver requests and how to maximize your chance of approval.

Legal and Regulatory Framework
Taxpayer relief applications penalty waiver requests fall under:

• CRA’s Taxpayer Relief Provisions (Income Tax Act s.220(3.1))
• CRA Information Circular IC07-1R1
• Excise Tax Act relief rules for GST/HST
• Revenu Québec’s Tax Administration Act
• Tax Court of Canada jurisprudence

These provisions allow CRA and ARQ to cancel:

• late-filing penalties
• late-payment penalties
• repeated-failure penalties
• instalment penalties
• GST/HST penalty charges
• interest (in limited cases)
• penalties caused by CRA/ARQ delay

Taxpayer relief applications penalty waiver requests apply only to penalties and interest, never to the tax principal.

When You Should Apply for Taxpayer Relief

Relief may be granted if:

• you experienced extraordinary circumstances
• CRA or ARQ caused delays or processing errors
• the penalty is unfair or unreasonable
• financial hardship prevents payment
• natural disasters or events prevented filing
• serious illness, accident, trauma or mental health crisis occurred
• a death in the family disrupted tax compliance
• the business faced serious disruption (fire, fraud, theft, cyber-attack)
• accountant or payroll provider errors occurred
• incorrect CRA guidance misled the taxpayer

Taxpayer relief applications penalty waiver requests should be submitted as soon as possible after discovering the issue.

Step-by-Step Guide: Filing a Taxpayer Relief Application

Step 1: Identify All Affected Tax Years and Penalties

List all:

• late-filing penalties
• late-payment penalties
• instalment penalties
• missing GST/HST or QST penalties
• interest charges

CRA and ARQ allow relief for up to 10 previous calendar years.

Step 2: Prepare Evidence of Circumstances

This is the foundation of taxpayer relief applications penalty waiver requests.
Evidence may include:

• medical records
• hospital notes
• death certificates
• insurance reports
• police reports
• affidavits
• correspondence with CRA or ARQ
• emails showing accountant negligence
• financial hardship documentation
• business disruption reports

Your explanation must prove that the penalty was not intentional.

Step 3: Draft a Strong Relief Submission

A proper relief request includes:

• detailed explanation of events
• why the circumstances were beyond your control
• timelines showing when the event occurred
• proof that you acted quickly once the issue was resolved
• supporting documentation
• legal references to CRA/ARQ taxpayer relief criteria
• argument showing that enforcing penalties is unfair

CRA Form: RC4288 – Request for Taxpayer Relief
Revenu Québec: MR-14.R – Request for Cancelation of Interest or Penalties

Step 4: Submit the Application

CRA submissions can be filed by:

• CRA My Account
• My Business Account
• mail to the Taxpayer Relief Division

Revenu Québec submissions are filed through:

• the online services portal
• mail to the Collections and Relief Department

Step 5: Wait for Review and Provide Additional Information

CRA and ARQ may request:

• supplementary documentation
• updated financial statements
• medical clarifications
• proof of accountant errors
• business impact evidence

It can take 3–24 months to receive a decision.

Step 6: Receive Final Decision

Possible outcomes:

• full penalty relief
• partial penalty relief
• interest relief
• denial (which may be appealed)

Denials may be escalated to:

• CRA Director’s Review
• Federal Court (Judicial Review)
• Revenu Québec Administrative Review

Professional support dramatically increases approval probability.

Key Court Decisions

Courts have repeatedly clarified taxpayer relief applications penalty waiver requests:

• relief must be based on fairness, not sympathy
• CRA cannot deny relief arbitrarily
• taxpayers must prove circumstances were beyond their control
• CRA must consider medical and mental-health evidence carefully
• professional advisor errors can justify relief
• financial hardship alone is insufficient without documentation
• Québec courts apply similar fairness principles

These rulings reinforce the need for a strong, well-documented submission.

Why CRA and Revenu Québec Reject Many Applications

Common reasons for denial:

• insufficient documentation
• vague explanations
• late submission without justification
• errors caused by taxpayer negligence
• missing evidence of extraordinary circumstances
• inconsistent statements
• repeated non-compliance without proof of improvement
• failure to demonstrate hardship

Properly preparing taxpayer relief applications penalty waiver requests avoids these pitfalls.

Mackisen Strategy

Mackisen CPA provides a highly structured, evidence-based approach to taxpayer relief applications penalty waiver requests:

• analyzing penalties and identifying relief opportunities
• gathering full documentation and evidence
• drafting strong legal-quality relief submissions
• referencing CRA policy, jurisprudence and fairness criteria
• preparing medical or hardship supporting packages
• negotiating with CRA and ARQ collections
• filing appeals when relief is denied
• aligning future compliance to prevent repeat penalties

Our process ensures maximum likelihood of success.

Real Client Experience

Examples of taxpayer relief applications penalty waiver requests successfully handled by Mackisen:

• A business owner hospitalized for surgery missed filing deadlines. We filed a medical-supported relief request that cancelled all penalties.
• A Québec taxpayer followed incorrect CRA phone advice. Mackisen filed a fairness request with call logs and achieved full relief.
• A corporation affected by a cyber-attack missed GST/QST remittances. We documented the incident and obtained major penalty reductions.
• A grieving family missed multiple returns after a sudden death. Mackisen provided evidence and secured full penalty relief.
• An entrepreneur’s accountant made repeated errors. We filed documentation showing professional negligence and recovered years of penalties.

These cases show how powerful proper taxpayer relief applications penalty waiver requests can be.

Common Questions

• Does taxpayer relief remove tax owing?
No—it removes penalties and sometimes interest only.

• How long does relief take?
Anywhere from 3 months to 2 years.

• Can I apply more than once?
Yes—for different years or different issues.

• Can CRA reverse penalties for GST/HST?
Yes—GST/HST penalties qualify for relief.

• Can financial hardship qualify?
Yes—if documented thoroughly.

• Does ARQ offer similar relief?
Yes—Revenu Québec has its own fairness system.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps taxpayers secure penalty relief while protecting their financial stability. Whether you're facing major CRA penalties, QST interest, payroll charges or GST/HST fines, our expert team prepares strong, evidence-based submissions that maximize your chance of success. When assisting with taxpayer relief applications penalty waiver requests, Mackisen handles everything from documentation to final negotiation.