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  • Richard Fonagy

Not all Misrepresentations are Negligent - Therefore Statute Barred Years Past 3(sometimes 4)

Yesterday Post On Misrepresentation: Very Important to Know for Great Tax Practitioners and how to fight CRA for your client- an important concept to know- another tool in your knowledge to make you the best.

As you progress along your career you will get many different clients. And you will need many arsenals in your box of knowledge to draw upon. One day if you stay in this business long enough you will go through many audits, and notice CRA will try to "overextend" it self on your client.

They may request information going back more than 3 years and claim it is because the client misrepresented there tax return as they found an error. However just because a taxpayer had an error in a past tax return, and yes it was an error therefore a misrepresentation, not all errors are in fact negligence.

How do you fight the auditor going back past 3 years:

The CRA will find an error. They will call it a misrepresentation and go back further than 3 years. However if the misrepresentation is not negligent, in fact the client may have been sick or many other mitigating circumstances and had done there best, then you have a chance to have those returns sealed. So enquire what was going on in your clients life, talk to there doctors, gather testimonial evidence from friends (and get paid for this) because it is a high proof for CRA to prove, and for honest taxpayers, this may save a lot of money and make you a hero to your client.

The audits I have seen that were instigated because of an innocent misrepresentation that should have never been opened up and was clearly "fightable" by the client and would have saved them from bankruptcy is numerous.

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