If you disagree with the audit findings of the Canada Revenue Agency (CRA), you have two main windows to act. The first opens before the audit closes, when the auditor sends a proposal letter. The second opens after the notice of reassessment arrives, when you can file a formal objection. Missing either window narrows your options, and the second one carries a strict statutory deadline.
Respond in writing to the proposal letter within its 30-day window, then file a notice of objection within 90 days of the notice of reassessment if the CRA still assesses the adjustments. For corporations and GST/HST registrants, that 90-day limit applies without the longer one-year option some individuals receive. A clear evidentiary record built at the proposal stage also strengthens the objection and any later appeal to the Tax Court of Canada.
At Beganyi Law, we advise Ontario business owners on corporate and tax matters, and we see the same pattern repeatedly: disputes go better when the response is documented early and the legal position is framed before deadlines tighten. If a proposal letter or reassessment has landed on your desk, you can reach us through our contact page or at +1 647-977-7749 to arrange a confidential consultation with a tax lawyer, including remote meetings anywhere in Ontario.
Key Takeaways
- Answer the auditor's proposal letter with evidence before the CRA finalizes a reassessment.
- File your notice of objection within the applicable deadline, usually 90 days for businesses.
- Penalty and interest relief is a separate request from disputing the tax itself.
How Do You Challenge Proposed Audit Adjustments?
You challenge proposed adjustments by answering the CRA auditor's proposal letter, in writing and with documents, before the audit is finalized. The strongest responses identify exactly which adjustment is wrong, show the source records that contradict it, and arrive before the response deadline.
Is It a Proposal Letter or a Notice of Assessment?
Check the document type first, because it decides which process applies. During a tax audit, the auditor issues a proposal letter setting out each proposed adjustment, including any penalties, with supporting schedules by year. You are usually given 30 days from the date of that letter to send a response, rebuttal, explanation, or further documentation.
A notice of assessment or reassessment is different. It means the audit findings have been processed and the tax is now assessed. At that point, the formal route is a notice of objection, and an objection filed before a reassessment exists may be treated as invalid.
Document | What it means | Your next step |
|---|---|---|
Proposal letter | Audit adjustments are proposed, not final | Respond to the auditor, usually within 30 days |
Final letter | The CRA's final audit position | Prepare for reassessment and objection |
Notice of reassessment | Tax, interest, or penalty is assessed | File a notice of objection on time |
Request the Auditor's Reasons and Reconcile the Evidence
Ask the auditor to explain the basis for any adjustment you cannot trace. CRA audit policy states that you should receive a full explanation of proposed adjustments and an adequate opportunity to respond, and a final meeting is often held to discuss outstanding issues.
Then reconcile the auditor's numbers against your own records. In a field audit or desk review, the auditor examines ledgers, invoices, contracts, and bank statements, and may review personal records of owners and related parties such as a spouse, a family trust, or an affiliated corporation. Adjustments built on third-party information, such as bank deposit analyses or supplier data, frequently miss transfers between related accounts or non-taxable receipts.
In our practice, the most persuasive responses go issue by issue. Each disputed item gets its own explanation, the specific document that answers it, and the dollar effect of the correction.
Respond Before the Proposal Deadline and Protect Privileged Advice
Send your representations before the deadline, or ask for more time in writing. CRA policy directs auditors to consider reasonable extension requests and to grant additional days for events outside your control, such as illness or a change in representative. If you do not respond, the reassessment may be processed on the auditor's version of the facts.
Watch for statute-barred dates. If a tax year is close to expiring, the auditor may refuse an extension unless you sign a waiver. A waiver has consequences, so get advice before signing one.
Keep legal advice separate from documents you hand over. Communications with a lawyer made to obtain legal advice are protected by solicitor-client privilege, while the CRA's own guidance states there is no accountant-client privilege. Strategy memos prepared by your accountant alone are generally producible.
How Do You File a Notice of Objection on Time?
You file a notice of objection by submitting it to the CRA's Appeals Branch within the deadline that applies to your return type, either online or on the prescribed form. The objection should name every disputed adjustment, state the facts and reasons, and specify the result you want.
Which Objection Deadline Applies to Your Business or Personal Return?
Corporations have 90 days from the date of the notice of assessment or reassessment to file an income tax objection. GST/HST objections also carry a 90-day limit.
Individuals (other than trusts) and graduated rate estates get the later of two dates: one year after the filing deadline for the return, or 90 days from the notice date. After an audit reassessment of an older year, the one-year option has usually passed, so treat 90 days as your working deadline.
Count from the date printed on the notice, not the date you opened it. We calendar the deadline on the day a reassessment arrives and build the objection backward from it.
Submit an Income Tax Objection Through CRA Accounts or Form T400A
The fastest route is online. Individuals log in to My Account, and corporations use My Business Account, then select the formal dispute option. Authorized representatives can file through Represent a Client. An online filing generates a case number immediately, and the CRA states that portal filings are assigned to an appeals officer sooner.
You can also complete Form T400A, Notice of Objection (Income Tax Act), or write a signed letter, and mail or fax it to the Chief of Appeals at your Appeals Intake Centre. An authorized officer must sign for a corporation. File a separate objection for each disputed assessment.
Use the Correct Process for a GST/HST Objection
A GST/HST objection runs under the Excise Tax Act, so the income tax form does not apply. Businesses can file through the formal dispute service in My Business Account or Represent a Client, or use Form GST159, Notice of Objection (GST/HST).
When an audit produces both an income tax reassessment and a GST/HST reassessment, file two objections. The same unrecorded sales adjustment, for example, will appear in both, and each must be disputed under its own statute.
Explain Each Disputed Adjustment and the Relief Requested
Include your name, address, account number, the notice date, the tax year, and the facts and reasons for the objection, along with supporting documents. Vague objections slow the review.
Large corporations (taxable capital employed in Canada above $10 million, including related corporations) face stricter rules. Each issue must be described, the relief sought must be quantified per issue, and new issues cannot be added later. The amount stated becomes the ceiling on what can be allowed.
Documents you withheld during the audit and produce at objection may be sent back to the audit area for a second review, which adds time.
What if You Miss the Filing Deadline?
You can apply for an extension of time, but only within one year after the original deadline. The application goes through My Account, My Business Account, or in writing to the Chief of Appeals, with your objection attached.
You must show that you were unable to act or intended to object within the original period, that granting the extension would be fair, and that you applied as soon as circumstances permitted. If the CRA refuses, you can apply to the Tax Court of Canada within 90 days of the refusal notice.
What Happens While CRA Appeals Reviews Your Objection?
An appeals officer within the CRA Appeals Division reviews your file independently of the auditor, discusses the issues with you, and recommends a decision. Collection of disputed income tax is normally paused during that review, but interest keeps running.
Understand the Appeals Officer's Review and Possible Outcomes
The officer assigned to your objection was not involved in the original decision. They review the law and CRA policy, consider your position, and may request a technical opinion. You will be offered copies of material the Canada Revenue Agency relies on, and you should ask for the audit working papers if you do not have them.
The officer can also refer the file back to audit for additional work, though the appeals officer keeps full decisional independence. Outcomes include allowing the objection, varying the reassessment, or confirming it. You carry the onus of proving the reassessment wrong, while the CRA bears the onus on gross negligence penalties and on reassessing beyond the normal period.
One trap: a new reassessment for the same period cancels the existing objection, and you must object again.
Do You Have to Pay Disputed Tax While You Wait?
For income tax, the CRA normally postpones collection on disputed amounts until 90 days after it sends its decision. Large corporations must pay 50% of the disputed amount, plus all undisputed tax. Withheld source deductions are not postponed.
Interest continues to accrue on any amount ultimately found owing. Paying part or all of the balance reduces that interest, and if you have paid and receive no decision within 120 days, you can request a refund of the disputed amount. GST/HST collection rules differ, so confirm the collection position on any GST/HST balance separately.
Exercise Your Rights Without Confusing Service Complaints with Objections
The Taxpayer Bill of Rights sets out 16 rights, including a formal review and appeal, and the right not to pay disputed income tax before an impartial review (subject to legislated exceptions). Those rights are enforced through the objection process.
A service complaint about rudeness, delay, or poor information goes to the CRA Service Feedback Program and, if unresolved, the Taxpayers' Ombudsperson. A complaint does not change the tax owing or stop your objection clock. File both if both apply.
When Should You Consider Court or Taxpayer Relief?
Consider the Tax Court of Canada when the Appeals Division confirms an assessment you still believe is wrong, and consider taxpayer relief when the dispute is about penalties or interest you accept are technically owed. They answer different problems.
Preserve Your Tax Court Appeal Rights and Check Applicable Deadlines
The Tax Court must receive your notice of appeal within 90 days of the CRA's notice of confirmation or reassessment on your objection. You can also appeal if the CRA has made no decision within 90 days of an income tax objection, or 180 days of a GST/HST objection.
The Court hears appeals under the Informal Procedure, which has no filing fee, and the General Procedure, which carries a fee based on the amount in dispute. An extension to appeal must be sought within one year and 90 days of the decision. Do not sign any waiver of objection or appeal rights on an issue during settlement discussions unless you intend to give up that issue permanently.
Distinguish Penalty and Interest Relief from Disputing the Tax
The taxpayer relief provisions let the CRA cancel or waive penalties and interest for reasons such as extraordinary circumstances, financial hardship, or CRA error, including undue delay in an audit or objection. Relief cannot reduce assessed tax, and requests are limited to a 10-year window.
Processing is slow. As of late September 2026, the CRA reported an average of about 16 months. A reassessment issued under these provisions cannot be objected to, so challenge the tax through objection and request relief separately.
Coordinate Legal and Accounting Advice on Corporate Tax Issues
Corporate audits regularly touch shareholder loans, related-party transactions, and reorganizations, where tax law and corporate records intersect. Your accountant rebuilds the numbers; a tax lawyer frames the legal argument, protects privilege, and handles court procedure.
We work alongside clients' accountants on this division of labour, the same approach we describe in our piece on integrated tax and legal strategy in Ontario. Minute books and agreements that match the reported transactions often decide these disputes.
Protect Your Deadline and Build a Documented Response
Your outcome turns on two things you control: meeting each deadline and backing every position with records. Respond to the proposal letter within its window, and request extensions in writing with reasons.
Once a reassessment issues, calendar the objection deadline immediately: 90 days for corporations and GST/HST, and the later of 90 days or one year after the filing deadline for most individuals. File a notice of objection that addresses each adjustment with facts, reasons, and a dollar figure.
While the review runs, consider paying the disputed amount to stop interest growth, and keep penalty relief on its own track. If Appeals confirms the reassessment, the 90-day Tax Court clock starts.
A tax lawyer adds the most value at the proposal stage, before positions harden and before documents are produced without privilege review. Our team prepares written representations and objections for Ontario businesses, coordinating with your accountant from the first letter.
Frequently Asked Questions
Can I challenge CRA audit findings before a reassessment is issued?
Yes. You can respond to the auditor's proposal letter with written representations and documents, usually within 30 days. A formal notice of objection, though, can only be filed after the reassessment is issued.
Does talking to the auditor extend my objection deadline?
No. The objection deadline runs from the date on the notice of reassessment regardless of ongoing discussions. Trying to resolve the issue with the assessing office is one ground for a later extension application, but relying on that is risky.
Can I file an objection before all my supporting documents are ready?
Yes, and you should if the deadline is near. File a complete statement of the facts and reasons on time, then submit additional documents using your case number. Large corporations cannot add new issues later, so list every issue at filing.
Will interest keep accruing if I dispute the reassessment?
Yes. Interest accrues on any amount ultimately owing while the objection or appeal is pending, even when collection is postponed. Paying all or part of the balance reduces that exposure, and you receive a refund with interest if you succeed.
Should my accountant or a tax lawyer handle the disagreement?
Both usually have a role. An accountant reconciles the figures behind the audit findings, while a tax lawyer frames the legal position, protects privileged advice, and represents you at the Tax Court. For large adjustments, penalties, or corporate restructuring issues, involve a lawyer before responding to the CRA auditor.