Author: Alex Klyguine

The CRA’s Voluntary Disclosures Program (VDP) is the built‑in safety valve for taxpayers and businesses who need to fix past tax non‑compliance – before the CRA fixes it for them.

If you failed to file returns, under‑reported income, missed foreign reporting, or messed up GST/HST, the VDP is the formal process to correct those errors. If the CRA grants relief, you may receive penalty relief, interest relief, and no referral for criminal prosecution – but you still pay the underlying tax owing.

This guide walks you through:

• Who qualifies (and who doesn’t)
• The 10‑year relief limit most people overlook
• The difference between unprompted vs. prompted disclosures (and why it matters)
• What relief is available (general relief, partial relief, wash transactions relief)
• How to file a complete RC199 package that the CRA can actually process
• What happens after you apply (including second review and judicial review)
• Why VDP applications get denied – and how to avoid the common traps

1. What Is the CRA Voluntary Disclosures Program?

The VDP is an opportunity to tell the CRA about errors or omissions in your tax obligations and correct them. If the CRA grants relief under the VDP, you can receive some penalty and interest relief and will not be referred for criminal prosecution for the issues disclosed – but any taxes owing still have to be paid in full.

The program applies across a wide range of CRA‑administered obligations. For example, it covers disclosures related to GST/HST and excise taxes, income tax, excise duties, the fuel charge (carbon pricing), luxury tax, underused housing tax, digital services tax, global minimum tax, and certain other federal charges.

Importantly:

• VDP relief is about penalties/interest and prosecution protection – not the tax itself. You generally still pay the tax you should have paid in the first place.
• The CRA reviews VDP requests case‑by‑case, and it is not required to grant relief just because you apply.
• You must be at least one year (or one reporting period) past the filing due date for the issue you’re correcting.
• The CRA expects you to stay compliant going forward. The CRA may consider a later VDP application only in limited circumstances (for example, if the new issue is different or beyond your control).

2. The 10‑Year Limit You Cannot Ignore

The VDP can be hugely helpful – but relief is not unlimited.

For income tax, the CRA’s ability to cancel penalties and interest is constrained by a 10‑year limitation period:

• Penalty relief: limited to penalties that could apply to tax years that ended within the previous 10 years before the calendar year you file the application.
• Interest relief: the CRA can cancel interest that accrued during the 10 calendar years before the year you request relief (even if the underlying tax debt is older).

For GST/HST and other “applicable Acts,” relief is also tied to statutory limitation periods under those Acts. Bottom line: don’t assume a disclosure automatically wipes away decades of interest and penalties – get clear on what years/periods are realistically inside the relief window.

3. Who Can Apply?

Most taxpayers and registrants can apply.

Taxpayers include:

• Individuals
• Employers
• Corporations
• Partnerships
• Trusts

Registrants include (examples):

• GST/HST registrants or claimants
• Excise duty licensees/registrants
• Excise tax licensees
• Excise tax refund claimants
• Air travellers security charge registrants / designated air carriers
• Softwood lumber product exporters

4. What Issues Are Typically Eligible?

If you’re fixing a real compliance problem (something that normally attracts interest and/or penalties), you’re in the territory the VDP is designed for.

Common VDP‑eligible situations include:

• Not filing a tax return (and it’s now at least one year late)
• Not reporting or under‑reporting income
• Claiming ineligible expenses
• Not remitting employee source deductions (CPP/EI, etc.)
• Not filing required information returns (for example, T1135)
• Not reporting foreign‑sourced income taxable in Canada
• Having undisclosed tax liabilities
• Failing to charge, collect, or report GST/HST
• Claiming ineligible GST/HST credits, refunds, or rebates
• Providing incomplete information on a return

5. The Eligibility Checklist

To be eligible for VDP relief, you must meet all five conditions below:

1. Apply before an audit or investigation starts against you (or a related taxpayer) about the information being disclosed.
2. Include all relevant information and documentation for the required tax years/reporting periods.
3. The disclosure involves an error or omission with applicable interest charges and/or penalties.
4. The information is at least one year (or one reporting period) past the filing due date.
5. You include payment of the estimated tax owing, or a request for a payment arrangement (subject to CRA approval).

What CRA officers care about in practice:

• Voluntary timing: Did you come in before the CRA started enforcement for this issue?
• Completeness: Are all affected years/periods covered, or are there obvious gaps?
• Paperwork quality: Are the returns/forms/schedules actually filed and consistent with your story?
• Payment realism: If you’re asking for a payment arrangement, is it reasonable and supported? The CRA’s approval is not guaranteed.

6. Unprompted vs. Prompted: The One Difference That Drives Your Relief

The updated VDP (effective October 1, 2025) uses two application types:

Unprompted application

You’re normally unprompted when:

• You apply when there has been no CRA communication (verbal or written) about an identified compliance issue related to the disclosure; or
• You apply after an education letter or notice that offers general guidance and filing information on a topic (those usually do not “prompt” you into a lower tier).

Example: You discover a missed T1135 and unreported foreign income, and you apply before the CRA identifies your specific issue.

Prompted application

You’re generally prompted when:

• You apply after CRA communication that identifies the compliance issue, such as a letter/notice (excluding education letters) that:
  • identifies a specific error or omission on your account, and/or
  • gives a deadline to correct the issue; or
• You apply after the CRA has already received third‑party information about potential non‑compliance involving you (or a related taxpayer/registrant).

Example: The CRA sends a letter saying they found a specific omission on your account and expects you to correct it by a certain date.

Why this matters:

Your application type typically determines whether you qualify for general relief or partial relief (next section).

7. What Relief Can You Get?

If the CRA grants VDP relief, there are different levels depending on whether your application is unprompted or prompted.

General relief (normally for unprompted applications)

• 75% relief of the applicable interest
• 100% relief of the applicable penalties

Partial relief (normally for prompted applications)

• 25% relief of the applicable interest
• Up to 100% relief of the applicable penalties

Wash transactions relief (GST/HST)

Certain GST/HST “wash transaction” situations are normally eligible for 100% relief of interest and penalties, where they fall under the CRA’s wash transaction policy.

8. How to Apply (Form RC199 Step‑by‑Step)

The CRA will consider fully completed applications only. Your application must include three things: a signed RC199, the necessary supporting documents to correct the issue, and payment or a payment arrangement request.

Step 1: Gather everything (don’t guess if you don’t have to)

Your VDP package should include:

• The completed and signed Form RC199
• All necessary returns, forms, schedules, and statements needed to correct the non‑compliance
• Payment, or a request for a payment arrangement, for the estimated tax owing

Step 2: Be complete

A “complete” disclosure generally means:

• You disclose all known errors and omissions.
• You respond comprehensively and promptly to CRA requests for additional information (if they ask).

Step 3: Include payment (or request a payment arrangement)

A valid application must include payment of the estimated tax owing or a request for a payment arrangement, subject to CRA approval.

Step 4: Submit using one method

You can submit online, by fax, or by mail — but use only one method.

• Online: through CRA My Account (individuals), My Business Account (businesses), or Represent a Client (representatives).
• Fax: 1‑888‑452‑8994
• Mail:
   Voluntary Disclosures Program
   4695 Shawinigan‑Sud Boulevard
   Shawinigan, QC G9P 5H9

Optional – Pre‑disclosure discussion (anonymous)

If you’re unsure whether to apply, the CRA offers a pre‑disclosure discussion service where you can speak anonymously to get insight into the process and risks. It’s informal and non‑binding, and it does not guarantee relief.

9. What Happens After You Apply?

If the CRA grants VDP relief, it will send you a letter confirming:

• whether the application is treated as unprompted or prompted,
• what level of relief applies (general, partial, or wash transactions), and
• which tax years/reporting periods are eligible.

If the CRA does not grant relief, it will send a letter explaining why.

If you disagree with CRA’s decision

You can:

• request a second administrative review, and/or
• apply to the Federal Court for judicial review.

10. Common Reasons VDP Applications Get Denied

From the CRA’s published requirements, the same pitfalls show up repeatedly:

• It’s not voluntary: an audit or investigation has already started on the issue.
• It’s incomplete: missing returns, missing schedules, missing periods, or missing facts.
• No payment / no payment plan request: you didn’t include payment or a payment arrangement request.
• Wrong tool for the job: you’re trying to use VDP for refund‑only adjustments, already‑assessed penalties/interest, elections, etc.
• You left out other non‑compliance: the CRA later discovers additional issues you didn’t disclose – a major credibility problem.
• You don’t respond to CRA follow‑ups: failure to provide additional information within CRA timeframes can lead to denial.

11. How a Tax Lawyer Can Strengthen a VDP Application

A good VDP application is part accounting, part law, and part “storytelling with evidence.”

A tax lawyer can help by:

• Assessing eligibility early (so you don’t make a disclosure that gets rejected.
• Positioning unprompted vs. prompted correctly, based on CRA’s definitions and the communications you’ve received.
• Ensuring the disclosure is complete (all affected years/periods, all required supporting documents, no silent gaps).
• Managing risk and communications (including responding to CRA requests and keeping the process controlled).
• Challenging an unfair result, through a second administrative review and, where appropriate, judicial review in Federal Court.

12. Need Help With the CRA Voluntary Disclosures Program?

If you know (or strongly suspect) you have unreported income, missing filings, or serious GST/HST issues, doing nothing is usually the worst option. The VDP exists so you can correct the past with significantly reduced consequences – but relief is not automatic, and a poorly prepared application can be denied.

If you’re unsure whether you qualify, or you want help preparing a complete RC199 package, getting professional advice early can make the difference between:

• a clean disclosure with meaningful relief, and
• a denied application with the CRA now aware of the issue.
  

Tax disputes can be daunting for any business. When faced with a Canada Revenue Agency (CRA) audit or a tax reassessment, companies need a lawyer who can provide not only competent legal defense but also practical guidance through the process. A successful tax litigation (or tax dispute resolution) lawyer will protect the company’s interests, navigate complex tax laws, and strive for the best outcome – whether that means negotiating a favorable settlement or fighting a case in court. The following are key qualities and skills to look for in a strong tax disputes advocate for your business.

Legal Expertise in Canadian Tax Law

At the core, a good tax litigation lawyer must have mastery of tax law. Tax is an intricate and ever-changing field, so your lawyer should have in-depth knowledge of Canadian tax statutes, regulations, and case law. This expertise enables them to interpret complex rules and apply tax laws to your advantage. Look for a practitioner with a proven track record in resolving tax disputes – their past successes and years of focused experience are a testament to strong technical skills. Top tax litigators often have significant technical expertise, giving them insight into the nuances of corporate tax, GST/HST, international tax and more. In short, a successful tax disputes lawyer offers deep and up-to-date tax knowledge, which is critical when your business is dealing with complicated assessments or obscure provisions of the law.

Strategic Thinking and Problem-Solving

Tax controversies require not just knowledge, but also strategic savvy. Every tax dispute is unique, so a skilled lawyer will assess the specifics of your situation and develop a customized resolution strategy rather than a one-size-fits-all approach. This strategic thinking involves evaluating the strength of your legal position, anticipating the CRA’s tactics, and deciding when to negotiate or when to litigate. The best tax litigators are innovative problem-solvers who can find creative, cost-effective ways to settle issues early when possible. They will outline a clear plan – for example, whether to engage in settlement discussions, file a notice of objection, or proceed to the Tax Court – and adapt that plan as new developments arise. In high-stakes corporate tax disputes, this kind of foresight and planning can save your business time, resources, and uncertainty.

Familiarity with the CRA and Canadian Courts

Successful tax dispute lawyers know the terrain of tax enforcement and litigation. That means being thoroughly familiar with the CRA’s processes (from audits and investigations to the appeals process) as well as the procedures of the Tax Court of Canada and other courts. A seasoned tax litigator is well-versed in the rules and procedures laid out by the CRA and the Tax Court of Canada, ensuring that your case is handled in full compliance with the proper protocols. Many leading practitioners have experience dealing with CRA auditors and appeals officers on a daily basis, and some even come from backgrounds as former CRA lawyers or Tax Court clerks. This insider familiarity can be a huge asset – your lawyer will know how to navigate the CRA’s bureaucracy and anticipate common issues or delays. And if your case does end up in court, they will have the advocacy experience to present a solid defense before a judge. In short, look for counsel who regularly deals with the CRA and appears before the Tax Court, as this experience helps them handle your dispute efficiently and effectively.

Strong Negotiation Skills

In Canada, the majority of tax disputes with the CRA are resolved out of court, often through settlements or negotiated agreements. Therefore, a tax disputes lawyer must be an adept negotiator. They should be skilled in communicating with tax authorities on your behalf, addressing the issues in contention and exploring avenues for settlement. Effective negotiation can result in significant benefits – for example, your lawyer might manage to negotiate a settlement with the CRA that lessens your company’s tax liability or avoids hefty penalties. This skill requires both legal acumen and tact: a good tax lawyer will know the strengths and weaknesses of your case and use that knowledge as leverage in discussions with Department of Justice lawyers. They also understand the CRA’s perspective and constraints, which helps  finding a middle ground where possible. By choosing a lawyer with strong negotiation skills, you increase the likelihood of a faster, mutually acceptable resolution that spares your business the uncertainty of a trial.

Industry-Specific Knowledge and Business Acumen

Tax issues do not exist in a vacuum – they are intertwined with the business activities and industry context of the taxpayer. A successful tax litigation lawyer for a corporation will take the time to understand your company’s industry, business model, and objectives. Familiarity with the specific sector (be it technology, real estate, finance, manufacturing, etc.) allows the lawyer to anticipate unique tax challenges and craft arguments that make sense in your business context. Importantly, an effective advocate sees the bigger picture beyond just legal rules. In practice, this means your tax lawyer should recognize what a dispute means for your operations, finances, and stakeholders. They might, for example, know how a potential tax settlement could impact your financial statements or industry reputation. This blend of tax knowledge and business acumen ensures that the advice you get is practical and aligned with your corporate goals.

Effective Communication with Corporate Stakeholders

Tax law is full of technical jargon and arcane concepts, so a lawyer’s ability to communicate clearly is paramount. The ideal tax dispute lawyer can distill complex tax and legal issues into plain language for their clients. They will explain complicated tax concepts in a way that you and your team can understand, and they remain responsive to questions and concerns throughout the process. This communication skill is important not only for the day-to-day lawyer-client relationship, but also for keeping all corporate stakeholders informed. For instance, the lawyer should be comfortable briefing your company’s executives or board members on the status of a case and its implications. They should also be able to work collaboratively with other professionals such as your accountants or financial advisors. A good tax litigator often coordinates with a corporate client’s CFO or external tax advisors to ensure everyone is on the same page. In court or negotiations, strong communication skills translate to persuasive advocacy – but internally, they mean you’ll always know where your case stands and can make informed decisions. In short, look for an advocate who is not just legally savvy but also a clear communicator and trusted advisor to your business.

Conclusion

When a Canadian business is selecting a tax litigation and disputes lawyer, these qualities – deep tax law expertise, strategic thinking, CRA/courts familiarity, negotiation prowess, industry knowledge, and solid communication – are key indicators of a strong advocate. A lawyer who embodies these traits will be well-equipped to protect your company’s interests in a tax dispute. They will navigate the technicalities of tax legislation and the nuances of CRA procedure, all while keeping your business objectives in focus. By choosing a tax disputes lawyer with the right mix of legal skill and practical insight, you can approach any CRA audit or tax litigation with greater confidence that your case is in capable hands.

Businesses often ask the following question: how long does Canada Revenue Agency (CRA) have to collect unpaid taxes. The answer lies in the CRA collections limitation period, a legally defined timeframe during which the Canada Revenue Agency can enforce tax debt collection. Generally, the CRA’s window to collect is either 6 or 10 years, depending on the type of tax debt. After this period, the debt becomes statute-barred – meaning CRA is typically prohibited from further enforcement.

Collection Periods by Tax Debt Type

• Corporate Income Tax: 10-year collection limitation period (for corporate income tax debts), starting 90 days after the CRA issues a Notice of Assessment or reassessment.
• GST/HST Remittances: 10-year limitation period for GST/HST debts, beginning the day after the Notice of Assessment is sent.
• Payroll Source Deductions: 6-year limitation period for unremitted payroll withholdings, starting the day after the CRA issues a Notice of Assessment.

When the Clock Starts and Resets

The 6- or 10-year countdown can be restarted or extended by certain actions. Any payment, written acknowledgment of the debt, or new action by CRA (for example, issuing a garnishment or registering the debt as a judgment in Federal Court) will restart the clock. Likewise, if CRA issues a reassessment – say, after an audit or discovering unreported income – a fresh limitation period begins from that new assessment date. Some events also pause the countdown: for example, if a taxpayer files a Notice of Objection, declares bankruptcy, or leaves Canada, the clock is suspended until that event concludes.

After the Limitation Period Ends

Once the CRA tax debt collection rules have run their course with no interruptions, the CRA is generally barred from taking further collection action on that debt. However, the debt itself still exists, and voluntary payments can be made even after the deadline passes (such payments are generally not expected to restart the expired limitation period).

Annual Caseload and Filing Trends

The Tax Court of Canada (TCC) hears hundreds of tax dispute appeals each year. In recent years, the number of new cases (appeals) filed annually has been in the low-to-mid thousands, with notable fluctuations. In the fiscal year 2022–23, a total of 3,230 appeals were instituted or filed. This represented a slight decrease from 3,426 cases filed in 2021–22, but a significant rebound from the 2,325 cases filed in 2020–21, when filings dropped (likely due to pandemic-related disruptions). Prior to 2020, the Court’s caseload was higher – for example, 5,211 new cases were filed in 2018–19, and 4,684 in 2019–20. This trend indicates that after a sharp dip in 2020–21, tax dispute filings have recovered towards pre-pandemic levels, though they remain somewhat below the peak numbers seen in the late 2010s.

Alongside new filings, the Court has been actively processing and disposing of cases. In 2022–23, the TCC disposed of 3,876 cases (through judgments, settlements, withdrawals, etc.), which actually exceeded the number of new filings that year. This helped reduce the backlog of active cases. As of March 31, 2023, there were 10,273 active proceedings pending before the Tax Court, down from 11,504 a year earlier. These figures suggest the Court improved its clearance rate, closing more cases than were opened in that period. By comparison, active caseloads in the late 2010s were around 10,500 cases, indicating that the overall pending volume has been relatively stable, with some pandemic-related variability.

Types of Tax Issues in Dispute

The Tax Court’s jurisdiction covers a range of federal tax matters, and the vast majority of cases involve income tax. As of the most recent data, about 81% of pending appeals are income tax disputes. For example, at March 31, 2023, there were 8,328 active Income Tax Act (Canada) cases in the Court’s inventory (out of 10,273 total). The next largest category of appeals relates to federal sales tax: roughly 15% of cases involve Goods and Services Tax/Harmonized Sales Tax (GST/HST) matters (approximately 1,584 active GST/HST cases at the same date..

A smaller share of the Court’s workload involves other statutes. Only about 3% of active proceedings are appeals under the Employment Insurance Act or Canada Pension Plan (e.g. disputes over EI premiums or CPP contributions/benefits), totaling 300–350 cases in recent years. The remainder (only a few dozen cases) fall into “other” categories (such as excise taxes, or other less common federal tax issues). These proportions have been relatively consistent in recent years – income tax issues dominate the docket, followed by GST/HST, with only a marginal number of cases concerning other taxes or programs.

Profile of Appellants: Individuals vs. Corporations

Both individual taxpayers and corporate taxpayers bring appeals to the Tax Court. The Court provides two procedural streams which tend to correlate with the type of appellant and size of dispute. Individual taxpayers (including unincorporated small businesses) frequently use the Informal Procedure, which is designed for simpler, lower-value cases. The informal track has no filing fee and does not require the appellant to hire a lawyer, but it is limited to disputes involving smaller amounts. This option is popular among individual appellants because of its accessibility and lower cost. In contrast, larger businesses (and some individuals with high-value disputes) proceed under the General Procedure, which has formal court processes (and typically involves counsel) and no monetary limit on the amount in dispute.

While official statistics do not specifically break down the proportion of cases by taxpayer type (individual vs. corporate), the nature of the procedural choices provides some insight. Many of the TCC’s appeals – especially those under the informal procedure – are launched by individual taxpayers challenging personal income tax assessments or GST credits. Corporate tax disputes (often involving significant amounts or complex issues) are fewer in number but can be prominent in the general procedure docket. Both categories of taxpayers are represented in the Court’s caseload. For instance, the Canada Revenue Agency (CRA) notes that when a taxpayer (individual or business) disagrees with an assessment and exhausts the internal objection process, they may appeal to the Tax Court under either the informal or general procedure as appropriate In practice, this means the TCC sees everything from self-represented individuals contesting modest personal tax adjustments, to large corporations litigating sophisticated tax avoidance or accounting issues.

Case Resolutions

Most tax appeals are resolved without proceeding to a full trial in court. Official analyses have shown that a substantial portion of Tax Court cases end in settlements or other resolutions before a judge issues a verdict. For example, in 2022–23 the Court held hearings (i.e. cases “heard in court”) in 713 cases, while 3,876 total cases were disposed that year. This implies that roughly four out of five dispositions were resolved through settlements, withdrawals or other non-trial closures, with only about 18% of cases requiring a court hearing and judgment. It is clear that settlement negotiations and alternative resolution mechanisms (such as settlement conferences facilitated by the Court’s process) play a major role in tax litigation, allowing many disputes to be concluded without a formal trial.

In summary, the Tax Court of Canada’s latest official statistics show a moderate volume of new cases each year (on the order of a few thousand, with recent increases post-2020), and a broad range of tax matters dominated by income tax issues. Appeals are brought by both individual Canadians and corporations, through procedures tailored to the size of the dispute. Most cases are resolved through settlements or other means before trial, reflecting an emphasis on dispute resolution; only a fraction proceed to a full hearing.

The RC4288, Request for Taxpayer Relief – Cancel or Waive Penalties or Interest, is the CRA’s built-in safety valve. If you fell behind on your tax obligations because of events outside your control, serious financial hardship, or CRA’s own delays or mistakes, this is the form you use to ask the CRA to cancel or reduce penalties and interest.

This guide walks you through:

• Who actually qualifies (and who doesn’t)
• The 10-year deadline most people miss
• How to complete a strong, well-documented application
• What happens after you apply – including second reviews & judicial review
• Where a tax lawyer makes a real difference

1. What Is CRA Form RC4288?

Form RC4288 is the CRA’s standard form for a written request asking the Minister (through CRA officials) to:

1. Cancel or waive penalties, and/or
2. Cancel or waive interest on tax debts

It can be used by:

• Individuals
• Corporations
• Trusts
• Partnerships

Importantly:

• You’re asking for relief from penalties and interest – not from the underlying tax itself. The tax debt usually still has to be paid. In very rare cases, separate “remission orders” can relieve tax itself, but that’s a different, extraordinary process.
• You don’t technically have to use RC4288 – a detailed letter can also be a valid taxpayer relief request – but the CRA’s own procedures manual assumes RC4288 or equivalent written details, so using the form is strongly recommended.

2. The 10-Year Deadline You Cannot Miss

The taxpayer relief rules are subject to a strict 10-year rolling limitation period. You generally have 10 years from the end of the calendar year in which the interest accrued or penalties came into existence to ask for relief.

If your first RC4288 request for a particular year is outside that 10-year window, the CRA considers it invalid and will send it back – they legally cannot grant relief.

3. Who Can Apply for Taxpayer Relief? (The Real Eligibility Test)

The CRA’s internal guidelines say penalties and interest may be cancelled or waived in four main kinds of situations:

1. Extraordinary circumstances
2. Actions of the CRA
3. Inability to pay / financial hardship
4. Other circumstances, including some third-party or bank errors

The CRA is also required to consider other reasonable circumstances – their discretion is not limited to a rigid checklist.

Let’s unpack these.

4.1 Extraordinary Circumstances

These are events beyond your control that made it impossible or unreasonable to comply. CRA examples include:

• Natural or human-made disasters – flood, fire, major storms
• Serious illness or accident
• Death, serious illness, or accident in the immediate family
• Serious emotional or mental distress (marital breakdown, job loss)
• Civil disturbances or strikes that disrupt normal services

What CRA officers look for:

• Do the dates and details of the event line up with when you missed your obligation?
• How exactly did the event prevent you from filing or paying on time?
• Did you consider other ways to comply (e.g., using online services, authorizing a representative)?
• Are there supporting documents (police/fire reports, medical records, insurance claims, etc.)?

4.2 Actions or Delays by the CRA

The CRA can grant relief where:

• There were undue delays in processing an audit, objection, or appeal
• The CRA made errors, gave incorrect written information, or failed to notify you of an amount owing within a reasonable time
• CRA actions caused compounded interest to build up over a long period

4.3 Inability to Pay / Financial Hardship

Financial hardship isn’t just “this is inconvenient.” CRA looks for situations where, even with genuine effort:

• You have made bona fide efforts to pay down the debt over time
• But interest and penalties absorb a significant portion of each payment
• The arrears are so onerous relative to what you can realistically pay that it would be very difficult, if not impossible, ever to clear the account

For individuals, CRA often asks you to complete Form RC376 – Statement of Income and Expenses and Assets and Liabilities, then the CRA:

• Reviews your income and essential expenses (housing, food, utilities, medical, etc.)
• Distinguishes essential vs non-essential spending
• Analyzes your net worth and ability to borrow or liquidate assets

They then determine whether you truly cannot reasonably pay, or whether the issue is more about prioritization.

4.4 Third-Party Errors and Bank Mistakes

The default CRA position: you are generally responsible for your accountant, bookkeeper, or payroll provider’s errors.

However, the CRA manual on taxpayer relief confirms:

• CRA must consider other reasons, including third-party errors, and cannot deny relief simply because circumstances are “not extraordinary.”
• Relief may be appropriate where the representative faced an extraordinary event (e.g., sudden hospitalization) that prevented filing.
• Bank errors or delays (e.g., funds remitted on time but delayed by the bank’s system) may justify cancelling penalties/interest if the bank confirms the mistake.

Because CRA is cautious here, third-party error cases usually need careful framing and strong documentation.

5. What Penalties & Interest Can Be Waived?

RC4288 relief can target most interest and penalties assessed under the Income Tax Act (Canada) and Excise Tax Act (Canada), including:

• Late filing penalties – income tax, GST/HST, information returns
• Failure to remit penalties – payroll source deductions, GST/HST remittances
• Interest on unpaid tax, penalties, and some elections-related penalties (e.g., late-filed or amended elections)

But:

• It does not cancel the underlying tax (except via separate remission process, which is rare).
• It cannot be used to dispute the correctness of an assessment or penalty – that must be done through a notice of objection and, if needed, appeals.

6. How to Fill Out Form RC4288 (Step-by-Step)

Step 1 – Identify Yourself and Your Account

Complete the appropriate section:

• Individuals: Full legal name, SIN, current address, phone
• Businesses: Legal name, Business Number (BN), program accounts (e.g., RP, RT, RC)
• Trusts: Trust name and Trust Account Number

Make sure the contact information matches CRA’s records.

Step 2 – Specify the Type of Relief

The form will ask what you’re requesting relief for. Common boxes to tick:

• Penalties
• Interest
• Both penalties and interest

You must also list the years or reporting periods involved for each account (T1, T2, GST/HST, payroll, etc.).

Step 3 – Explain Your Circumstances (This Is the Heart of Your Application)

This is where strong applications distinguish themselves.

Your explanation should:

1. Tell the story chronologically
   • What happened
   • When it happened
   • How it affected your ability to file or pay
2. Connect the dots for CRA
   • Link specific events (e.g., hospitalization dates, disaster dates, CRA delays) to specific missed deadlines or periods
3. Show responsible behaviour
   • Efforts to comply despite the problem (extensions requested, partial payments, attempts to contact CRA)
   • Evidence of improved compliance – filing on time now, current payments up to date
4. Address financial hardship (if applicable)
   • Outline income, essential expenses, debts and assets (often via RC376)
   • Explain why, even with a reasonable payment plan, the interest/penalty component makes repayment unrealistic

Step 4 – Attach Supporting Documentation

Examples of helpful documents:

• Medical records, hospital discharge summaries, doctor’s letters
• Death certificates, funeral documentation
• Police, fire or insurance reports for disasters or theft
• Bank letters acknowledging errors or delays
• Correspondence with CRA showing delays, errors or incorrect information
• Financial documents (RC376, bank statements, income statements, tax returns, payment history)

The CRA’s own manual stresses that complete requests allow officers to exercise discretion properly and avoid delays.

Step 5 – Sign and Submit

• Ensure the form is signed by the taxpayer or an authorized representative (with valid authorization on file).
• Submit the RC4288 and supporting documents:
  • By mail to the appropriate CRA Tax Centre (address on the form); or
  • By uploading through CRA My Account / My Business Account (if available), selecting the “Submit documents” option for taxpayer relief.

7. How Long Does CRA Take to Process RC4288?

In practice, CRA relief reviews commonly take several months, and complex or hardship-heavy files can take longer.

Internally, files are categorized by complexity and processed through “first review” and “second review” levels. Complex cases (e.g., multiple years, memorandum assessments, financial hardship plus CRA action) are treated as higher complexity workloads.

While you wait:

• Keep filing current returns on time
• Make reasonable payments toward your balance where possible – this supports hardship arguments and shows good faith.

8. What Happens After You Submit Form RC4288?

8.1 First Review

Your first application for a given year/issue goes through a first review. This covers:

• The first time you’ve asked for relief for that year/period and penalty/interest; or
• Additional information submitted before a decision is made; or
• Clarifications requested by CRA during their review

At the end of the first review, CRA will issue a written decision letter, which may:

1. Approve full relief – all specified penalties and/or interest are cancelled
2. Approve partial relief – only certain years or amounts are reduced
3. Deny relief – no change to penalties or interest

Adjustments are then processed on the relevant CRA systems (e.g., T1, T2, GST/HST) and reflected on your account.

8.2 Second Review (Internal Appeal)

If you disagree with the first decision, you can ask for a second review. This is another discretionary review, typically by a different officer or team. You can request a second review whether or not you have new information or arguments – but new, well-framed information helps.

8.3 Judicial Review in Federal Court

There is no formal appeal to the Tax Court for taxpayer relief decisions. Instead, if you believe CRA misused its discretion (e.g., ignored relevant facts, applied rigid rules, or misunderstood the law), you can seek judicial review in Federal Court.

Important:

• The Court doesn’t simply “re-decide” your relief request. It reviews whether CRA exercised its discretion reasonably and fairly.
• If the Court finds problems, it normally sends the matter back to CRA for a new decision by a different official, with directions to consider the file properly.

9. Common Reasons RC4288 Requests Fail

From both practice and CRA’s own guidance, we see the same pitfalls again and again:

• Missing the 10-year deadline for a first request
• Using RC4288 to argue what should be argued in a Notice of Objection
• Providing vague explanations (“had personal issues,” “business was slow”) with no dates or detail
• Failing to connect events to specific missteps (e.g., which year’s return was late and why)
• Claiming financial hardship but providing no financial disclosure or clearly non-essential spending patterns
• Relying solely on “my accountant messed up” without explaining why relief is still fair in your particular case

10. How a Tax Lawyer Can Strengthen the RC4288 Application

A well-prepared RC4288 package is part law, part accounting, and part storytelling. At Taxpayer Law, we help by:

• Assessing eligibility:
  • Identifying which years are still within the 10-year window
  • Determining whether your facts align with CRA’s categories (extraordinary circumstances, CRA actions, hardship, or other)
• Building a persuasive narrative:
  • Organizing events, timelines and evidence so the CRA officer doesn’t have to dig
  • Making sure every fact in your story ties back to specific penalties and interest
• Preparing complete documentation:
  • Drafting detailed written submissions
  • Assembling medical, financial, and third-party evidence in the way CRA expects
• Managing CRA communications:
  • Handling information requests, clarifications and follow-ups
  • Ensuring your rights are respected and deadlines aren’t missed
• Challenging unfair decisions:
  • Requesting a second review with focused new arguments
  • Pursuing judicial review in Federal Court where CRA has misapplied its discretion

11. Need Help With Form RC4288?

If penalties and interest are overwhelming you, you do have options – but relief is never automatic, and poorly prepared RC4288 requests are often denied.

If you’d like help:

• figuring out whether you qualify,
• understanding your 10-year deadline, or
• preparing a strong RC4288 application or second review,

Contact Taxpayer Law for a free consultation. We can review your CRA account, your facts, and your options – and help you put your best possible case forward for taxpayer relief.