Reminder: Notice of Objection Taxable Phoenix Damages

July 28, 2022

Sisters, brothers, and friends,

As stated in a communication in March 2022, the Union of Taxation Employees (UTE) encourages its members to file individual notices of objection. We anticipate that a large number of applications may pressure the government to review the tax treatment of compensation for all UTE members rather than adjudicating thousands of individual notice of objections applications.

For the benefit of all our members, UTE wishes to remind those who have not yet filed notices of objection, to please do so. This communication offers complementary information following UTE’s March 3rd message to members. We are offering this complementary information to further guide you in the process, therefore encouraging more members to file a notice of objection.

GUIDE: 

Members can easily file a notice of objection by following these recommended steps.

HOW TO FILE:

Once members have filed their 2021 tax returns and received their “Notice of Assessment” from CRA, they can easily object to the taxability of the Phoenix damages by completing a form T400A (Notice of Objection) directly in their CRA My Account and clicking on filing an objection or by mailing it to:

Chef of Appeals                                   
Appeals Intake Centre                       
Post Office Box 2006, Station Main 
Newmarket ON L3Y 0E9                    

My account can now be access by logging in using your bank login.

FOR MEMBERS RESIDING IN QUEBEC

You must also follow the same process and file a Notice of Objection with Revenu Québec after receiving your “Notice of Assessment” from them by completing the form MR-93.1.1 (Notice of Objection) directly in your Revenu Québec My Account and click on filing an objection or by mailing it to: 

Revenu Québec
3800, rue de Marly
C. P. 25025, succursale Terminus
Québec (Québec) G1A 0B8

FILING DEADLINE:

Please note that the time limit for filing an objection is the latest of the following two dates:

  • one year after the date of the return's filing due date for the year; or
  • 90 days after the day the Notice of Assessment or determination was issued.

*The filing deadlines are the same with Revenue Québec as those applied by the Canada Revenue Agency

WHAT TO WRITE:

A portion of the income reported on my T4 for 2021 represents general damages paid under a settlement agreement negotiated by the Public Service Alliance of Canada (PSAC) as compensation for stress, aggravation, and pain and suffering, payable to all members of PSAC in recognition of the effect of the Phoenix pay system and the delayed implementation of a collective agreement on the membership.

The payment was not dependent upon or in any way related to any grievance previously filed by me, or any demonstrated financial loss suffered by me. Rather, the payment was compensation for the stress felt by all employees, regardless of their personal circumstances, due to the delays, confusion, and general chaos that resulted from the Phoenix implementation. As such, the amounts received as damages for pain and suffering should not have been subject to tax. I respectfully submit that my 2021 tax return should be reassessed to reflect the non-taxable nature of the general damages received of $2,500 from my employment income line (10101) pursuant to paragraph 81(1)(g.1) of the Income Tax Act.

For members residing in Quebec, you may use the same wording but replace the very last sentence with the following:

I respectfully submit that my 2021 tax return should be reassessed to reflect the non-taxable nature of the general damages received of $2,500 from my employment income line (101) pursuant to the section of the Quebec Income Tax Act on Income from personal injury award property.

AFTER HAVING FILED:

You wait for a reply where you will get a reassessment agreeing with your objection, or you will get a Notice of Confirmation stating the Assessment is correct.

After 90 days of having filed your Notice of Objection and haven’t yet received an answer, you may continue to wait if you chose, or file a Notice of Appeal to the Tax Court of Canada.

The notice of appeal can also be made online, you can use the same text that you used for your notice of objection.

If you receive a Notice of Confirmation from the Chief of Appeals, you then have 90 calendar days from the date on the Notice of Confirmation to file a Notice of Appeal to the Tax Court of Canada.

If, for compelling and persuasive reasons, you are late and exceeded the 90 days for filing a Notice of Objection to the Chief of Appeals, you then have one year from the initial date of the 90th day to apply for an extension of the time limit to object. The Application must be sent to the Chief of Appeals and should set out the reasons why the Notice of Objection was not filed within the required time limit. If the reason is justified, the application may be granted, and the CRA may consider your objection.

If your Application is not granted, you may file with the Tax Court of Canada the same Application for an extension of the time limit to object. A judge can then decide on the validity of the reason why the Notice of Objection was not filed within the required time limit. If found valid, the judge then issues a Court order stating your application is valid and the Chief of Appeals is therefore ordered to consider the objection.

*UTE understands that everyone’s individual circumstances may vary, and UTE does not provide legal advice on individual tax appeals.  We encourage you to consult a professional tax advisor if you have specific questions about filing your income tax return and matters ancillary to it.

In solidarity,

Marc Brière's signature

Marc Brière
National President
Union of Taxation Employees