If you ever find yourself in the unfortunate situation of being audited by the Canada Revenue Agency, the CRA auditor may ask you to sign a “waiver”. He or she will usually tell you something along the lines that it is for your benefit to sign the waiver, so as to make sure that there are no mistakes in the audit. Don’t believe him. You are already in the CRA’s radar by being selected for an audit, and the auditor is not there to help you. He or she works for the CRA. CRA’s statutory mandate is to collect taxes. They are going to reassess you no matter what, so why help them do that by signing a waiver when you don’t have to?
When the CRA asks you to sign a waiver it means that they are either already out of time to reassess you, or the time limit for doing so is about to expire, and they want more time so they can screw you up good. The normal reassessment time limit for Canadian income taxes is three years from the date that your tax return was initially assessed. By signing the waiver, you are giving them permission to reassess you past the normal 3 year reassessment period. There is no benefit to you to give them more time.
Once the 3 year time limit has expired, then without a signed waiver, the CRA cannot reassess you unless they are able to prove fraud, negligence, or willful conduct on your part. That is not easy to prove. It has to be more than just an honest mistake. The CRA has to show that there was some material misrepresentation or non-reporting.
So the short answer to my question is “no”, you should not sign a waiver if the CRA asks you to.
If the CRA has contacted you regarding an audit, it is important that you speak to a tax audit lawyer as soon as possible. A tax audit lawyer can communicate with the CRA on your behalf, and help you navigate through the audit process. Furthermore, your communications with your tax lawyer are protected by lawyer-client privilege. This is not so with non-lawyer tax professionals, unless they are acting on behalf of your lawyer for the purpose of providing legal advice, or in contemplation of litigation.
If you have any questions about the reassessment process please contact me today to find out how I can help.