When a taxpayer receives a Notice of Reassessment (NORA), they often file a Notice of Objection (NOO) if they disagree with the Reassessment. The NOO stops the CRA from collecting the tax in dispute as a result of the NOO and the file is transferred from the Audit division to the Appeals division at CRA. Appeals is supposed to respond within 120 days, however, when it comes to Registered Gifting Arrangements they never do. They often take 10 years or more to respond, and that can put the taxpayer in a very difficult position.
The CRA Appeals division has 3 choices when formally responding to a NOO. They can Vary , Vacate, or Confirm the NORA. When it comes to Gifting Arrangements, the most predictable outcome is that CRA will Confirm the Reassessment by issuing a Notice of Confirmation. This is a formal notice from CRA that they are confirming the original reassessment and the tax in dispute is now due and payable back to CRA, plus interest for many years. See an example of Page 1 of a Notice of Confirmation. The Notices can be in different formats from different CRA offices, and differ in length and detail, however, they will always have Notice of Confirmation as the title.
When a taxpayer receives a Notice of Confirmation, he has two choices. He must pay back the CRA the tax in dispute or file an Appeal to the Tax Court of Canada within 90 days. There is no further appeal allowed within CRA, except perhaps to request a fairness review to reduce the interest or negotiate a payment plan. There are several firms offering a service to do this for taxpayers, however, their fees are usually quite high. These firms do not attempt to reduce the original tax owing, nor do they Appeal to Tax Court.
Most taxpayers don't have the knowledge or financial resources to file an Appeal to Tax Court. It can be extremely expensive. Some of the Gifting Arrangement programs have filed Appeals in support of their donors, however, most have not. They have abandoned their donors. Some independent groups have formed to defend themselves and some individuals have also launched Appeals. The best example we have is the Profitable Giving Canada Class Defence for the 4 programs listed. We have published a document in the Members Section of our website that lists the more well known Gifting Arrangements in Canada and the status of their Appeals, if any. It also lists details of settlement offers that might have been made. Please login to the Members Section and go to Section 5.2 to see what options you might have when you receive your Notice of Confirmation.