Filing a Notice of Objection for Phoenix Damages
When you receive your Notice of Assessment, there is a date on it. From that date, you have 90 days to file a Notice of Objection addressed to the chief of Appeals at your TSO. You can easily do this by simply going to your CRA My Account and click on filing an objection. My account can now be access by logging in using your bank login now. In your Notice of objection, you write the following:
A portion of the income reported on the 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 the myself, or any demonstrated financial loss suffered by myself. 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 asks that my 2021 tax return be reassessed to reflect the non-taxable nature of the general damages received of $2,500 form my employment income line 10101 pursuant to paragraph 81(1)(g.1) of the Income Tax Act.
SUBDIVISION G Amounts Not Included in Computing Income
Marginal note:Amounts not included in income
81 (1) There shall not be included in computing the income of a taxpayer for a taxation year,
Income from personal injury award property
(g.1) the income for the year from any property acquired by or on behalf of a person as an award of, or pursuant to an action for, damages in respect of physical or mental injury to that person, or from any property substituted therefor and any taxable capital gain for the year from the disposition of any such property,
(i) where the income was income from the property, if the income was earned in respect of a period before the end of the taxation year in which the person attained the age of 21 years, and
(ii) in any other case, if the person was less than 21 years of age during any part of the year;
You then either 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.
If after 90 days that you filed your Notice of Objection you still have not received an answer, you can continue to wait, or your can now file a Notice of Appeal to the Tax Court of Canada. This can be done online also and your write the same text above.
If your receive a Notice of Confirmation from the chief of Appeals, you got 90 days from the date on the Notice of Confirmation to file a Notice of Appeal to the Tax Court of Canada.
If for good reasons you have passed the 90 days for filing a Notice of Objection to the Chief of Appeals, you have 1 year from the date of the 90th day to file an Application to late file a Notice of Objection and you send that to the Chief of Appeals. In this application you indicate the reason you are late. If the reason is justified, the application will be granted, and they will consider your objection.
If your Application is not granted, you can file with the Tax Court of Canada the same Application to late file a Notice of Objection. Then a judge will decide if your reason is valid or not. If valid, the judge then issues a court order stating your application is valid and the chief of appeals is thus ordered to consider the objection.
