Why Your Tax Refund Might Be Delayed or Never Arrive?

The anticipation of a tax refund can quickly turn into anxiety if it doesn’t arrive as expected especially when you were planning to pay a very important bill using the refund. In this blog, we will discuss most common reasons why your tax refund might experience delays or, in unfortunate cases, fail to materialize.

To start let’s discuss what is the CRA’s estimated timeline for processing returns and the issuance of refunds. If you filed your tax return online, the CRA aims to send you a Notice of Assessment (NOA) and any refund within 2 weeks. This efficient processing time is one of the benefits of electronic filing. For those who filed a paper return, the processing time is slightly longer. You can expect your NOA and refund to arrive within approximately 8 weeks . If you’re a non-resident taxpayer, the CRA takes about 16 weeks to process your return and issue the NOA and any applicable refund. Non-resident returns involve additional complexities, which contribute to the extended timeline.

When it comes to tax refunds, the Canada Revenue Agency (CRA) occasionally selects returns for a more detailed review. Unfortunately, there’s no fixed timeline for this process. It can happen randomly, and the review duration varies. In the event of a review and if there is a delay in the issuance of your refund, the CRA may owe you interest. This interest is typically calculated from the original due date of your return until the date they issue your refund or resolve the issue. The prescribed interest rates are issued four times a year before the start of each quarter. At the time of the writing of this blog, the prescribed interest rates for the period of April 1, 2024 to June 30, 2024, are as follows:

The interest rate to be paid on corporate taxpayer overpayments: 6%.

The interest rate to be paid on non-corporate taxpayer overpayments: 8%.

In a real-life scenario, the author of this blog found himself in an unexpected situation after filing his 2022 tax return. Nine long months passed without any communication or explanations for the delay were provided from the Canada Revenue Agency (CRA). In such instances, the Office of the Taxpayers’ Ombudsperson (OTO) can help in resolving such issues related to the Canada Revenue Agency (CRA). The OTO operates independently from the CRA and focuses on improving taxpayer service by reviewing service-related complaints. The OTO reviews individual complaints and systemic issues related to taxpayer service rights. They also examine service issues that could impact a large number of taxpayers or specific segments of the population.

The CRA also has the authority to withhold part of all of your refund for amounts owing or anticipation of amounts owing for various reasons:

Balance Owing: If you owe taxes from a previous year, the CRA may apply your refund to cover that outstanding balance.

Missing Returns: : If you haven’t filed all your required tax returns, the CRA might hold your refund until you’ve submitted the missing ones.

Related Balance Owing: If you have other debts to federal, provincial, territorial governments, immigration loans, student loan repayments, or Employment Insurance (EI) overpayments, the CRA can use your refund to offset those amounts.

The Family Orders and Agreements Enforcement Assistance Act (FOAEAA) allows the government to take payments such as income tax refunds and employment insurance benefits for the payment of child or spousal support.

The processing of the returns and refunds can also be delayed due to flagging situations where the CRA was not informed of changes to the taxpayer’s marital status and the resulting mismatch in the information submitted to the CRA. Some of these situations are:

Marriage

Divorce

Becoming common-law (12 months or more of cohabitation)

Separating for more than 90 days

Death of spouse or common-law partner

If you are anxious about the status of your return or the refund, there are two ways to check:

Contact the CRA Individual Inquiries at 1-800-959-8281. Make sure to have your personal information, social insurance number, and copies of your previous year tax returns handy, or

Log in to your My Account and view the status of your return under “Tax Returns” tab.

For further information please contact Taxtron Support at 416-491-0333 or visit www.taxtron.ca