CRA Appeal Outcomes by Issue Type: Where Objections Actually Succeed

The CRA agrees with taxpayers on objections about 55% of the time, measured across the seven-year period from 2017 to 2024. That number is real, but it hides wide variation. Some issue types resolve in the taxpayer’s favor more than 70% of the time. Others succeed less than 20%. Knowing the base rates before you invest time, money, and emotional energy in a dispute changes the decision. An objection on an issue with a 70% resolution rate is worth fighting. An objection on an issue with a 15% success rate might still be worth filing (the assessment might be wrong), but you should go in with realistic expectations. This page maps the outcomes by issue type and explains what drives the differences.

What does the 55% success rate actually mean?

The CRA publishes annual reports on objection outcomes through the Departmental Results Reports and the Taxpayer Bill of Rights annual reports. The 55% figure includes three outcome categories:

1. Allowed in full: The CRA reverses the reassessment entirely. The taxpayer gets their original position back.
2. Allowed in part: The CRA agrees with some of the taxpayer’s arguments but not all. The reassessment is reduced but not eliminated.
3. Vacated or referred back: The CRA sends the assessment back for further review, usually because the Appeals officer found a procedural error or needed additional information.

The remaining 45% are either confirmed (the CRA’s original assessment stands) or withdrawn by the taxpayer (the taxpayer drops the objection before it is decided, often because they conclude the CRA’s position is correct or the cost of pursuing it exceeds the potential recovery).

The 55% is a weighted average across all issue types. It includes simple documentary disputes (send the receipt, get the deduction back) and complex interpretive disputes (argue a treaty position through multiple rounds of submissions). The simple disputes have very high resolution rates (they should never have been reassessed in the first place, and the objection is just the correction mechanism). The complex disputes have lower rates.

Which issue types have the highest success rates?

Employment expenses (T2200-related). When the CRA disallows employment expenses because the T2200 was not on file, was incomplete, or the amounts could not be verified, the resolution rate on objection is high (estimated 65-75%). The reason: the taxpayer often has the documentation but did not submit it during the initial review, or the T2200 was filed but not matched to the return. Providing the T2200 and supporting receipts at the objection stage usually resolves the issue.

Medical expenses. Similar pattern. The CRA disallows medical expenses during a review because receipts were missing or did not match the claimed amounts. At the objection stage, the taxpayer provides the receipts and the reassessment is reversed. Success rate is high for documented claims (70%+), lower for claims involving eligibility questions (whether a particular expense qualifies under ITA 118.2(2)).

Source deduction disputes (employer remittances). When the CRA reassesses a business for unremitted source deductions and the business can show the remittances were made (bank records, CRA My Business Account confirmations), the objection succeeds at a high rate. These are often matching errors on the CRA’s side.

Charitable donations (with receipts from registered charities). When the charity is legitimate and registered, and the taxpayer has official donation receipts that meet the requirements, objections succeed at a high rate. The CRA’s review process sometimes flags legitimate donations for verification, and providing the receipts resolves it.

Which issue types have the lowest success rates?

Tax shelters and GAAR assessments. When the CRA reassesses a transaction under the General Anti-Avoidance Rule (ITA 245), the success rate on objection is very low (estimated 10-20%). GAAR assessments are usually the product of extensive audit work and legal review before the reassessment is issued. The CRA does not apply GAAR casually. By the time the assessment reaches the taxpayer, the CRA has already concluded that the transaction was an avoidance transaction with no bona fide purpose. Overturning that conclusion at the objection stage is difficult. Many GAAR cases proceed to Tax Court.

Donation schemes (non-cash, inflated receipts). The CRA has systematically targeted donation schemes involving non-cash gifts where the receipt amount exceeds the fair market value of the property donated (art donation schemes, pharmaceutical donation schemes, leveraged donation programs). The objection success rate is very low. The CRA’s position is supported by Tax Court decisions in multiple program-wide cases, and individual objections within a known scheme are typically held pending the lead case.

SR&ED claims on ineligible activities. When the CRA denies a Scientific Research and Experimental Development claim because the activities do not meet the eligibility criteria (systematic investigation, technological uncertainty, technological advancement), the objection success rate depends on the specifics but is generally below 40%. The CRA’s SR&ED reviewers are technical specialists, and their assessments of whether the work constitutes eligible R&D are given weight at the Appeals stage.

Unreported income (net worth assessments). When the CRA reassesses using the net worth method, the success rate on objection depends on whether the taxpayer can explain the discrepancy. If the taxpayer can document non-taxable sources (gifts, loans, pre-existing savings), the objection can succeed. If the taxpayer cannot explain the increase in net worth, the CRA’s assessment stands. The overall success rate for net worth objections is in the 30-40% range, but varies widely based on the facts.

Where do cross-border issues fall?

Cross-border objections fall in the middle of the success range, with outcomes depending on the specific issue:

Foreign tax credit disputes. When the CRA disallows or reduces a foreign tax credit claimed on income reported in both countries, the objection outcome depends on documentation. If the taxpayer can prove the foreign tax was paid (US return, IRS transcript, proof of payment), the credit is usually allowed. If the dispute is about the amount of the credit (exchange rate issues, allocation between Canadian and US-source income, whether the foreign tax qualifies as an “income or profits tax” under ITA 126), the outcome is less predictable.

Treaty residence disputes. When the CRA and the taxpayer disagree about whether the taxpayer was a Canadian resident under the treaty tie-breaker rules (Article IV of the Canada-US treaty), the dispute is fact-intensive and the success rate depends on the evidence. The CRA tends to assert Canadian residence; the taxpayer argues they were treaty-resident in the US. If the facts clearly support one country (centre of vital interests, habitual abode), the objection can succeed. If the facts are ambiguous, the case may need to go to Tax Court or the Competent Authority process.

T1135 penalties. Objections to T1135 penalties have a moderate success rate. The CRA sometimes waives penalties when the taxpayer can show reasonable cause for the late filing (relied on a professional who did not know about the requirement, did not understand the $100,000 threshold applied to cost rather than market value). The underlying tax is rarely disputed; it is the penalty that is at issue.

What does the processing time look like?

The CRA’s published processing targets and actual performance for objections:

Complexity	Target	Actual (2024-25)
Low complexity	85 days	~125 days
Medium complexity	180 days	~365 days
High complexity	365 days	~896 days

Low-complexity objections are documentary (missing receipt, T2200 not matched, simple calculation error). Medium-complexity objections involve interpretive questions (eligibility of an expense, application of a provision). High-complexity objections involve legal issues (GAAR, treaty interpretation, transfer pricing), multiple years, or large dollar amounts.

Cross-border objections are almost always classified as medium or high complexity because they involve treaty interpretation, foreign tax credit calculations, or dual-residency questions. A cross-border objection should be planned with a 12-to-24-month timeline.

During the objection period, collection on the disputed amount is suspended under ITA 225.1 (with some exceptions for amounts not in dispute and for repeated objections). Interest continues to accrue on the unpaid balance during the objection period, but taxpayer relief can address the interest if the delay was the CRA’s.

Should I object or accept?

The decision framework:

Object if: the CRA’s assessment is factually wrong (you have the documentation), the amount is material (the cost of the objection is justified by the potential recovery), or the legal issue has a reasonable chance of success based on similar cases.

Accept if: you cannot document the claim (the receipt is lost, the explanation is weak), the amount is small relative to the cost and stress of the dispute, or the CRA’s position is supported by clear law or settled case law.

Object but plan for Tax Court if: the issue is interpretive, the CRA’s Appeals function is unlikely to overturn the auditor’s position (GAAR, complex treaty positions, significant dollar amounts), and the case needs a judge to decide. Some issues are simply not resolved at the objection stage; they require litigation. Filing the objection preserves your right to go to Tax Court, but the real strategy is preparing for the hearing.

What should I do next?

If you have received a reassessment: check the 90-day objection deadline first. File the notice of objection before the deadline, even if you have not finished gathering documentation. The objection can be supplemented later. If the reassessment involves a cross-border issue (foreign tax credits, treaty residence, T1135 penalties, foreign income), expect medium-to-high complexity classification and a 12-to-24-month timeline. If both countries are involved in the dispute, see coordinating dual-country audits.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.