Not the End of the Road: Why a CRA Re-Objection Might Be Your Smartest Move

In tax dispute work, reassessments and objections often follow a familiar rhythm: assess, object, confirm or vary, then escalate to the Tax Court of Canada.

But when the CRA issues a varied reassessment following an objection, that linear path suddenly opens up. Most advisors treat this as the moment to move on to litigation. Few pause to consider the strategic potential of re-objecting even though subsection 165(7) of the Income Tax Act (Canada) leaves the door open.

It’s a procedural option. But in the right fact pattern, it becomes a tactical one.

The Legal Mechanics

Under subsection 165(3), once a taxpayer files a notice of objection, the CRA must “reconsider the assessment and vacate, confirm or vary the assessment or reassess.” If the CRA decides to uphold its position, it issues a notice of confirmation. But if it accepts the objection in part for example, by adjusting amounts, changing penalties, or applying reserves or losses, it may issue a varied reassessment to reflect the revised outcome.

Subsection 165(7) governs the taxpayer’s next step. A varied reassessment can be appealed directly to the TCC. But this is not mandatory. The taxpayer can instead choose to file a new notice of objection, unless the varied reassessment is a nil assessment. The same principle applies under section 302 of the Excise Tax Act for GST/HST disputes.

An important procedural consequence arises from Savics v. Canada, 2021 FCA 56: a new reassessment made under one part of the Act nullifies all prior reassessments for that year under the same part and with it, any objection tied to the earlier reassessment. If the taxpayer wants to contest the new version, they must act afresh: either by appealing or by re-objecting.

CRA policy (Appeals Manual, section 3.3.2.8) suggests that re-objections are assigned to the same appeals officer “where possible.” In practice, this is inconsistent. In several of my own cases, the reassigned officer was entirely new, regardless of whether that was preferable.

Why Re-Object?

Re-objecting is not a default route. In most cases, litigation offers finality and structure. But there are times when a second round with Appeals can offer a more efficient or flexible outcome.

1. New Adjustments, Fresh Grounds

Reassessments often evolve beyond the original issues under objection. This might happen when the taxpayer, mid-objection, requests that non-capital losses be applied, or asks for a reserve to be claimed. CRA may allow it, but the resulting varied reassessment might contain mechanical adjustments or secondary impacts never addressed in the original dispute.

Because the new reassessment nullifies the old one, the taxpayer’s original objection dies with it. If the taxpayer wants to contest the new position even just parts of it a new objection or an appeal is required.

Re-objecting allows for a targeted, administrative resolution. It keeps the file out of court, allows new facts or calculations to be introduced, and maintains flexibility around negotiation.

2. Partial Review, Missed Submissions

Another scenario: Appeals issues a varied reassessment dealing with one issue say, shareholder benefits but ignores others, like gross negligence penalties or deductibility of expenses. Whether due to internal deadlines or simple oversight, parts of the objection may never be addressed.

In these cases, re-objecting lets you put the rest of the file back on the table, and potentially with a fresh officer. I have seen varied outcomes here. In some files, the new officer was more cooperative and better prepared. In others, we weren’t reassigned but had a different tone and level of engagement the second time around.

Sometimes the issue isn’t legal. It’s human. The officer might lack technical depth, be poorly briefed, or simply be difficult to work with. Re-objecting isn’t a guaranteed fix, but it creates room to try again, without escalating to Court.

3. New Basis Under Subsection 152(9)

CRA has wide latitude under subsection 152(9) to support an assessment on alternative grounds, even after issuing a varied reassessment. If CRA pivots from a section 15 position to a section 246(1) position or raises a new GAAR argument, the taxpayer has the right to respond.

Re-objecting is often the most direct and procedurally clean way to respond to a surprise shift in CRA’s position. It places the new issue squarely in the administrative record and avoids the pressure of responding mid-litigation.

A Practitioner’s Lens

In one recent file, a client was reassessed for shareholder benefits. We objected, and the appeals officer allowed a partial reduction, issuing a varied reassessment. But they failed to consider our reserve claim or the treatment of certain soft costs. Rather than escalate to court, we re-objected. The file landed on a new officer’s desk. This time, the process was faster, more focused, and resolved in our favour within two months. Same facts, same position, different result.

That experience reinforced something I have seen across files: re-objecting is not about retrying the same arguments louder. It is about knowing when the CRA has moved just enough to reopen the door.

Here is how I usually think it through:

• Has the reassessment introduced new numbers, new issues, or a new legal theory?
• Did the first officer misunderstand, overlook, or sidestep a material issue?
• Is there additional evidence or clarification we did not get to present?
• Would my client benefit from keeping the matter administrative a little longer?

It is rarely a black-and-white answer. But in the right file, it creates meaningful leverage without triggering court timelines or litigation costs.

When explaining the strategy to a client, I often say this:

“This is technically a new reassessment. We can go to court, or we can refile the objection and give CRA one more opportunity to reconsider. It adds time, but also gives us another round to try and settle this before escalating.”

That framing helps the client understand that we are not backing down. We are choosing the forum that gives us the best shot at resolving the issue with precision and control.

The Tradeoffs

Re-objecting offers flexibility but it’s not without cost. In practice, several downsides should be weighed before taking this route.

1. It Delays Resolution

Re-entering the administrative process adds time. Even if the new reassessment is narrow or procedural, a second objection can take months to be assigned and reviewed. If the issues are already crystallized, proceeding to the Tax Court may be more efficient particularly where the client is seeking finality.

2. The Appeals Officer May Not Change

Although CRA policy states the file should be reassigned to the same officer, this is not guaranteed. In my experience, a new officer was assigned in every re-objection but there’s no predictability. If the original officer was reasonable and familiar with the file, reassignment could set things back. If the officer was inflexible or unprepared, reassignment might improve things but it’s not a lever the taxpayer can control.

3. Interest Continues to Accrue

Re-objecting doesn’t stop interest from running. If the taxpayer loses on any part of the assessment, interest continues to accrue and the longer the matter remains unresolved, the more that cost compounds. Re-objecting without a substantive path forward is a risky deferral strategy.

4. CRA May Push Back

Although the right to re-object is grounded in law, some Appeals officers are hesitant to revisit issues they believe have been addressed. If the new reassessment is seen as largely cosmetic, it may take additional effort to justify reopening the file.

5. It’s Not Always Strategic

In files where CRA’s position is deeply entrenched GAAR assessments, large-file audits, or where headquarters has been involved, there may be limited value in re-objecting. The administrative stream won’t necessarily move the needle, and time may be better spent preparing for litigation.

Beyond Law: Optics and Quiet Resets

Two subtle but real dynamics also make re-objecting worth considering:

The Quiet Reset

Occasionally, CRA issues a varied reassessment not to harden its position, but to reset it to quietly revise without formally conceding. In these moments, a re-objection allows both parties to reset tone and posture without triggering court deadlines. It’s informal diplomacy, structured through procedure.

Avoiding Court for Relational or Reputational Reasons

Not every client wants to be in open litigation with the government. For founders, family offices, or sensitive files, maintaining a working relationship with CRA or avoiding the optics of court entirely can be reason enough to stay in the administrative stream, at least for one more round.

Final Thought

Re-objecting after a varied reassessment is not a stall tactic. Done well, it’s a strategic recalibration, grounded in timing, substance, and the evolving character of a file.

It may offer a better officer. It may address issues overlooked. It may create room to respond to a new legal theory or unwind a misunderstanding.

It does not waive the right to appeal. But it can offer something even more valuable: one more chance to get it right, without escalation.

The varied reassessment resets the board. The re-objection re-engages the game sometimes, to better effect.

If You’re Dealing with a Varied Reassessment

My practice supports high-complexity tax dispute files across Canada, often where the facts are messy, the stakes are high, and the standard playbook isn’t enough.

If you’re facing a varied reassessment and wondering whether to escalate or recalibrate, feel free to reach out. Quiet strategy is our approach, and, in these moments, that often makes the difference.

Footnote: This piece was inspired in part by Robert Celac’s “Re-Objecting After a Varied Reassessment” (2025) 15:2 Canadian Tax Focus 3–4, and builds on foundational insights from Jennifer J. Smith and Andrea M. Ryer in “‘I Object!’: The Objections Process at the Canada Revenue Agency,” in Pooja Mihailovich and John Sorensen, eds., Tax Disputes in Canada: The Path Forward (Toronto: Canadian Tax Foundation, 2022), 7:201–36.

Disclaimer: The information provided in this article is intended for general guidance and educational purposes only. It should not be considered tax, legal, or accounting advice for any specific individual or situation. While every effort has been made to ensure accuracy as of the publication date, tax law is complex and constantly evolving. Readers are strongly encouraged to consult with a qualified tax professional before making any decisions based on the content of this article. No client–advisor relationship is created by reading or relying on this material.