2024 Alberta CPA Roundtable

Q.1 Service standards – Service Standards 2023-2024 - Canada.ca

The CRA publishes service standards for various types of returns on its website.[1] The website also provides a helpful tool to check current CRA processing times for various returns or enquiries. Some members have expressed a desire for greater disclosure of service standards and greater transparency as to whether those service standards are being met.

The website does not provide the service standard or standard processing time for the following:

Q.1(a)

Missing service standard or standard process times

• Assessing T4 returns, T5 returns
• Assessing other information returns (other than T4/T5)
• Assessing Underused Housing Tax (UHT) returns
• Processing amendments to T4 returns, T5 returns and other information return
• Assigning an objection to an appeals officer
• Processing non-resident clearance certificates (T2062/T2062A)
• Time to reach an agent when taxpayers phone the general enquiries telephone

Response

Service standards for the past 8 fiscal years can be found on the main web page: Service Standards in the CRA.

Assessing T4 returns, T5 returns

The CRA is not contemplating the development of a published service at this time. More than 99.5% of all information returns (slips) are filed electronically which allows most of them to be processed automatically without CRA intervention. However, certain processing delays are encountered when filers submit incorrect or incomplete information as the filers are required to submit corrected information returns to continue processing. Additionally, starting in the 2025 processing year, the CRA will be introducing upfront validations that will prevent filers from submitting certain erroneous or incomplete information returns.

Assessing other information returns (other than T4/T5)

The CRA is not contemplating developing new service standard due to the small numbers of returns in some other programs. These include Fuel Charge (CT), Luxury tax (LT), Excise Duty (RD), Excise tax and special Levies (RE), Air travelers security charge (RG), Insurance premium tax (RN), and Information returns (RZ) where we have approximately 100k registrants across all 7 programs.

Assessing Underused Housing Tax (UHT) returns

The UHT is a new program. When taxpayers fle a UHT return, it is either a NIL return or a payment, they are not expecting a refund, nor does it have an impact upon any other programs, such as, CCTB, so taxpayers would not need a reassurance nor would they be following up to see if the return is processed. As this is a new program and there were significant changes to the program for 2023, volumes of returns, kick out rates and complexity is difficult to determine. As such it would not make any sense to begin thinking of a service standard until we have a couple of programs with the new rules.

Processing amendments to T4 returns, T5 returns and other information return

For partnership information returns, our overall volumes are low, and, with amendments only being a portion of the overall volume, which would be even lower, so we are not contemplating an External Service Standard (ESS).

Assigning an objection to an appeals officer

The Appeals Branch objections dispute resolution has two timeliness service standards pertaining to the resolution of the objections in categories named low-complexity and medium-complexity, and results are disclosed in transparency. Processing times are also published every month to provide real time status update on current resolution of objections.

Additionally, the Progress Tracker which is available in My Account and My Business Account, provides taxpayers with the date that the objection was assigned to an appeals officer for the low & medium-complexity, ITA & GST categories. Given that objections have a wide range of complexities and subject matters, under multiple acts of legislation, objections are assigned to appeals officers in different time spans.

Therefore, we do not recommend the introduction of the proposed service standard.

Processing non-resident clearance certificates (T2062/T2062A)

The CRA currently do not have an outward facing standard processing time for T2062 files, and, at this time, we do not wish to add a standard processing time for these specific files. Please see the response to Question 13 that has been provided regarding delays on T2062 files.

""Time to reach an agent when taxpayers phone the general enquiries telephone number

There are no service standards for general enquiries because they are now split:

• Individual, benefits, and business
• Charities
• GST/HST rulings and interpretations
• Debt management

These service standards are outlined in the Service Standards 2023-2024 webpage, under Enquiries and account update.

Q.1(b)

Could the CRA provide the current service standard for these items? Would the CRA consider having a single webpage where they publish all the current service standards?

Response

Service standards for the past 8 fiscal years can be found on the main web page: Service Standards in the CRA.

Q.1(c)

Could the CRA also publish actual processing times alongside the service standards on its website, much like is already done for notices of objection?

Response

Processing times can be found at Check CRA processing times, which is linked in the service standard webpage for each fiscal year.

Q.2 - CRA Review Programs

The CRA compares information provided to the CRA by third parties with information reported on personal income tax returns.

Q.2(a)

Members have indicated that clients are receiving letters from the CRA asking for T4/T5/T2202 slips when this information is readily available on My Account. Why does the CRA request copies of information slips that it already has?

Response

There may be situations where a taxpayer has received an additional, amended or deleted information slip that is not updated in the CRA database. The CRA would request all copies of the appropriate information slips in order to reconcile the amounts used to file the T1 return.

There may be occasions where taxpayers are requesting changes after the CRA has completed their initial review and issued a notice of reassessment. The taxpayer may receive a standard electronically created letter that requests the information slips to support the request for a change to their return.

Q.2(b)

Members have indicated that clients have received reassessment notices because of slip matching without the CRA having frst contacted the taxpayer or a representative.

Under what circumstances does the CRA automatically reassess taxpayers when information supplied by third parties is inconsistent with information reported on personal income tax returns? Do the agents in the matching program have the ability to see whether amended slips have been fled, but are not yet processed?

Response

The T1 return may be reassessed when there is a clear indication that the information slip issued by third parties have not been reported by an individual on their T1 return. Amended information slips are verified by another department within the CRA. As such, there may be timing issues for agents within the T1 Matching Program to review whether amendments have been fled. If an information slip is provided that does not agree with the information currently available within CRA records, the slip is forwarded to the department responsible for verifying the accuracy of the information provided on the slips prior to any changes made to the T1 return.

Q.2(c)

Unlike with audits and appeals, CRA does not issue proposal letters for many verification activities (including pre and post assessment reviews and the matching program). Assessments or reassessments are typically issued when the CRA is not satisfied with the support initially submitted by the taxpayer or representative. Would the CRA consider adding the ability for taxpayers to make further submissions prior to issuing assessments or reassessments, similar to proposal letters?

Response

Canada’s system of taxation is based on self-assessment, where taxpayers volunteer the facts about their income, determine credits and calculate taxes payable. During the initial assessment, most income tax returns are processed with a minimum of verification so that a Notice of Assessment can be issued quickly. The returns, however, may be subject to further verification at a later time. This includes a computer-matching program in which income amounts reported by individuals are verified 4against information slips provided by issuers such as employers or financial institutions. The majority of returns which have unreported income are reassessed to agree with the information slips that have been provided to CRA. When it is determined that additional information is required, the CRA will initiate contact which allows for the submission of additional supporting documentation.

If a claim was changed after being reviewed by one of our programs and additional information or documents related to the claim are available, we will accept all new submissions and review the claim again for a possible adjustment. CRA statistics show that only a small percentage of the reassessments completed in our programs are reversed.

Due to the high volumes in our programs and the time required to issue proposal letters, there are no plans for the pre-assessment and post-assessment review programs to issue proposal letters or contact taxpayers and/or their authorized representatives prior to issuing a notice of assessment or reassessment.

Q.2(d)

Members have indicated that individual taxpayers who work in Quebec but are resident in Ontario are being sent letters informing them that the tax deducted is not matching their records. CRA’s guide states to claim Quebec tax on line 43700 of the return.

Does the CRA have access to slip data from Revenue Quebec to verify that taxes have been withheld by Quebec employers? If so, does the CRA use this data before requesting information from taxpayers?

Response

The CRA is provided with data from Revenue Quebec; however, the CRA does not have access to Revenue Quebec’s income slips. If any changes are made to the Relevé slips after the exchange of data, the T1 Matching agents would not have the revised slip details. Therefore, if the information provided by Revenue Quebec does not agree with the information fled by the taxpayer on line 43700 of their T1 return, the T1 Matching agents will contact the taxpayer to request copies of the Relevé slips used in the fling of their return.

Q.3 - Notices of objection and trust accounts

Where a taxpayer has fled an objection, income tax collection is generally suspended during the objection period unless the taxpayer is a large corporation or the objection involves certain trust accounts (e.g., source deductions and GST/HST).

Is there a process to request a stay on collection while a notice of objection is still being decided by Appeals especially where collection action or provision of security would create undue hardship for the taxpayer?

Response

Statutory Authority

As regards the collection of trust funds such as payroll source deductions and GST/ HST amounts owing, the only statutory authority that exists which provides for the postponement of collection action on amounts owing on an appealed assessment fall under subsections 314(2) and 315(3) of the Excise Tax Act (the ETA). These provisions are specific to GST/HST amounts:

• Subsection 314(2) of the ETA allows for the Minister to postpone collection action on amounts owing where the taxpayer provides security “…in an amount and a form satisfactory to the Minister…” in lieu of payment, where the taxpayer has objected to or appealed the amounts assessed
• Subsection 315(3) of the ETA allows for the Minister to postpone collection of GST/ HST amounts owing without accepting security, where the taxpayer has objected to or appealed the amounts assessed. Any postponement under this subsection requires approval of the appropriate delegated authority

The Income Tax Act (ITA), Employment Insurance Act (EIA), and Canada Pension Plan (CPP) which govern the withholding, remittance, and collection of payroll/source deduction amounts, contain no statutory analogue to the ETA provisions which would allow for the postponement of collection of amounts owing which are under appeal or objection.

Administrative Remedies for Payroll and Source Deduction Amounts Subject to the ITA, EIA, and CPP

If a taxpayer finds themselves in a situation where they are having difficulty meeting their statutory obligation to remit source deduction/payroll amounts, they are advised to immediately contact their assigned collections officer. The collections officer will request the necessary information from the taxpayer in order to review all income, expenses, assets, and liabilities and determine the taxpayer’s ability to pay. The collections officer will then work with the taxpayer to formulate a suitable payment arrangement which will allow the taxpayer to address their arrears balance and keep fling and remittances current, while allowing the taxpayer to meet its monthly operational obligations like current wages, mortgage or loan repayments, and payments to suppliers in the case of corporations, or the basic necessities of life such as food, lodging and transportation in the case of individuals. Where the taxpayer has made such arrangements, CRA collections does have the administrative authority to withdraw any collection actions such as garnishment, so long as the payment arrangement remains in good standing.

Postponement Under the ETA

Specific to the postponement of GST/HST amounts owing which have been objected to, where the taxpayer is unable to provide security in a form and amount satisfactory to the Minister, postponement will only be considered where:

• the registrant remains current with tax compliance requirements for all associated accounts
• the GST/HST amounts in dispute have not already been collected by the registrant
• at all times during the objection and/or appeal, the business remains in good financial standing
• the registrant provides relevant information after an assessment is raised that may result in the assessment being overturned
• the registrant’s objection and/or appeal identifies reasonable differences in the interpretation of the legislation
• the registrant has Canadian-based assets

The decision to postpone collection action without the acceptance of security is a local business decision made on a case-by-case basis, based on the facts of each specific account.

Should a taxpayer’s request for postponement be denied by the CRA, the taxpayer may seek judicial review of the Minister’s decision in the Federal Court of Canada. The Court will consider all relevant facts, and may uphold the Minister’s decision, send the decision back to the Minister to be reconsidered, vary the decision, or order a stay of collection action until the judicial review action is disposed of.

Q.4 - Complying with Proposed Legislation

Tax changes are announced typically through annual federal budgets, or economic statements. Sometimes, but not always, these tax changes are accompanied by proposed legislation contained in a Notice of Ways and Means Motion (NWMM). Many tax changes apply retroactively to the date of announcement or to some specifed future date (e.g., June 25, 2024 for the capital gains inclusion rate). Taxpayers often are required to fle tax returns before proposed legislative changes have received Royal Assent.

How does the CRA assess taxpayers when changes have been announced but implementing legislation has not received Royal Assent? Does the assessing practice depend on the stage of proposed legislation in the House?

Response

In a self-assessing tax system, taxpayers decide whether to fle based on proposed legislation. The Canada Revenue Agency (CRA) cannot enforce compliance with proposed legislation until it has received Royal Assent. If the proposed legislation eventually becomes law, especially if it has retroactive application, the CRA may later review tax returns and take reassessment action if a taxpayer did not originally fle in accordance with the new legislation. The CRA’s assessing practice does not strictly depend on the stage of proposed legislation in the House, but rather on whether the legislation has been enacted into law through Royal Assent.

Q.5 - Interest on T1 Notices of Assessment

Notices of Assessment for T1s tend to be issued quickly, so the assessments show arrears interest charges based on a future date. For example, a T1 might be e-fled on April 25 and show a balance owing of $10,000 that must be paid on or before April 30. The Notice of Assessment issued to the taxpayer would be dated in the future (e.g., May 8, 2024) and include interest accrued to that date assuming no payments were remitted in the interim. Taxpayers have been confused, wondering why payments made between April 25 and May 8 have not been reflected on their Notice of Assessment and why interest is being charged when all outstanding amounts have been paid on or before the balance due date of April 30. This was discussed in Question 6 of the 2022 CPA / Provincial Accounting Bodies Q&A wherein the CRA noted that the “Explanation of changes and other important information” section of the NOA indicates that recent payments may not appear on the notice and that additional interest charges can be avoided by paying the full amount by a certain date. Members report that clients are still frequently confused by the interest charges assessed. Would the CRA consider reorganizing the Notice of Assessment to highlight that the NOA does not include payments made after April 25 and that the interest applies only if payment is not made by April 30? For example, place this notice next to the interest and balance payable. Ideally this notice would appear next to the interest and balance payable not as a paragraph on a later page of the assessment.

Response

The CRA currently includes a verse on the notice of assessment to explain that payments may not be included on the notice. This verse is not date specific:

We assessed your return, and you have a balance due. If you paid this balance and your payment is not appearing on this notice, please note it may take up to 10 business days for your payment to be reflected in our system. You can view your account balance and statement of account online using My Account.

Q.6 - Applying benefit payments to T1 balances not yet due

Members have reported instances where the CRA has applied Canada Carbon Rebates (CCR) and/or GST credits against personal income tax balances not yet due. For example, a taxpayer might fle a personal income tax return early in April and have until April 30 to pay the outstanding balance. Members have described instances where CCR payments or GST credits have been applied against this balance prior to the due date.

Q.6(a)

What are CRA’s policies where benefit payments like the Canada Carbon Rebate or GST credits are due, and the taxpayer has an assessed T1 balance for which the balance due date has not passed, or which was assessed so recently that payments may have been remitted but not applied?

In the 2023 CPA / Provincial Accounting Bodies Q&A, CRA indicated that application of benefits in such circumstances was not standard practice and that improvements had been made to administration of the Climate Action Incentive payment (since renamed the Canada Carbon Rebate).

However, many members note that this issue has continued in respect of benefit payments due in early 2024. Can CRA provide an update including details of the circumstances in which payments get applied to assessed balances not yet due?

Response

The improvements mentioned last year were introduced and applied to the quarterly entitlements issued on April 15, 2024. We did since discover a situation that was not addressed. Any payments issued on a date after April 15 (i.e., in a supplementary issuance) continued to be applied to current year T1 debt. This will be resolved, and the change will be reflected beginning with the April 2025 issuance.

Q.6(b)

In the 2023 CPA / Provincial Accounting Bodies Q&A, CRA indicated that benefit payments applied in this manner would be refunded to taxpayers who remitted the full balance owing leaving a credit balance approximately equal to the benefit payment (adjusted for interest).

For example, if the taxpayer owes $1,000 and was entitled to a CCR of $140, CRA indicated it would refund the $140 when it processes the $1,000 payment. It appears that CRA is now maintaining these payments as a credit balance on assessed years where no balance is payable rather than issuing the refunds described in 2023. Payments of minor interest amounts (as described at Question #5) also appear to be maintained in this manner.

What steps are being taken to automate these refunds as indicated in the 2023 response? Could credit amounts for an assessed year be posted to “available payments” with an option for taxpayers to request that they be refunded?

Response

As mentioned last year, the CRA does not hold any overpayments; any excess amounts are returned to the recipient. If there are delays in receiving the overpayment, we do encourage taxpayers to contact us.

Q.7 - Payments

Q.7(a)

Would the CRA consider implementing, through My Account and Represent a Client, the ability to move personal income tax payments from one taxation year to another similar to functionality currently available on My Business Account where the payment has been assigned to an incorrect taxation or instalment year?

Response

Taxpayer Self-service – Real-time Payment Transfers for Individuals functionality was implemented in February 2023 allowing taxpayers and their authorized representatives to transfer unallocated payments to their arrears or instalment segments. This functionality was expanded in May 2024 to enable taxpayers and their authorized representatives to transfer unallocated payments to their individual COVID-19 benefit debt.

Taxpayer Self-service – Make an Online Request for Individuals functionality will be implemented in the near future. This new service will enable taxpayers and their authorized representatives to submit online requests:

• to transfer unallocated payments within their own account or to another account or revenue line
• to refund payments from the unallocated payments segment
• to transfer an instalment payment within their own account or to another account or revenue line
• to refund payments from the instalment segment of their account
• for an Electronic Statement of Account in the event the statement of account function in My Account is unavailable to them
• for a payment trace

Q.7(b)

Would the CRA consider expanding the ability for business taxpayers to move balances among program accounts (e.g., RC to RP) or within program accounts (e.g., RC0001 to RC0002)? At present, the Transfer Payments feature seems limited to selecting one or more specific payments received from the taxpayer (rather than, say a credit balance remaining after balances relating to that program account have been covered). Transfers also appear limited to any balance due on the program account to which the payment is to be transferred preventing any excess from being applied as a credit balance for a balance anticipated to arise, or be assessed, in the future.

Response

Currently, the Transfer payment service allows business owners or their representatives the ability to transfer a payment or credit from one interim period to another interim period or assessed period with a balance owing. The transfer can be completed within the same BN15 or can be completed with another program line on the BN9 account. If the taxpayer or representative wants to transfer a credit within the same BN15 or to another program account within the BN9, outside the parameters listed above, they may submit the request through the “Enquiries service” application, “Transfer of a credit” form within the My Business Account (MyBA) portal.

The CRA is continuously working to enhance our system and are currently working on updating the system to include the following improvements:

• The ability for the client to make more than one request within one submission on the “Transfer of a credit” and “Request a payment search” forms
• The ability for the client to attach documents to the “Request a payment search” and “Request a refund” forms, with the goal of reducing the completion time on these requests for the client 10• Update the banner information in MyBA to help clients utilize more self-service options and clarify which types of requests the client can action on their own and which actions will require CRA intervention

Q.8 - Audit procedures

Members have complained that auditors at the CRA are asking for excessive information at the start of an audit. For example, auditors performing an audit of a private company are asking for personal bank statements for all the shareholders for the relevant period.

Auditors sometimes insist on sending IT personnel to taxpayer’s premises to download accounting backup files. Members have also complained that audits take too long, sometimes taking years to complete.

Q.8(a)

If the taxpayer, or representative, believes that the personal financial information requested is excessive, is there a process that can be followed to reduce the information demanded? Can the CRA advise why this information is generally being requested (in response to this question)?

Response

The CRA encourage taxpayers to openly discuss their concerns during the audit. The auditor is in the best position to explain why items are needed. Taxpayers may contact the auditor’s team leader if they are not satisfied with the auditor’s explanations. Openness, transparency, and cooperation with CRA officials is encouraged as it will lead to a more efficient audit, thus lessening the compliance burden.

The scope of audits is based on issues identified by the CRA. Where an indirect verification of income is conducted, (please refer to section 13.3 of the Income Tax Audit Manual (ITAM)), the auditor must obtain the personal banking records of the shareholders of the closely held corporation, as well as their spouses’ and common-law partners’, and all contributing members of each household unit. A closely held corporation is an administrative term for the ITAM only (please refer to section 10.2.1), and it includes a corporation whose shareholders are one or more individuals related within the meaning of section 251 of the Income Tax Act (the Act).

Other circumstances where the auditor may require personal banking records include when they are unable to rely on accounting records due to weak internal controls or the absence of segregation of duties, when inconsistencies are noted between the apparent lifestyle of the taxpayer and the reported income, or in order to verify transactions between the corporation and the shareholder. Auditors determine the appropriate audit procedures and testing to address risks identified throughout the planning and conducting of an audit.

Subsection 231.1(1) of the Act provides the legal authority for authorized CRA employees to conduct audits. This includes the authority to request personal bank statements of a shareholder, their spouse or common law partner, and other contributing individuals 11living in the same household, when conducting audits. Please refer to technical interpretation 2015-0572151C6 [2015 STEP q.15] and to the policy document AD-19-02R, Obtaining Information for Audit Purposes, for more information.

Q.8(b)

Is it always necessary to provide accounting backup files to CRA auditors? Do CRA auditors have the discretion to accept searchable Excel files or PDF files containing entire general ledgers?

Response

Subsection 230(4.1) of the Act requires that where a person keeps records electronically, the records must be kept in an electronically readable format for the retention period referred to in subsection 230(4) of the Act. The Information Circular IC05-1R1, Electronic Record Keeping, defines electronically readable format at paragraph 7 as information supported by a system capable of producing an accessible and useable copy. A readable copy will permit auditors to process and analyse the electronic records on CRA equipment and with CRA software.

Subsection 231.1(1) of the Act provides the legal authority for authorized CRA employees to inspect, audit or examine any document, including books and records. The Federal Court of Appeal’s decision in eBay addressed the definition of a “record” in paragraph 39: “(…) for the purposes of sections 231.1 to 231.7, section 231 defines “document” as including a “record”. “Record”, in turn, is defined by subsection 248(1) to include “any other thing containing information, whether in writing or in any other form”, a definition broad enough to include information in electronic form stored on a server.” The legal authority to make, or cause to be made, copies of documents audited is provided in section 231.5 of the Act.

In certain cases, a computer audit specialist will assist the auditor with the retrieval and processing of accounting data. This will be necessary if data is stored in proprietary accounting systems, or if the amount of data is large. The computer audit specialist may need to obtain the back up taxpayer’s directly on the taxpayer’s premises.

Q.8(c)

Can the taxpayer or representative request details of the audit plan? This might include indicating why certain information is requested (see part (a), above).

Response

Auditors must explain to the taxpayer why certain information is requested during the audit. Open, transparent, and professional communication with the taxpayer should provide them with answers they need to understand why certain information is requested. The taxpayer may contact the auditor’s team leader if they are not satisfied with the answer given by the auditor. As outlined in the Informal Disclosure Guidelines, information on audit procedures, including the detailed audit plan, must not be disclosed.

Q.8(d)

In respect of the timeframe for the audit:

Response

i. Can a taxpayer request or otherwise obtain a proposed timetable for the audit to be completed?

Audits help maintain confidence in the fairness and integrity of Canada’s tax system and CRA is committed to conduct audits in a timely matter. The time required to complete an audit will vary based on the scope and complexity of the audit. The auditor should discuss the estimated time to complete the audit during the initial contact with the taxpayer. The time budget may require adjusting as additional information becomes available and as the audit progresses. The auditor should inform the taxpayer of material changes in the estimated time needed to complete the audit.

ii. What communication should taxpayers expect from the CRA if it appears that an audit will not be completed in the expected time frame?

Response

Section 9.6.4 of the ITAM requires auditors to keep the team leader and the taxpayer informed of material changes in the estimated time needed to complete the audit. The auditor is responsible for keeping the taxpayer informed on the status of the audit. The taxpayer may contact the auditor’s team leader if they are not satisfied with the information provided by the auditor.

Q.9 - CRA Training

Q.9(a)

What training is provided to CRA auditors or reviewers regarding the standards of evidence? The standard in court is “balance of probabilities.” In some cases, CRA appears to be inappropriately applying a stricter standard.

Response

Explicit discussions on standards of evidence are not included in many current CRA training materials. Instead, the focus is on ensuring sufficient evidence to support audit findings.

Auditors are trained in methods of gathering initial evidence and are provided with lists of source documents that can serve as evidence or supporting documents in various audit scenarios. They are trained on the importance of collecting sufficient evidence to meet the required burden of proof for specific audit issues. Training covers the standards for documentary evidence, including exercises to test whether the evidence supports the amounts that were reported and claimed. Training emphasizes determining the reasonableness of amounts reported and claimed. Auditors learn to use these standards when evaluating the sufficiency of evidence collected. Training courses also provide industry-specific examples and exercises to help auditors understand industry-specific practices and evaluate evidence within that context. Auditors are instructed to conduct examinations using all available indirect evidence, with guidance on how to refer to industry statistics and other resources for accuracy.

CRA’s training courses include court cases as examples. Court cases are frequently cited in training to illustrate the concept of appropriate documentary evidence and to assess whether audit evidence is sufficient.

The Income Tax Audit Manual (ITAM) serves as the primary resource for instructing auditors on evaluating audit-based evidence. While not all training materials make explicit reference to the ITAM, auditors are encouraged to consult this reference as a vital tool in their work.

CRA auditor’s work is guided by section 10.5.1 of the ITAM, which provides guidelines on the types, sources, quality, and quantity of audit evidence required. The weighing of audit evidence is addressed at section 10.5.2 and requires the auditor to consider the oral and documentary audit evidence produced, the credibility of each piece of audit evidence, the overall amount of audit evidence, and circumstances of the particular case. The auditor uses the following principles as a guide to weigh audit evidence in a fair and impartial manner:

• objective state of mind
• balance of probabilities
• relevance of audit evidence
• reliability of audit evidence
• drawing an inference
• sufficiency of relevant audit evidence

Section 10.5.3 of the ITAM also states the more reliable a piece of audit evidence, the more weight it deserves. The particular characteristics of the audit evidence that determine its reliability can be broadly categorized as:

• Type – documentary audit evidence is often more reliable than verbal testimony
• Credibility – if a witness has direct knowledge of a fact, the testimony is more credible
• Timeliness – timely information relating to the period in dispute is better than that relating to another period
• Whether positive or negative – positive audit evidence, from which only one explanation or conclusion can be seen as reasonable, is more reliable than negative audit evidence; negative audit evidence usually leads to several possible explanations or conclusions and does not prove a fact, but rather disproves the fact in question

Q.9(b)

What steps are taken by CRA auditors to become familiar with the taxpayer’s industry prior to audit?

Response

CRA auditors become familiar with the taxpayer’s industry prior to the audit in various ways and have several internal and external resources and reference materials available to them. These resources are regularly reviewed, redesigned and/or updated as required, when legislative changes occur. These include an array of training and learning products, electronic libraries and knowledge sharing portals. Auditors can find overviews of different sectors as well as information on accounting practices, performance indicators, books and records, etc. They may access other sources of information such as industry statistics and benchmarks, other regulatory bodies, and the internet. Auditors may also request assistance from internal industry specialists who are located in designated Tax Services Offices across Canada and who can provide information, advice, and assistance on the operations and taxation of specific industry sectors.

Q.10 - Representing clients

A frequent complaint of members is that it is difficult to become authorized as a client representative.

To obtain authorization for a business client, an owner, director or officer must first register for My Business Account. Members have indicated that clients have had difficulty registering with My Business Account because they are not being recognized as a director or officer of the taxpayer.

It seems that that the CRA is not receiving timely information on the identity of the directors of corporations. Members have been asked to provide a copy of the directors’ register, the owners’ social insurance numbers and obtain signatures so that the CRA may update its system.

Does the CRA have access to corporate registry for all or any jurisdictions in Canada, such that they could confirm the identities of Directors? If not, can the CRA list the jurisdictions which they do not have access and would the CRA consider partnering with the appropriate bodies in these jurisdictions to facilitate information sharing?

Response

CRA has partnerships that include system-to-system business information sharing with Corporations Canada, and most provincial and territories’ registries (except for Quebec, Newfoundland and the Territories). The CRA is always seeking to increase our partnerships with corporate registries. For jurisdictions where there is no system-to-system information exchange, applicable areas within CRA have access to the various registries to manually complete the owner update to the CRA BN system; however, there may be instances where owners must provide appropriate documentation to the CRA to add or update owner information. To help prevent any delays, it is important for the business to ensure the corporate registry is up to date.

Q.11 - Communication of Information by CRA

What is the best way for members to keep up to date with changes to CRA policies and procedures? While web pages exist for numerous specific programs, processes, policies and procedures, members have no ability to see all recent updates to the CRA webpage. Would the CRA consider adding a page that identifies all updates within some specified period (e.g., 90 days) with links to the new or updated pages?

Response

The best way to keep up to date with changes to CRA policies and procedures is to bookmark the tax tips page on Canada.ca and to check that regularly, as well as to sign up for the different electronic mailing lists that the CRA has. One example of these mailing lists is the Business Tax Information newsletter, which goes out every second month, and notifies you as new or updated information for businesses is posted to our web site, such as news, tips, local events, and more.

You can also sign up to the CRA’s RSS feeds. When you subscribe to the CRA’s RSS feeds using a news aggregator or feed reader, you will be notified automatically of any new content on the specific topics, eliminating the need to check for updates. The RSS feed will provide a link to the new content and information about when it was posted.

You can also use the Library and Archives Canada’s Government of Canada Web Archive to see changes to particular web pages within a date timespan. You can paste in the URL and view a snapshot of any webpage on Canada.ca from a particular date in the past to see what has changed between that date and the live version.

We realize how important it is for CPA Canada members to be aware of changes right from the start. The CRA continues to explore further ways of keeping stakeholders up to date on changes.

Q.12 - Electronic filing of tax returns and special elections

Q.12(a) - Charity returns

Is there a plan in place to allow for electronic filing of the T3010 Registered Charity Information Return using existing tax preparation software packages, rather than through the CRA Portals?

Response

The Charities Directorate is actively exploring fling options to further digitize the process of submitting a T3010, Registered Charity Information Return, to the Canada Revenue Agency (CRA).

The CRA portal remains the access point to ensure proper authentication and secure transmission of the information.

Q.12(b) - Tax forms not transmitted by software packages

The CRA requires taxpayers to fle certain forms with their tax returns. We understand that some software vendors have not integrated certain less common forms into their software packages (e.g., Schedule 150). As a result, these less common forms are not being transmitted to the CRA when the related returns are e-filed.

Response

i. Does the CRA plan to require software vendors to include and transmit all forms that are required to be submitted as part of the return.

Software developers are required to support five mandatory schedules associated with the fling of the T2 Corporation Income Tax Return. While we encourage software developers to support the remaining forms and schedules, tax software is generally designed to target a particular market share and developers provide functionality based on their client needs.

ii. How should these less common forms be fled with the CRA?

Taxpayers have the option to select a software package that supports the schedules and forms needed to meet their fling requirements. If the software package does not support a particular form or schedule, taxpayers have the option to download the forms from Canada.ca and submit them by mail or e-fax. Taxpayers also have the option to use CRA’s existing Attach-a-doc or the Submit documents services for certain forms (Submit documents online - Canada.ca).

Q.12(c) - Form T2183

Form T2183 is used to authorize the electronic filing of certain special elections.

Response

i. Joint elections

Form T2183 can be used to authorize the fling of joint elections (T2057, T2058 and T2059). We understand that e-filers require the fully executed election form prior to e-file. Therefore, all parties will have reviewed and signed the election. Is it therefore acceptable for either party (or their authorized person) to sign the T2183, or does the CRA require that this be signed by a specific party (that is only the transferor or only the transferee may sign the T2183)?

It is acceptable for either the taxpayer or their authorized representative to sign the T2183. Part 4, “Electronic filer identification” must be completed by either you (the taxpayer) or the electronic filer.

ii. Capital dividend elections

Both T2054 and T2 S89 are listed on Form T2183. Does a taxpayer wishing to e-file a capital dividend election need to prepare Form T2183 for both Form T2054 and T2 S89 or is a separate T2183 expected for T2 S89 only when it is fled independently of a T2054 (e.g., balance confirmation request)?

A separate T2183 is only required when it is fled independently of a T2054. If Form T2054 and T2 S89 are fled together, one T2183 is sufficient. If a T2 S89 is fled independently of a T2054, then a T2183 would be required.

iii. Does the CRA have plans to allow taxpayers to electronically fle ancillary documents (e.g., directors resolutions with T2054s, schedules with T2057s)?

Electronic filing for ancillary documents is available now through Attach-a-doc or through Submit Docs (Submit documents online - Canada.ca).

Q.13 - Form T2062/T2062A Clearance Certificates

Members have told us that processing times to obtain a non-resident clearance certificate are very long.

Q.13(a)

Could the CRA tell our members of any planned improvements to the processing time to obtain a non-resident clearance certificate (T2062/T2062A)?

Response

The introduction of the Underused Housing Tax (UHT) in 2022 and amendments made to S. 116 of the ITA, requires the CRA to verify that an applicant is in compliance with all applicable obligations under the Underused Housing Tax Act before issuing a certificate of compliance. With this new requirement, processing times for certain applicants have increased.

The CRA is aware of the delays and is providing specialized training to officers on the new UHTA legislation. The CRA is also actively taking steps to improve the situation for all applicants by exploring opportunities to streamline processes and shorten processing time for issuing certificates of compliance. We are also working towards centralizing and nationalizing work to ensure files are processed consistently and efficiently across Canada.

To reduce delays in processing files, it is important that taxpayers submit a file that is complete as outlined in the guidance provided on our website at https://www.canada.ca/ en/revenue-agency/services/tax/international-non-residents/information-been-moved/ disposing-acquiring-certain-canadian-property.html.

Q.13(b)

Would the CRA consider accepting a partial remittance during their review process (for example to ensure that sufficient taxes are paid to cover the balance on the tax return)?

Response

The CRA will accept a partial remittance, but no certificate of compliance will be issued until the full amount required by section 116 is submitted in respect of the proposed or completed disposition. It should be noted that a partial remittance would not relieve 18the purchaser of their obligation under the Income Tax Act. The amount to be withheld by the purchaser is prescribed in subsections 116(5) and 116(5.3) of the Income Tax Act. Final settlement of the tax liability is made when the Canadian income tax return is fled.

Q.14 - CRA telephone line

A frequent complaint from members is that they have difficulty reaching a CRA agent by phone using general or business enquiries telephone numbers for matters that cannot be dealt with online. Members have also mentioned dropped calls and difficulties using the callback feature. One member had not requested a callback yet received an error message stating the callback feature cannot be used because the maximum number of call backs for the day had been reached.

Q.14(a)

What improvements is the CRA considering to speed up the time to reach an agent and reduce the frequency of dropped calls?

Response

The CRA launched our “National hours of service” in 2024, expanding the number of hours that Canadians can access contact centre agents - for regular and complex calls.

Q.14(b)

The CRA cautions that agents might be using cell phones that are unsecure. What improvements are being made to improve cell phone security?

Response

In consultation with Legal Services and the CRA Security Branch, it was determined that there is minimal security risk when one or both parties are using a cell phone for communication. To align with the standards of other Federal Government contact centres, the cell phone disclaimer was removed from CRA’s Interactive Voice Response (IVR) in August of 2023.

Q.14(c)

Would the CRA consider offering a separate telephone enquiries line for representatives like accountants?

Response

The CRA remains committed to offering standardized services to all Canadians. The creation of a separate telephone enquiries line for representatives is not being considered at this time.

Q.14(d)

One frustration for accountants is the length of time it takes to reach the right agent by telephone. Phone calls are often escalated to more experienced agents which adds time and risk (e.g., that the call will be dropped).

Response

The CRA has published wait-times on Canada.ca to help callers make an informed decision on the best time to call. Prior to the launch of the T1 Filing season, the CRA provided CPA Canada with the CRA’s IVR pathways to help ensure they reach the most appropriate contact centre agent. The CRA also has a callback feature, which, when available, will hold a caller’s place in queue.

Q.14(e)

Would the CRA consider adding to My Account / My Business Account / Represent a Client the ability to request assistance with issues that cannot be done directly online? These questions would then be directed to appropriate agents at the CRA who would make contact with the representative.

Response

The CRA is actively considering new ways to expand how taxpayers interact with the CRA digitally.

Q.15 - Ability to print payment vouchers through My Account / My Business Account /Represent a Client

Could the CRA provide the ability for taxpayers or representatives to print a payment voucher through My Account, My Business Account or Represent a Client that taxpayers could take to the bank when making an electronic payment?

Response

No, the CRA cannot provide the ability to print a payment voucher through My Account, My Business Account or Represent a Client at this time. Both the bank processing centre and our automated equipment are dependent on the magnetic ink as well as the size and location of the fields on the voucher to correctly post the payments to the taxpayer accounts. You can, however, order most remittance vouchers or payment forms through My Account, My Business Account and Represent a Client. For more information, go to Remittance vouchers and payment forms - Payments to the CRA - Canada.ca.

Q.16 - Principal residence exemption

Budget 2022 introduced the Multigenerational Home Renovation Tax Credit (MHRTC) which is a refundable tax credit to assist with the cost of renovating an eligible dwelling to establish a “secondary unit” to enable a “qualifying individual” to live with a “qualifying relation.” A “secondary unit” is a “self-contained housing unit” that has a private entrance, kitchen, bathroom and sleeping area, meets local requirements to qualify as a secondary dwelling unit and prescribed conditions (if any).

On a subsequent sale of a home in which an individual has benefitted from the MHRTC, the individual would need to consider the availability of the principal residence exemption (PRE). The PRE is available for a property that is a “housing unit” and meets other requirements.

Response

a. Could the CRA comment on whether a home with a “secondary unit” (as defined for the purposes of the MHRTC) could ever be considered a single “housing unit” for the PRE?

b. At what point does a “secondary unit” become a separate “housing unit” for the PRE? Response a) and b):

The MHRTC, provided for in section 122.92 of the Income Tax Act (“the Act”), is a 15% refundable tax credit which allows an eligible individual to claim up to $50,000 in qualifying expenditures that are paid and are directly attributable to a qualifying 20renovation that is made to an eligible dwelling of a qualifying individual. A qualifying renovation means a renovation or alteration of, or addition to, an eligible dwelling of a qualifying individual, that is of an enduring nature and integral to the eligible dwelling. The renovation is undertaken to allow the qualifying individual and a qualifying relation of that individual to reside together in the dwelling, by establishing a secondary unit (that is, a self-contained unit with a private entrance, kitchen, bathroom facilities and sleeping area) within the dwelling for occupancy by the qualifying individual or the qualifying relation.

The term “principal residence” is defined in section 54 of the Act and includes, among other things, a property that is a housing unit or a leasehold interest in a housing unit that the taxpayer owned, whether jointly with another person or otherwise, and that was ordinarily inhabited in the year by the taxpayer, the taxpayer’s spouse or common-law partner, former spouse or common-law partner, or child. A taxpayer can designate only one property as their principal residence for a given tax year. It follows that, where a property consists of more than one housing unit, only one may be eligible for designation as the taxpayer’s principal residence for any particular year.

Whether a property containing a secondary unit is considered one or two housing units for purposes of the principal residence definition in section 54 of the Act is a question of fact that can only be determined following a review of all of the specific facts and circumstances of a taxpayer’s particular situation. Factors to be considered in the determination of whether a taxpayer has one or two housing units in a given situation include, but are not limited to, the extent of the integration of the two units, whether the units have separate legal titles, separate municipal addresses, separate entrance doors, and separate accounts for utilities and other public service providers, as well as the use of the units.

In general, if two units can be enjoyed and ordinarily inhabited separate from each other and without access to the other (that is, if each unit is self-contained with its own entrance, kitchen and bathroom), it is our view that they will generally be considered separate housing units. This may be the case notwithstanding the fact that the units are part of a single structure or are not on separate legal lots. An exception to this general view might arise in a situation where it can be demonstrated that the two units are sufficiently integrated (both structurally and based on use) and are being used for the exclusive use and enjoyment of the taxpayer and their family. In other words, the two units are being used together and are functioning as one single housing unit.

Accordingly, a taxpayer that constructs a secondary unit that meets the requirements of the MHRTC in section 122.92 of the Act would generally be considered to have two separate housing units. Nonetheless, where a taxpayer uses the secondary unit for personal purposes rather than for the purpose of gaining or producing income and they 21are able to demonstrate that the two units are sufficiently integrated and are being used together and are functioning as one, then it may be possible to conclude that the entire property is one housing unit that is eligible for the PRE.

Q.17 - Voluntary disclosure program and UHT

Will the CRA voluntary disclosure program be extended to the Underused Housing Tax and, if so, when?

Response

Under the Underused Housing Tax Act, the Voluntary Disclosures Program (VDP) is authorized to exercise the powers and perform the duties of the Minister of National Revenue to waive, cancel or reduce penalties and interest. Each VDP application is reviewed on a case-by-case basis and must meet the five criteria of the program to be valid and to qualify for relief. For additional information on the program and the eligibility conditions, consult https://canada.ca/taxes-voluntary-disclosures.

Q.18 - Consultation with Department of Finance on new rules

We recognize that CRA’s role is limited to the administration of the tax system. Does the Department of Finance consult with the Canada Revenue Agency on the potential challenges, and the resources required, to administer new tax policies?

Response

As Canada’s federal tax and benefits administrator, the CRA recognizes the importance of striking an appropriate balance between safeguarding Canada’s critical revenue bases and minimizing the compliance burden on taxpayers. To that end, the CRA maintains a strong and meaningful relationship with the Department of Finance which includes engaging in ongoing discussions about proposed legislative measures, where consideration is given to the administrative feasibility of new tax measures, any associated taxpayer burden, and the resources required to implement and administer new measures. These discussions ensure a consistent approach with respect to tax administration and promote outcomes that are consistent with the policy intent of the legislation.

Q.19 - My Account / My Business Account / Represent a Client

Q.19(a) - Filtering

Would the CRA consider adding a more robust ability for users to set filtering and sorting parameters for account transactions (e.g., multiple periods of GST/HST in one summarized document)?

Response

The CRA continues to make improvements to our secure portal services including changes to account transactions. Adding additional filtering options may be considered for future enhancements.

Q.19(b) - Time for “T” slips to appear in My Account / Represent a Client

Members have noted long delays for slips to appear on My Account / Represent a Client. Once “T” slips are fled by an issuer, how long should it take to appear in My Account / Represent a Client? Are there common areas in slips issued or amended that cause delays?

Response

Once processed, information returns are available in My Account or Represent a client within 24 to 48 hours. The majority of electronically fled information returns are processed within 1 to 3 days of receipt. Although every effort is made to process paper fled information returns as quickly as possible, it can take up to 90 days for those returns to be processed after receipt. It should be noted that more than 99.5% of all information returns (slips) processed by the CRA are filed electronically. Errors or discrepancies on the return, missing or invalid contact information, and the size of the return can affect the processing time. When errors or discrepancies are identified, the processing time will depend on the filer submitting the necessary corrections. To avoid any unnecessary delays, filers must ensure that the returns submitted contain the most up-to-date contact information and the correct account number. For electronically fled returns, filers must adhere strictly to the XML specifications published online: https://www.canada.ca/en/revenue-agency/services/e-services/fling-information-returns-electronically-t4-t5-other-types-returns-overview/xml-specs.html.

Q.19(c) - Uploading documents to Submit Documents

Is there a plan for increasing the types of correspondence that can be uploaded through Submit Documents? Would the CRA consider making Submit Documents an electronic mail room? Members are concerned that Canada Post loses documents.

Response

To meet the expectations of Canadians when it comes to digital services and submitting documents online, the CRA is continuously adding new types of correspondence to the Submit Documents service.

The CRA is not considering making Submit Documents into an electronic mailroom at this time.

Q.19(d) - Mail on My Account /My Business Account/Represent a Client

Is the CRA planning to ensure that all correspondence to taxpayers will appear in their Mail on the portal? Would the CRA consider adding a list of the types of correspondence that is, or is not, posted to online mail? Confusion in this regard deters some taxpayers, and some advisors, from making greater use of CRA’s online mail services.

Response

The CRA does not plan to have all types of CRA correspondence delivered electronically at this time. It is at the discretion of each program area to decide whether they send mail electronically. In addition, some correspondence is not be able to be delivered electronically due to legal requirements.

There is an overview of the types of online mail available to individuals, businesses, and representatives for My Account and My Business Account on Canada.ca. See links and screen shots below.

My Account:

Email notifications from the CRA – Individuals - Canada.ca

My Business Account:

Email notifications from the CRA – Businesses - Canada.ca

Q.19(e) - Functional currency statements

One member indicated that functional currency statements of account (e.g., USD) are not available online. It is necessary to fax a request to the CRA to receive a statement of account in functional currency. Is there a plan to allow taxpayers or representatives to obtain statements of account online denominated in a functional currency in the future?

Response

For accounts that report in functional currency there are restrictions to what is available online, this is due to the rates used during the conversion between currencies and the requirement to manually calculate conversion interest and/or instalment bases. Due to the complexity in processing accounts reporting in functional currency, there is no current plan for a change in the MyBA portal for this specific situation. However, functional currency accounts do have access to the Enquiries service application, “Request a customized statement form” where they may make a request for a statement which will be manually prepared and issued to the client.

Q.20 - Obtaining a business number

A member indicated to us that clients in rural communities have difficulty applying for a new business number where the postal code is attached to a PO Box and not to a physical address.

It is also possible that a taxpayer could apply for a business number using a postal code that is not yet recognized by the CRA (e.g., new subdivision).

What should taxpayers do in these situations to obtain a business number?

Response

The CRA requires a physical and mailing address upon Business Number registration. The physical address is the business or head office address. This address must be where the day-to-day activities take place. It must represent the physical location of the actual business. CRA does not accept rural route (RR) numbers or post office (PO) boxes as a business address. If a street address is not available, the legal description of the location of the business can be used. For example, Lot 1, Concession 2. For situations where a new postal code is not yet recognized as valid in the BN System upon registration of a business number, the information is sent to another CRA area that can validate the new postal code and add it to the CRA database.

Q.21 - Automated penalties where an extended due date applies

Recently, we have seen several instances of automated penalties where an extended due date applied due to a holiday (e.g. the 2024 deadline for trusts with a December 31, 2023 year-end, September 30 deadlines extended due to the National Day for Truth and Reconciliation; deadlines falling on Sunday June 30, 2024, extended to Tuesday, July 2).

Has the CRA taken steps to ensure automated penalty assessments reflect the extensions when due dates fall on weekends or holidays?

Response

The CRA ensures the determination of due dates recognizes weekends and holidays. For corporation income tax and underused housing tax returns due on a weekend or on a holiday, the deadline is automatically extended to the following business day. For example, a corporation with a tax year end of March 31 will have to file its corporation income tax return on September 30, the National Day for Truth and Reconciliation. For 2024, the deadline was extended to the following business day, which was Tuesday, October 1. If the return was fled by October 1, it was considered to have been fled on time.

The same rules apply for penalty assessments for Specialty Business Returns, T2, UHT, GST, and OL (Other Levies).

For T1 and T3 returns, processes are in place to ensure weekends and recognized holidays are taken into account in the calculation for penalties.

Q.22 - SR&ED

CRA moved to National Workload System a few years ago. The change was made various reasons including better matching of technical reviewers and audit staff to claims to improve the process of reviewing claims.

Q.22(a) - What measures is the CRA taking to address and reconcile regional inconsistencies in the administration of the SR&ED program?

Response

The CRA’s Business Tax Incentives Directorate, within the Compliance Programs Branch, has implemented several initiatives to monitor, identify, and address inconsistencies in the SR&ED Program. The foundational piece has been the establishment of national standardized processes, including training, to allow for consistent application of the legislation. These standardized processes have been developed with a lens to allow for the flexibility that is needed in unique claim submissions.

A robust Quality Assurance program, which includes regular monitoring of files at a national level, supports the national program delivery by verifying consistent application of procedures across all stages of file review and application of policies. It also addresses issues observed through information sessions with SR&ED field members. Finally, regular discussions are held to explore opportunities to enhance program consistency and implement best practices. This, in turn, supports the continual improvement of the SR&ED Program.

Q.22(b) - How does CRA ensure continuity for complex and large claims?

Response

Currently, large claims are not assigned through the National Workload System. They continue to be assigned to reviewers located in the same region as the claimant. This serves the objective of maintaining continuity on these files, as well as maximizing the knowledge and expertise needed for the review and processing of these claims. To maintain continuity when a change in reviewer is required, a transfer of knowledge takes place and the new reviewer is provided with historical information on the claimant.

Q.22(c) - What rights do claimants have if they prefer an on-site review?

Response

If a claimant believes that an on-site visit is needed for a review, they are invited to share their reasons with the CRA. The CRA will consider these factors when deciding whether or not to hold an on-site review. However, it is at the CRA’s discretion to conduct an on-site review or not. This discretion is based on a number of factors, including the availability of reviewers within reasonable proximity to the claimant’s location, to minimize associated travel costs. All requests for on-site visits are considered on a case-by-case basis.