Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Efile and Form T106
1. Will CRA consider expanding the EFILE process to include Form T106 in order to eliminate the separate paper filing requirement? If so, when might the system be updated to permit this?
2. Will the EFILE process be expanded to facilitate electronic filing of other forms, such as Forms T1134A, T1134B, and T5013? Is there a timetable for facilitating electronic filing of such forms and eliminating paper filing?
3. Will CRA update the filing instructions on its website to clarify and confirm that Form T106 must be filed on paper even where EFILE is employed?
Position: See Response.
2011 TEI-CRA Liaison Meeting
December 6, 2011
Question 2 - EFILE and Form T106
Taxpayers generally use certified software packages listed on the CRA website to prepare their corporate income tax returns. Such software generally permits data entry for Form T2 (Corporation Income Tax Return) as well as other schedules, annexes, and forms, including information and data in respect of Forms T106 (Information Return of Non-Arm's Length Transactions with Non-Residents). The EFILE section of the CRA website, however, does not alert taxpayers to the separate paper filing requirement for Forms T106. Indeed, the only website reference to separate paper filing requirements is the following statement:
Inform your client that elections, designations, agreements, waivers, and special elective returns must be submitted on paper by the appropriate due date, as established in the Income Tax Act.
Form T106, however, is not an "election, designation, agreement, waiver or other special elective return."
Some companies that employed the EFILE option for their T2 returns have been assessed late filing penalties and interest on the grounds that Form T106, which was included with the electronically filed return, must be filed in paper format even where the taxpayer uses the EFILE option. The affected taxpayers have filed requests for relief arguing the penalties and interest were unfairly assessed since (1) electronic returns prepared with certified software were accepted as filed and (2) there are no EFILE website instructions alerting taxpayers to file Form T106 separately on paper. Without regard to how CRA will resolve pending requests for relief, we invite a discussion of the following issues:
a) Will CRA consider expanding the EFILE process to include Form T106 in order to eliminate the separate paper filing requirement? If so, when might the system be updated to permit this?
CRA Response
The ITD participates in the International Tax Data Working Group, which reports to the Assistant Commissioner of the Strategies and Integration Branch of CRA and the Assistant Deputy Minister of the Tax Policy Branch of the Department of Finance. The mandate of this working group is to examine and recommend ways to improve the reliability and utility of data obtained from international tax forms, taking into account the recommendations of the Subcommittee on International Tax Forms (established under the Advisory Panel on Canada's System of International Taxation). E-filing of foreign reporting forms is an avenue currently being studied by the working group however the Electronic and Print Media Directorate of the Public Affairs Branch of the CRA recently informed the working group that the e-filing initiative is not currently a top priority for the CRA because its main concern is making all forms available in alternate formats to comply with certain court decisions and recommendations from the Canadian Human Rights Commission. The working group will continue to explore e-filing possibilities for foreign reporting forms and make recommendations to executive management.
b) Will the EFILE process be expanded to facilitate electronic filing of other forms, such as Forms T1134A, T1134B, and T5013? Is there a timetable for facilitating electronic filing of such forms and eliminating paper filing?
CRA Response
The International Tax Data Working Group is studying e-filing possibilities for all foreign reporting forms. However, since additional e-filing initiatives have currently been halted by the CRA due to other priorities, no timetable has been established.
c) To minimize confusion about Form T106 filing requirements, will CRA update the electronic filing instructions on its website to clarify and confirm that Form T106 must be filed on paper even where EFILE is employed?
CRA Response
The Assessment and Benefit Services Branch is looking at adding some clarifications on the Corporate Internet Filing pages of our website as well as in the messaging included in T2 software packages.
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2011
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2011
Email this Content