CRA OPERATIONAL UPDATE — TEN THINGS YOU NEED TO KNOW
We all know how COVID-19 pandemic has affected the world. With growing COVID pandemic, CRA on October 21 has made an update on tax controversy and dispute resolution. Since this presentation is not in records,
We have covered it on 10 topics below:-
1. The Time Limits and Other Periods Act (COVID-19) (‘TLOPA’)
The TLOPA allow the suspension or extension of time limits for taking certain steps under numerous statutes and it also includes income Tax act and the Excise Tax Act. Moreover, the TLOPA suspensions/extensions will expire after 31 December, 2020.
Whether small or medium sized enterprises will have to depend on the TLOPA or not will depend on a case by case basis and the taxpayer’s particular circumstances will be taken into account.
2. Interest Relief
Proactive interest relief is routinely provided on income tax debts from 1 April to 30 September and on GST/HST debts from 1 April to 30 June. Of course, this over-the-counter scheme does not mitigate any fines or interest that has been previously imposed and simply avoids further accrues.
3. CRA Business Resumption Logistics
Only a few hundred auditors were assigned to the Canada Emergency Response Benefit and CEWS programs for small and medium sized audits.
Although for large business audits CRA is functioning with full strength from the month of June.
4. Notices of Objection
CRA intake centers are back up and running. When a notice of objection is filed with the CRA and when no appeals office is assigned within 1 month then taxpayer should contact the CRA headquarters by themselves.
5. Taxpayer Relief
Although the CRA is usually targeting 180 days for assessing tax relief claims, there is a backlog exacerbated by COVID, so taxpayers can expect delays.
6. Voluntary Disclosures Program (‘VDP’)
COVID has postponed the VDP by about 4 months, but during this period the VDP has prioritised problems concerning access to benefits and more recently, the management of the workload has been strengthened, as the CRA has allocated other workers to help minimise the backlog.
7. Audit Priorities
For small and medium sized businesses, CRA is doing audits in a balanced way by adopting a case by case approach. Audits are not closed and are managed across the board in particular industry areas.
For large business audits, CRA is only taking exceptional cases into consideration and have asked their auditors to concentrate on higher risk circumstances.
8. Patience
Even before the COVID pandemic, for small and medium sized audits, auditors were asked to work with taxpayers to give them fair extensions on request.
In the case of large company audits, auditors have greater discretion and decisions on extension requests are taken on a case-by-case basis.
9. Communicating with Taxpayers
Now taxpayers can easily connect with both CRA auditors and appeals officers through phone calls.
Also, emails communication and video conferences are permissible, with taxpayer agreement.
10. The Way Forward
CRA is now focusing on educating and identifying suitable taxpayers for small and medium sized audits.
It has also observed that CRA will quickly develop and adopt a digital and modern approach now onwards.
