Issue 454, June 2019

At a May 8, 2019 Roundtable with CRA and the Chartered Professional Accountants of Alberta, CRA informally discussed a number of issues and initiatives, including the following:

whether we will see fewer requests for the same information we provided in the past

  • CRA now has a permanent correspondence file for each taxpayer available to all representatives working on that file. This was noted in a discussion of repeated requests by CRA for wills and probate documents for deceased taxpayers and their estates.
  • Where an online access request is rejected, representatives can call the Efile help desk. Where the issue is a minor discrepancy in the signing officer’s name, CRA may be able to provide hints such as the need for a middle initial.

IVI procedures are no longer automatic on all small business audits

  • CRA is no longer undertaking independent verification of income (IVI) procedures such as reviews of personal bank statements on all small business files. They are applied based on risk assessments and where the books and records are unreliable. CRA noted that about 36% of audits include some IVI testing, and 20% use IVI assessing techniques. In the last year, 1,880 audits in which IVI testing was performed lead to assessments in 62% of cases.

40% reassessment rate on limited reviews of corporate tax returns – expect more projects

  • The limited review of corporate tax returns projects have a reassessment rate of approximately 40%. CRA did not provide any breakdown between the various claims (for example, automobile expense, class 10 additions, professional fees, travel, small business deduction) reviewed to date under this program.
  • Where a partner who is not a corporation wishes to assign its Specified Partnership Business Limit to a designated member of the partnership, the partner may make the designation using either a corporate Schedule 7 or by sending a letter with the appropriate information. See VTN 417(7) for details of the Specified Partnership Income rules.

correcting losses carried forward from statute-barred years

  • CRA accepts that a statute-barred year can be adjusted to correct capital or non-capital losses which would be available to offset income in a future year (see VTN 393(11) and 386(5)). To adjust a corporate capital loss, CRA would expect an amended Schedule 1 and Schedule 6 with an explanation in a covering letter.
  • CRA anticipates that capital dividend account confirmations and capital dividend elections will be able to be filed electronically in 2020.
  • Online services for trusts including online access to tax information and application for trust identification numbers are expected in 2022/2023. Trust returns eligible for Efile will also be expanded.

providing your comments to guide changes to online services

  • Represent a Client will provide access to a beta test version of My Business Account commencing in late July 2019 to obtain feedback, with a plan to roll out the new version in October.
  • CRA advised that representative access to business number information (e.g. payroll and GST/HST accounts) is no longer cancelled on the individual’s death, effective in May 2019. Effective February 2020, authorizations for deceased taxpayers should no longer be cancelled.
  • New digital services for charities will commence on June 1, 2019, including online data access and online filing for the T3010 charities return.
  • CRA can process T2201 Disability Tax Credit certificates independent of tax returns and recommends filing these in advance to avoid assessment delays.

not uploading documents outside of CRA’s parameters

  • Uploading documents which are not on CRA’s list of information for upload causes significant delays in their ability to process the information.
  • CRA auditors and other representatives are expected to facilitate access to supervisors and team leaders.

    escalating unresolved issues to the supervisor at CRA

    CRA representatives advised citing Right #9 in the Taxpayers’ Bill of Rights if this is refused and filing a service complaint if access continues to be denied. The guidance for this right, in CRA’s Guide RC17, includes the phrase “If you still disagree with the way your concerns were addressed, you can ask to discuss the matter with the employee’s supervisor.”

Note that these comments were informal. The questions and answers are generally published several months after the event, but many of the issues discussed above were outside the context of any specific question.

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