2017-0734831C6 2017 TEI – Question B5

Principal Issues: Update on Rulings Consultations

Position: See response below

Reasons: See response below

Author: Carruthers, Lori
Section: -

TEI – CRA Liaison Meeting – December 5, 2017

Question B5. Update on Rulings Consultations

The House of Commons Standing Committee on Finance’s October 2016 report, The Canada Revenue Agency, Tax Avoidance and Tax Evasion: Recommended Actions, recommended that the Minister of Revenue conduct a comprehensive review of the advance tax ruling process by March 31, 2017. On February 8, 2017, TEI participated in a conference call with officials in the Income Tax Rulings Directorate to discuss the current advance tax rulings process and identify ways to make it more efficient, effective, and less costly. Our discussion covered the preconsultation process, fee structure, specific types of issues on which the CRA will not provide rulings, and best practices in other tax jurisdictions. Please provide an update on any developments regarding this matter.

CRA Response

Following the completion of the review of the Advance Tax Ruling (“ATR”) process, the Minister of National Revenue reported to the Finance Committee in her Report on Progress dated May 29, 2017, that a number of key changes would be implemented before the end of the year, being March 31, 2018. These key changes are:

*    More frequent and better communications between the taxpayer and the CRA, including a meeting with taxpayers to be held no later than within four weeks of receipt of an ATR request.

The goal of this key change is to improve engagement, provide earlier feedback on the quality and sufficiency of the tax submissions for the rulings requested and where possible provide an earlier indication of our view on the rulings requested.

*    Increase awareness of the ATR process by:

o    conducting workshops at conferences and/or courses sponsored by national tax organizations;

o    reviewing and updating our Information Circular (IC 70-6) more frequently to provide more clear instructions on ATR requirements;

o    providing a sample “best practice” ATR request template; and

o    providing more frequent updates on developments and trends in the ATR service at national tax forums.

The goal of this key change is to improve the quality of ATR submissions so as to avoid undue time delays.

*    Amend the current 90-day service standard for ATRs to address complex tax policy issues that cannot typically be completed within a 90-day period, namely, those that require a formal referral to the CRA’s General Anti-Avoidance Rule Committee, the Department of Finance or the Department of Justice.

The goal of this key change is to set expectations for taxpayers upfront and provide them with a better indication of those ATRs that can be completed on a timelier basis.

*    Develop guidelines for the provision of ATRs on questions of fact.

Although some ATRs on questions of fact are currently provided, the goal of this key change is to provide a consistent approach within the Income Tax Rulings Directorate and to help manage expectations of users in respect of these types of ATRs.

*    Develop guidelines for refusing to rule on the tax consequences of transactions for which there is little or no ambiguity and/or the position of the CRA is, or should be, well known to taxpayers.

The goal of this key change is to help focus ATR requests on the real issues, with a view to making the process more efficient, less costly and timelier.

*    Close an ATR file where the ATR request is not properly prepared or supported with adequate representations or where the taxpayer has not responded to a request for additional information within 30 calendar days.

The goal of this key change is to thwart taxpayers from hurriedly submitting an incomplete submission in order to get an advantageous “spot in the queue”. Once an ATR file is closed, a follow-up submission will not receive any greater priority than any other ATR requests.

Kim Duval
Lori Carruthers
2017-073483
December 5, 2017

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