2021-0912081C6 2021 CTF - Q12 - ITR Remissions and Fees

Principal Issues: (1) How will the Income Tax Rulings Directorate determine remissions for rulings and pre-ruling consultations? (2) Will the fees for Rulings and Pre-rulings Consultations remain the same?

Position: (1) Remissions will apply to rulings and pre-ruling consultations received by the Directorate after April 1, 2021. Information on how to calculate remissions is described in Appendix H of IC 70-6R11 Advance Income Tax Rulings and Technical Interpretations. (2) Beginning April 1, 2022, the fee for Rulings and a Pre-rulings Consultations will be $221.24 for each hour or part of an hour worked on a file to be increased to $281.22 per hour or part of an hour effective April 1, 2023. Such fees will be increased each year in accordance with the Consumer Price Index.

Author: Campbell, Katie
Section: 2021 CTF - Q12 - ITR Remissions and Fees

2021 CTF Annual Tax Conference
CRA Roundtable

Question 12: Remissions and Fees - Advance Income Tax Rulings and Pre-ruling Consultations

The fees charged by the Canada Revenue Agency (CRA) for providing an advance income tax ruling or a supplemental ruling (a Ruling), and a consultation in advance of a Ruling (a Pre-ruling Consultation), are governed by the Service Fees Act (footnote 1).

In accordance with section 7 of the Service Fees Act, a reduction of a fee (a remission) is required where the CRA considers that a service standard has not been met.

A. Can the CRA describe how a remission will be determined with respect to the fees charged for Rulings and Pre-ruling Consultations?

B. Can the CRA confirm whether the hourly rate charged for Rulings and Pre-ruling Consultations is expected to change?

CRA Response (A)

The objective of the Income Tax Rulings Directorate (the Directorate) is to issue a Ruling or complete a Pre-ruling Consultation within a specified, agreed-upon time period.

The service standard for a Ruling is 90 business days commencing with the receipt of all information required from the client as outlined in Appendix A – Ruling Request Checklist of Information Circular IC 70-6R11, Advance Income Tax Rulings and Technical Interpretations (footnote 2) (IC 70-6). The service standard for a Pre-ruling Consultation is to complete a teleconference within 15 business days from the date the Directorate confirms to the client that the request complies with IC 70-6 and has been accepted.

In some cases, achieving these service targets may not be possible. Where the service target date needs to be adjusted, the Directorate will inform the client in advance and establish an alternate, mutually agreed upon service target date.

Remission of the service fee will be granted when the Ruling is issued, or the Pre-ruling Consultation is completed, subsequent to its service target date, as set out in Appendix H – Remissions of IC 70-6.

The remission will be calculated on an incremental basis as a percentage discount on the hourly rate applicable to the hours worked subsequent to the service target date and will be processed as a reduction to the client invoice.

Remission of the service fee, where appropriate, will apply to Rulings or Pre-ruling Consultations received by the Directorate after April 1, 2021. Additional information regarding remissions can be found in Appendix H - Remissions of IC 70-6.

CRA Response (B)

It has always been the CRA’s practice to recover the costs associated with the provision of Rulings and Pre-ruling Consultations from those who request the service. The CRA will be increasing the existing fee for Rulings and Pre-ruling Consultations in order to reflect the current costs of delivering these services.

When the fee structure was last updated in 2000, the fee was set at $100 for each of the first 10 hours spent processing a Ruling or a Pre-ruling Consultation request, and $155 for each subsequent hour. Since 2019, the hourly rate has been subject to annual increases in accordance with the Consumer Price Index (the CPI) as required by section 17 of the Service Fees Act. As a result, the current hourly rate for a Ruling or a Pre-ruling Consultation is $104.04 for the first 10 hours, and $161.26 for each subsequent hour.

Over the next two years, the Directorate will be phasing in a fee increase for Rulings and Pre-ruling Consultations. Beginning April 1, 2022, the new single-tier, hourly rate will be $221.24. This hourly rate will increase to $281.22 on April 1, 2023. The hourly rate does not include applicable taxes and will continue to be adjusted annually in accordance with the CPI.

Information in respect of the amendment to the fee structure for Rulings and Pre-ruling Consultations was published in the Canada Gazette, Part II, on July 21, 2021 as SOR/2021-173. (footnote 3)

Katie Campbell
2021-091208
November 25, 2021

FOOTNOTES

Note to reader: Because of our system requirements, the footnotes contained in the original document are shown below instead:

1 S.C. 2017, c. 20, s. 451.
2 IC 70-6R11 Advance Income Tax Rulings and Technical Interpretations was published April 1, 2021.
3 GOVERNMENT OF CANADA, Order Amending the Advance Income Tax Ruling Fees Order: SOR/2021-173, Canada Gazette, Part II, Volume 155, Number 15 (online: https://www.gazette.gc.ca/rp-p...).

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