Feds to give CRA new powers to compel data from taxpayers
The goal of the government is to give the Canada Revenue Agency (CRA) more time to review taxpayer filings and the authority to levy large new fines if taxpayers refuse to provide the agency with requested information.
For taxpayers facing an audit, the new penalties and the extended reassessment period are “going to sting,” according to Hemal Balsara, head of Manulife’s tax, retirement, and estate planning division in Toronto: “Suddenly, in addition to paying that extra tax, you’re also facing the penalty if you do end up getting reassessed.”
The CRA would have the authority to publish new notices known as notices of non-compliance under the proposed legislation. When someone disregards the CRA’s prior notices or requests for information or assistance, a notice will be sent out.
Additionally, the CRA would be permitted to extend the standard reassessment period for each taxpayer who has requested a judicial review of a notice or requirement that the CRA has issued. The length of the review would be covered by the extension. Although this is now usually the case, not all circumstances were covered by the regulations.
Two additional penalties are included in the budget proposal.
The first would apply to anyone who receives a notice of non-compliance and would be $50 for each day the notice is unpaid, up to a maximum of $25,000.
10% of the unpaid taxes would be the second penalty, which would be imposed if the CRA obtained a compliance order against a taxpayer. The penalty would only be applicable if the order relates to taxes owing of more than $50,000 in a single year.
Regardless of whether a taxpayer eventually complied with the order or whether the information gathered resulted in any additional taxes owed, the CRA had the right to issue a non-compliance notice.
The suggested changes to the budget also permit the CRA to:
- When someone has disregarded a request for foreign-based information or documents ask for a compliance order
- Request that the necessary information or documents be provided under oath or affirmation
Once the legislation enacting the amendments receives royal assent, all amendments will take effect.
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