Overview
CRA has broad audit powers underneath tax laws to administrate the tax system and levy taxes. Funds 2024 proposes to broaden the scope of sure powers permitting CRA to request data from taxpayers, and units out new penalties for non-compliant taxpayers. Funds 2024 additionally will increase CRA’s energy to evaluate when third events take part or help taxpayers within the avoidance of tax money owed.
Who will this have an effect on?
These measures will have an effect on all Canadian companies in addition to overseas entities doing enterprise in Canada.
Key options
Non-Compliance with Info Requests
Funds 2024 proposes measures to reinforce the effectivity and effectiveness of knowledge gathering within the context of tax audits and tax debt assortment by introducing the idea of “discover of non-compliance,” which might be despatched to taxpayers who don’t adjust to data requests made by the CRA.
Taxpayers underneath a discover of non-compliance would:
- not profit from the conventional reassessment interval (which signifies that taxation years at subject wouldn’t turn out to be statute-barred); and
- face penalties as much as $25,000.
Penalties as much as $50,000 is also levied by CRA in circumstances the place a compliance order to supply data or paperwork is obtained towards a taxpayer earlier than the Federal Courtroom.
Funds 2024 additionally proposes to strengthen CRA’s data gathering energy by requesting taxpayers to reply to data requests underneath oath or by affidavit.
These measures are proposed to come back into drive on royal assent of the enacting laws.
Avoidance of Tax Money owed
Part 160 permits the CRA to evaluate and acquire tax from a transferee to whom property has been transferred from a non-arm’s size tax debtor for no or insufficient consideration. Funds 2024 proposes to strengthen this rule by including subsections 160(6) and (7), which might apply if (i) there was a switch of property from a tax debtor to a different individual; (ii) as a part of the identical transaction or sequence of transactions, there was a separate switch of property from an individual apart from the tax debtor to a transferee that doesn’t deal at arm’s size with the tax debtor; and (iii) one of many functions of the transaction or sequence is to keep away from joint and a number of other, or solidary, legal responsibility.
In such circumstances, the property transferred by the tax debtor could be deemed to have been transferred to the transferee for the needs of part 160 and topic to the present penalty of subsection 160.01(2).
This measure is proposed to use to transactions or sequence of transactions that happen on or after Funds Day.
How we may also help
NRF’s tax disputes staff has huge expertise in aiding taxpayers throughout tax audits and assortment measures, guaranteeing the tax authorities train their powers legally and fairly. Our team has efficiently challenged CRA data requests and compliance orders earlier than Canadian courts in home and cross-border contexts.
