Effective. Accessible. Responsive
I am back from holidays now and back to having to deal with the many-headed Hydra that is the CRA.
Over the last few years the CRA has been “rationalizing” its services to cut costs and, supposedly, improve its services. A recent example of these changes is the reduction of services available at the counters at tax services offices. The CRA explains this change as follows:
For at least the last five or six years, an assortment of conspiracy theorists and their ilk have been trolling the Internet and spreading phony stories about the unlawful nature of Canada’s tax system (see, for example, the Usenet newsgroup can.taxes).
A taxpayer submits a fairness request to the CRA, and the request is rejected by the first officer to review it on the ground that it did not show inability to pay. The taxpayer agrees with the officer: the taxpayer did fail to show inability to pay because the taxpayer never raised the issue! The taxpayer, however, did mention CRA delay as a ground for relief, but that point is not addressed by the officer. The taxpayer sends the request back to the CRA for another review. A recent case — Dort (Estate) v. Canada (Minister of National Revenue), 2005 FC 1201 —- suggests that this other review should be regarded as a “first look” by the CRA and that, if the CRA rejects the request, the taxpayer is entitled to a second review.
Apparently, the Department of Finance and the CRA believe that you can have too much fairness in the tax system. In the 2004 budget, Finance introduced a ten-year limitation period for fairness applications. It appears that the CRA is now adopting a particularly strict interpretation of the rule to deny relief to taxpayers even where the events that form the basis for the fairness request occurred within the limitation period.
The CRA has launched an “alert service” to provide information on tax shelters, “scams” and other areas of interest. Will the service make it easier for us to provide advice to our clients?
Redeemer Foundation v. M.N.R., 2005 FC 1361, represents an interesting coda to my article on CRA demands for third-party information. In this decision, the Federal Court quashed reassessments that were based on information obtained pursuant to an improper demand for third-party information.
Section 231.2 of the Income Tax Act (Canada) (the “Act”) authorizes the CRA to demand information from any person for any purpose related to the enforcement of the Act. What do you need to know about a demand for information about an unnamed third party, if the CRA comes knocking at your door with one in hand?