Understanding the Taxpayer Bill of Rights Part 3: Commitment to Small Business

The next section of the Taxpayer Bill of Rights deals with Small Business.  We will now review these 5 items on the Taxpayer Bill of Rights.

1.The Canada Revenue Agency (CRA) is committed to administering the tax system in a way that minimizes the costs of compliance for small businesses:

As much as they say they try to minimize the costs of compliance for a small business, it is not an easy task.  CRA must balance this with their responsibility to administer and collect.  It is not advisable for a small business owner not to have an accountant who can advise them in the area of tax and reporting responsibilities.  Although CRA says they want to minimize it, it definitely seems to be heading the other direction!

2. The CRA is committed to working with all governments to streamline  service, minimize cost, and reduce the compliance burden:

The best example we can see of this is when the CRA collects taxes and gives the provinces their portion.  This is not the case in Alberta.  Although we don’t see great evidence of this, we can assume they do work with other governments to streamline things.  They do want to collect their taxes quicker, which hopefully makes it simpler for the small business!

3. The CRA is committed to providing service offerings that meet the needs of small businesses:

The CRA offers various online services for electronic filing and accessing information through an online CRA account.  As with any electronic service it can bring technical difficulties, however it can still be effective once in place and running smooth, particularly the access to your information online.

4. The CRA is committed to conducting outreach activities that help small businesses comply with the legislation we administer:

This mostly means they put on courses and put out publications for people to understand their opinions and methods.  Sometimes this can assist, but never just take it as fact!  It is always better to have your own tax advisors, accountants and lawyers that don’t work for the CRA!

5. The CRA is committed to explaining how we conduct our business with small businesses:

In my experience they sometimes do explain very well and other times they don’t.  I’ve worked with some auditors who are quite thorough and explanative, while I’ve worked with others who do their thing, won’t really answer your questions, and they just send a Reassessment.  It really depends on who you are dealing with as to what explanation you will get! 

So as you can see, the Taxpayer Bill of Rights is an important piece of legislation.  It is imperative that you know your rights, otherwise how will you know if they are trampling your rights and what to do about it.  If you believe that CRA is not staying in honor of any of these Rights, then lodge a complaint and go to the Ombudsman.  If we don’t do something to hold them accountable, who will? 

CRA also publishes a guide to explain this Taxpayer Bill of Rights from CRA’s side…( http://www.cra-arc.gc.ca/E/pub/tg/rc17/rc17-09e.pdf).   If you have any questions on the Taxpayer Bill of Rights or my blogs, please do contact me!

Understanding the Taxpayer Bill of Rights Part 2

Here’s the continuation of my discussion on the Taxpayer Bill of Rights.  We ended the previous blog with the 5^th taxpayers’ right so let’s move on to #6.

6. You have the right to complete, accurate, clear, and timely information:

This is another tough one as there is not a clear definition of what timely information is!  This is typically up to the Ombudsman or a judge to decide.  Getting it in writing ensures the information should be complete and accurate.  The word clear is also an issue here as a lot of things put out by the CRA are not clear to taxpayers! 

7. You have the right, as an individual, not to pay income tax amounts in dispute before you have had an impartial review:

This is a very important one!  If you have an amount in dispute through the appeal or Notice Of Objection then you do not have to pay it, until or unless it is resolved as owing.  However, interest may continue to accrue if the amount in fact has to be paid later. Also, if you are waiting for a refund for something else or another year they cannot hold it due to other amounts in appeal!

8. You have the right to have the law applied consistently:

In all my years doing accounting, I have rarely seen this to be true.  If you find this to be an issue, the Ombudsman must be notified in writing with the facts and details.

9. You have the right to lodge a service complaint and to be provided with an explanation of our findings:

Pretty self explanatory.  To lodge a complaint follow this link -- http://www.cra-arc.gc.ca/gncy/crsc/menu-eng.html

10. You have the right to have the costs of compliance taken into account when administering tax legislation:

So yes, if you hire accountants, lawyers or advisors you can deduct the cost.  Our motto at Kustom Design is that when you hire us, we’ll save you more in tax than you pay us for our accounting fees!

11. You have the right to expect us to be accountable:

Notice the wording on this – we have the right to expect them to be accountable…but do we have the right for them to be accountable?  Seems to be trick wording here!  If we look at the actual definition of accountability we can see clearly that they are not always accountable.  That being said, they usually are as clear as they can be why they have made a decision on tax matter, right or wrong.  They also do publish some annual reports to both public and parliament.

12. You have the right to relief from penalties and interest under tax legislation because of extraordinary circumstances:

This is a good one as there is sometimes the possibility to have things like penalty & interest waived, to allow you to file late returns without being penalized, and even to get refunds past 3 years back in some circumstances.  The details of applying for this relief can be found here (http://www.cra-arc.gc.ca/gncy/prgrms_srvcs/txpyrrlf/menu-eng.html).   If you are denied the first time, you can even file a further request.

13. You have the right to expect us to publish our service standards and report annually:

This one is pretty straight forward.  The annual service standard report can be found at www.cra.gc.ca/agency or (http://www.cra-arc.gc.ca/gncy/nnnl/menu-eng.html)

14. You have the right to expect us to warn you about questionable tax schemes in a timely manner:

This one is more for their benefit than yours.  They will warn you about things that are good and bad and you won’t know the difference.  They actually use this as a tactic to scare people from tax planning as tax planning and using tax programs can significantly reduce their revenues.  Keep in mind they are a collection agency and are paid to collect as much money as they can, which includes discouraging people from planning to save tax!

15. You have the right to be represented by a person of your choice.

Many times it is advisable to have a lawyer or accountant represent you when dealing with CRA, particularly when it comes to audits.  To give rights to a representative to handle your CRA matters you will need to fill out and submit a RC59 to CRA (http://www.cra-arc.gc.ca/E/pbg/tf/rc59/README.html). 

Understanding the Taxpayer Bill of Rights Part 1

In my next blogs I will help you understand your basic rights as a taxpayer.  Many people do not even know the Taxpayer Bill of Rights even exists in Canada, never mind read it.  So here it is (please click on the link below):

Taxpayer Bill of Rights

1. You have the right to receive entitlements and to pay no more and no less than what is required by law:

This means that you can take advantage of all tax credits, tax deductions and options available to you for saving taxes.  You can do everything within the guidelines to save tax, and yes there are a ton available.

2. You have the right to service in both official Languages:

This is simple, you can have service from CRA in either or both English and French.

3. You have the right to privacy and confidentiality:

Unfortunately this is a tough one as you don’t always know when they are breaking your confidentiality or privacy.  In the case that you do find them breaking this rule, you must immediately write to the Tax Payer’s Ombudsmen (http://www.taxpayersrights.gc.ca/)

4. You have the right to a formal review and a subsequent appeal:

This means you can object and have a formal review of your case.  If they disagree with your claim or reassess you and you don’t agree with it, you need to object.  You may want to call for any clarification before you file the Objection.  A Notice of Objection can be filed within 90 days of an assessment or Reassessment that you don’t agree with.  If after the initial review is done and you still don’t agree with their decision, you can appeal further to the tax court and even on to higher courts!

5. You have the right to be treated professionally, courteously, and fairly:

Sometimes they do, sometimes they don’t!  If you are not being treated in a professional, courteous and fair manner then you can go to their superior for a complaint.  If the complaint is not resolved at that level then go directly to the Tax Payer’s Ombudsman.  Remember it is best not to speak to CRA directly, but to do everything with them in writing.  If you do have to speak to them, always get their full name and badge/bond number!

We will discuss more of your rights on my next blog!

Tips when Dealing With CRA Part 3

In reading my prior blogs you should now understand that CRA is a collection agency for the government and that if you don’t agree with their decisions they make when “administering tax” then you can appeal their decision to the authorities (courts). The CRA never does have the final decision, unless you let them! You should also now be clear that you can’t believe everything they state on their website because of the disclaimer, and you can’t take what you get from them on the phone as fact. If you need a ruling on something that does not have a precedent set, then get it in writing. Because tax law is so complicated, you should almost always seek professional help. Kustom Design is always up to date on the current tax laws and we are here to work with you on structuring your assets and transactions. The bottom line is that you do not have to be scared of dealing with CRA, you just need to know how to deal with them.

If CRA calls you by telephone you are not obligated to speak with them. You can have them deal with your authorized representative, or just tell them to put their request in writing. As a matter of fact it is typically better that you don’t speak to them as they are under a protocol to assess any tax amount owing and charge penalty and interest…and then of course collect it. Some CRA agents may try and trap you in what they say, so again it is better not to speak with them, unless you have no other option. If you do speak with them it would typically only be in regards to something specific, like a payment plan. If you do have to speak with CRA, ensure you get their full name and badge number. If you are having difficulty dealing with the agent assigned to you, you can ask to speak with their supervisor. The majority of CRA agents are bonded and they can bring trouble upon themselves if they trample on your rights found in the taxpayer bill of rights. Unfortunately, as mentioned prior, many CRA agents do not even know the taxpayer bill of rights and neither do the people, so CRA sometimes gets away with trampling on people’s rights!

Right now Canada is in a major deficit position, which means they are spending more than they are taking in. Because of this issue we have seen the CRA become more aggressive with people while raising some penalties through the roof, creating new penalties, freezing bank accounts, putting liens on assets and more. All we see on the news is how the Government is handling the financial situation quite well compared to the rest of the world, but what we don’t see in the media is how they are doing it. The Bank of Canada is printing more currency and the government is forced to collect more and new taxes! Do we think it’s going to get any better as our government is projecting more deficits for the coming years? We must know our rights and how to deal with CRA so we can protect ourselves, our assets and our future generations. Watch for my next blogs where we will share more on dealing with the CRA!

Tips when Dealing With CRA Part 2

As per my last blog, please ensure you know your rights as a Tax Payer according to the Tax Payer Bill of Rights. Here are 3 other important facts in dealing with the CRA:

1. Don’t ever take what a CRA agent says on the phone as fact. Get it in writing! They can never be held accountable to what they say on the phone, and typically you are getting a junior agent that may have just started working at the CRA!
2. Don’t take what the CRA website says as fact! (see their disclaimer) Here’s a link and below is what is written in the disclaimer:

http://www.cra-arc.gc.ca/ntcs/dsclmr-eng.html

Disclaimer: Some of the information on this Web site has been provided by external sources. The CRA is not responsible for the quality, merchantability and fitness for a particular purpose of products or services available on external sites and listed or described on our menu; nor is it responsible for the accuracy, reliability or currency of the information contained on our Web site and supplied by external sources.

3. If you don’t agree with their assessment, appeal (See further in this blog for details)

APPEALING

Number 4 on the Tax Payer Bill of Rights states that you have the right to a formal review and subsequent appeal. So, if after they review your file you get reassessed, you can appeal their Assessment if you don’t agree with it. This assessment typically comes in 2 forms, a Notice of Assessment (N.O.A.) or a Notice of Reassessment (N.O.R.A.). Either one may be appealed as long as the appeal is within 90 days of the date on the N.O.A. or N.O.R.A. To appeal a decision you should file a Notice of Objection: http://www.cra-arc.gc.ca/E/pbg/tf/t400a/t400a-09e.pdf. Once your Notice of Objection is sent in you should receive a letter stating that they’ve received your Objection and that they will be reviewing your file. If after the review is completed, which sometimes takes a considerable amount of time, they state the Assessment still stands than you can appeal to the Tax Court of Canada. Their correspondence will come with the paperwork and steps to do so, however if you need assistance in your Notice of Objections or appeals, please don’t hesitate to contact us.

Please watch for my next blogs as I will continue to give you tips and information when it comes to dealing with the CRA.

Tips when Dealing With CRA Part 1

As I’ve just finished a full series on the Family Trust I was debating on what would be my next topic to blog on. After some thinking I came to the conclusion that one of the biggest issues many people face is dealing with CRA, the Canada Revenue Agency. Formerly they were called CCRA, Canada Customs and Revenue Agency and before that they were simply called Revenue Canada. The CRA is an agency that administers tax law for Canada, which means in essence they are a big part of implementing the tax legislation put forth by parliament. This is of course not their only function as they also administer other areas of benefits and tax programs to the public and they also currently work with international trade regulation. It’s interesting that this is what they are to do, but the majority of the public sees them as being a collection agency. The appearance of CRA does not seem to say anything different when they are harassing millions of Canadians for money even when they may not owe it!

The first thing you must realize when dealing with CRA is that they do not make the final decisions in regards to how tax legislation applies. Above the CRA is the Tax Court of Canada, The Federal Court of Appeal and the Supreme Court of Canada. So, in essence, the CRA is at the bottom of the totem pole when determining the law. The real issue is that many people do not know they can appeal further than CRA, nor do they know that they have specific rights as a taxpayer. You, as a taxpayer, have many rights that could be disregarded by CRA. Part of the problem is that it is not a requirement for CRA agents to know the tax payer bill of rights, and on top of that, many of CRA’s positions are transient as many employees either leave the CRA or move departments. I’ve asked numerous CRA agents if they know about the Tax Payer Bill of Rights and you would be surprised to find that many don’t know about it, and if they do, they haven’t had a chance to read it! You need to know your rights to ensure they are being upheld, here is the link to the Tax Payer Bill of Rights: http://www.cra-arc.gc.ca/E/pub/tg/rc4417/rc4417-09b.pdf

Now that you know your rights ensure you are never walked over by the CRA. If your rights are broken then you should contact your member of parliament, contact the Tax Payer’s Ombudsman and appeal any decisions you don’t agree with. There are good people that work at the CRA, however as a whole the CRA needs to collect as much from the taxpayers as possible as Canada is in a major deficit. Where do you think they get the loans from? Obviously not the United States as they are Trillions in debt! The fact is that the Bank of Canada is able to print amounts of funds based on a number of factors, including the basis of how much tax us Canadians can pay! …and we wonder why all the reassessments and audits are so rampant. In my next series of blogs, I will go into a number of tips in helping you deal with CRA.

Taxpayers’ Rights

It’s only fitting to end the tax season with some helpful information for taxpayers. So this week’s blogs would be all about tax, tax and more taxes! Let’s start by reviewing what rights you are entitled to as a taxpayer.

1. You have the right to receive entitlements and to pay no more and no less than what is required by law.

2. You have the right to service in both official languages.

3. You have the right to privacy and confidentiality.

4. You have the right to a formal review and a subsequent appeal.

5. You have the right to be treated professionally, courteously, and fairly.

6. You have the right to complete, accurate, clear and timely information.

7. You have the right, as an individual, not to pay income tax amounts in dispute before you have had an impartial review.

8. You have the right to have the law applied consistently.

9. You have the right to lodge a service complaint and to be provided with an explanation of our findings.

10. You have the right to have the costs of compliance taken into account when administering tax legislation.

11. You have the right to expect us to be accountable.

12. You have the right to relief from penalties and interest under tax legislation because of extraordinary circumstances.

13. You have the right to expect us to publish our service standards and report annually.

14. You have the right to expect us to warn you about questionable tax schemes in a timely manner.

15. You have the right to be represented by a person of your choice.

I would like to encourage you to get familiar with your rights as taxpayers to make sure that you are treated professionally, courteously and fairly especially during this tax season. Whether you are simply filing your personal income tax returns, getting tax information or are being reassessed, it is important that the CRA respects all the service rights you are entitled to according to the Taxpayer Bill of Rights.

http://www.cra-arc.gc.ca/E/pub/tg/rc4417/rc4417-09b.pdf