Covid-19 has really put some negative effects all over the world. Since this pandemic has not ended till now with the growing COVID pandemic, CRA on October 21 has made an update on tax controversy and dispute resolution. Since this presentation is not in records.
But you do not have to worry as we have covered all the 10 things you need to know:
1. The Time Limits and Other Periods Act (COVID-19) (‘TLOPA’)
The TLOPA allows the suspension or extension of time limits for taking certain steps under numerous statutes and it also includes the income Tax Act and the Excise Tax Act.
Moreover, the TLOPA suspensions/extensions will expire after 31 December 2020. Whether or not small or medium-sized businesses will have to rely on TLOPA will depend on a case-by-case basis and the individual circumstances of the taxpayer will be taken into consideration.
2. Interest Relief
You should know that proactive interest relief has been provided regularly on income tax debts from 1 April to 30 September and also on GST/HST debts from 1 April to 30 June. Of course, this over-the-counter method does not mitigate any previously levied penalties or interest and merely prevents further accrues.
3. CRA Business Resumption Logistics
Only a few hundred auditors for small and medium-sized audits were allocated to the Canada Emergency Response Benefit and CEWS systems. Although for large business audits CRA is operating with maximum strength from the month of June.
4. Notices of Objection
There are back up and running CRA intake centers. If a notice of objection is lodged with the CRA and no appeals office is allocated within 1 month, taxpayers can contact the headquarters of the CRA on their own.
5. Taxpayer Relief
Although the CRA normally intends to review tax relief claims for 180 days, there is a backlog compounded by COVID, so taxpayers may anticipate delays.
6. Voluntary Disclosures Program (‘VDP’)
COVID delayed the VDP by nearly 4 months, but during this time the VDP prioritized concerns relating to access to insurance and, more recently, improved workload management, while the CRA assigned other staff to help reduce the backlog.
7. Audit Priorities
CRA conducts audits in a balanced manner for small and medium-sized companies by following a case-by-case approach. Audits are not closed and, in specific business fields, are handled around the board. CRA only takes rare situations into consideration for major company audits and has asked its auditors to focus on higher-risk circumstances.
And before the COVID pandemic, auditors were asked to collaborate with taxpayers for small and medium-sized audits in order to grant them equal extensions on request. Auditors have more discretion in the case of large business audits, and decisions on extension requests are made on a case-by-case basis.
9. Communicating with Taxpayers
Today, via phone calls, taxpayers can conveniently communicate with both CRA auditors and appeals officers. Email communications and video conferences, with taxpayer consent, are also allowed.
10. The Way Forward
For small and medium-sized audits, CRA is now focused on training and finding relevant taxpayers. It has also been noted that CRA will now rapidly evolve and follow a digital and modern approach.