- CRA Update (audits of HNW individuals still remain a high priority)

At the Canadian Tax Foundation's Annual Conference in Calgary from November 25-27, 2012, the Canada Revenue Agency (CRA) made a number of announcements. Three of the more interesting ones are discussed below.

Paid Tax Preparer Registration System Coming?

The CRA openly mused to the conference attendees that they were toying with the idea of implementing a registration system for paid tax preparers. In the United States, the IRS has such a system. Many other countries around the world are also implementing such systems and the CRA is closely watching. If the system that Canada would ultimately implement would mirror that of the U.S., it would require paid tax preparers to meet certain minimum education, experience and ongoing professional development standards. This will be interesting to watch.

High Net Worth (“HNW”) Individual Audits

The CRA announced that audits of HNW individuals still remain a high priority. While this initiative is not new, it is interesting that the CRA appears committed to auditing people who have an estimated net worth of $50M or more and / or 30 or more entities in a related group. It appears that Canadian taxpayers who meet the mentioned criteria, and who have not already been contacted, should be ready for an eventual audit by the CRA.

New Folio Project

In September 2012, the CRA announced that it was replacing its Interpretation Bulletins (some of which are badly out of date) in favour of new electronic “folios” that would be organized by subjects. The CRA has a webpage on this where more information can be viewed here. The CRA will be obtaining assistance from certain accounting and law firms to help draft the content. The first folios are expected to be released in January 2013. This is an exciting new initiative by the CRA!

Any member of TSG would be pleased to discuss the above with you

TAX TIP OF THE WEEK is provided as a free service to clients and friends of the Tax Specialist Group member firms. The Tax Specialist Group is a national affiliation of firms who specialize in providing tax consulting services to other professionals, businesses and high net worth individuals on Canadian and international tax matters and tax disputes.

The material provided in Tax Tip of the Week is believed to be accurate and reliable as of the date it is written. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Neither the Tax Specialist Group nor any member firm can accept any liability for the tax consequences that may result from acting based on the contents hereof.