What is current policy in applying s. 285 penalties, e.g., respecting different kinds of mistake on the same return? CRA responded:
Below are some examples of factors that may be considered…:
- First occurrence vs multiple instances of similar errors;
- Voluntary disclosure vs adjustment detected via audit work;
- Adjustments made due to errors vs adjustments due to unreported/misreported transactions;
- Materiality of the false statement or omission;
- Whether the registrant was contacted by CRA in the past regarding the issue at hand;
- Expected level of registrant's knowledge of GST/HST matters;
- Degree of registrant's involvement in preparing the GST/HST return;
- Whether the registrant attempted to correctly apply the ETA and inadvertently misinterpreted it;
- Whether sufficient books and records were maintained; and
- Compliance history of the registrant.
Auditors who have identified adjustments during an audit that are subject to gross negligence penalties must prepare a gross negligence penalty report which… must be… approved by the auditor’s team leader and subsequently by the manager of the audit section or another independent CRA authority. …
[E]lement A would be determined after taking into account all adjustments to net tax for the period. These adjustments would include increases to net tax that are assessed due to gross negligence, increases assessed that are not due to gross negligence, as well as any decreases to net tax such as allowances for unclaimed ITCs or unclaimed deductions to net tax.
