Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Effect of recent negligence cases on tax administration.
Position: General comments provided.
2018 CTF Annual Conference
Question 7: Effect of recent negligence cases on tax administration
There have been a few negligence cases that receive disproportionate attention (Leroux, Samaroo, Group Enico, Ludmer). Does CRA want to comment on whether/how these cases have affected tax administration?
In broad terms, these cases, some of which are under appeal and thus will not be directly commented on, have not caused specific changes in tax administration practices. Without commenting directly on the cases in the opening question, close observers can see a spectrum in the underlying fact situations.
That being said:
- There are recent efforts to update the process for informal disclosure of information to a taxpayer during an audit and ongoing efforts to improve internal ATIP processes.
- CRA has (for many years) had a code of conduct for staff, a Taxpayer Bill of Rights and an Office of the Taxpayers’ Ombudsman. These all serve to set out and redress service level and staff conduct expectations for taxpayers and the CRA.
- Recently, the CRA has announced the appointment of a Chief Service Officer, Mireille Laroche, as part of a renewed focus on service.
- CRA is always looking to improve the policies, procedures and training provided to staff including areas which deal face to face with taxpayers. This includes how best to obtain information from taxpayers in light of identified tax compliance risks, scope of review, industry sector etc.
Taxpayers with significant resources available to them should not expect different results with respect to the technical merits of their case, where their tax situation is similar to that of other taxpayers. Furthermore, where reliance is placed on a published view regarding a plain vanilla domestic tax arrangement, taxpayers should not be surprised that the CRA might take the view that the underlying facts and issues in an offshore structure would be sufficiently distinguishable to result in a challenge to taxpayer’s self-reported assessment of tax.
Accordingly, the CRA is committed to:
- Arriving at reasonable assessing positions that are timely and transparent;
- Communication to taxpayers when adopting positions that deviate from long standing interpretations, especially when there are publicly stated positions;
- Treating taxpayers fairly and respectfully;
- Supporting its employees who may have been singled out for legal action in order to try to thwart the efforts of CRA in administering compliance activities such as an audit or a reassessment.
Most importantly, the CRA’s commitment to fair, and unbiased conduct that is ethical and honest, and to resolve disputes at the earliest possible stage is the best defence to any civil action. While the possibility of legal action against the CRA can’t be ruled out, the CRA will always be committed to serve the public with integrity, professionalism, respect, and cooperation in carrying out its mandate.
Response prepared by:
Matt Covey and Len Lubbers
Abusive Tax Avoidance and Technical Support Division
International and Large Business Directorate
November 27, 2018
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