Questions and answers – Liaison Officer Initiative (LOI)

1. What is the Liaison Officer Initiative (LOI)?
2. What type of businesses qualify for LOI services?
3. If my business is not selected and contacted by the Canada Revenue Agency (CRA) for this program, can I still participate in the LOI?
4. What can a selected business expect from the LOI?
5. Is the LOI an audit program?
6. What is a books and records review?
7. What is the purpose of industry “benchmarks”?
8. Should I be concerned if my business does not fit into the benchmarks for my industry sector?
9. Can I refuse to meet with the CRA Liaison Officer?
10. Must I agree to the books and records review and do I have to sign the compliance support arrangement (CSA)?
11. If I participate in the LOI and errors are found, can I still make a voluntary disclosure?
12. Where can I find more information about the LOI?

Questions and answers – Liaison Officer Assistance Requests (LOARs)

13. What is a LOAR?
14. What services are offered as part of the LOAR?
15. Who can ask for a LOAR service?
16. How can I ask for a LOAR service?
17. Can I choose to have the LOAR at my place of business? Or vice-versa, can I choose to have a seminar instead?
18. Why aren’t LOARs offered in my area?
19. When will you be expanding the LOAR service, if you do?
20. Where can I find more information about LOARs?

1. What is the Liaison Officer Initiative (LOI)?

The Liaison Officer Initiative (LOI) is designed to help small businesses meet their tax obligations. This approach involves activities that are designed to provide taxpayers with education and support. A visit from a Liaison Officer (LO) does not constitute an audit and will not result in any CRA-driven changes to past tax filings. The focus of the LOI is to help businesses “get it right from the start” by providing them with in-person support and guidance at key moments of their business life cycle.

Small businesses that voluntarily participate will be offered the following services:

• Small Business Support Visits
  • Liaison Officers (LO) visit taxpayers at their place of business on a one-to-one basis to provide support and guidance on tax matters. LOs address tax-related questions and concerns raised by small businesses, provide general information on tax obligations, and advise taxpayers about unintentional or recurring common errors for small businesses.
• Books and Records Reviews
  • The LO will review the taxpayer's books and records and provide feedback and guidance on accuracy and completeness, so that potential issues can be addressed prior to tax filing. This service is completely voluntary.
• Compliance Support Arrangements (CSA)
  • During a visit, in order to reinforce the opportunity for learning and awareness, LOs will ask taxpayers to voluntarily sign a CSA as an acknowledgement that they understand their tax responsibilities. The CSA highlights the key responsibilities of both parties, identifies unintentional and / or recurring income tax errors that small businesses make, and outlines industry benchmarks that the taxpayer can use to compare their performance to their industry sector in general.

2. What type of businesses qualify for LOI services?

Currently, LOI services are offered to new small businesses (sole proprietorships/partnerships). However, we are constantly evolving and looking for more ways to better serve taxpayers. In the future, we anticipate the expansion of the LOI to include more business lines and services.

3. If my business is not selected or contacted by the CRA for this program, can I still participate in the LOI?

We have recently started a “by request” pilot project whereby taxpayers can request assistance from a Liaison Officer. If you live in the greater Montréal or Toronto areas you may be able to make a Liaison Officer Assistance Request (LOAR).

4. What can a selected business expect from the LOI?

The LOI offers various services aimed at helping small businesses meet their tax obligations beginning with the tax filing process, to help prevent common errors. The services offered include:

• A Liaison Officer initiates a visit with a small business to provide general information about unintentional and / or recurring errors, and recommendations on how to fix them;
• A Liaison Officer offers to conduct a books and records review;
• A Liaison Officer asks the small business to enter into a Compliance Support Arrangement (CSA). The CSA is voluntary, and is not legally binding in a court of law. The CSA simply outlines key responsibilities of both the taxpayer and the CRA, and provides industry benchmarks to the taxpayer that can be used for self-comparison.

5. Is the LOI an audit program?

The LOI is not part of the traditional audit program but rather a complement to it. Specially trained CRA Liaison Officers (LOs) will visit your small business to offer information, assistance and general awareness of your tax obligations as well as unintentional and / or recurring errors that small businesses make. These visits will not result in an adjustment or changes to the balance of previously-filed income tax returns. LOI is completely independent of CRA’s audit programs in that the information learned and topics discussed during a visit is not shared in any way.

6. What is a books and records review?

This is a completely voluntary review by an LO of your books and records in order to identify any issues that could prevent you from meeting your tax obligations. The review enables the CRA to provide you with relevant, targeted information that will help you accurately file your income tax return in a timely manner. A books and records review can help you avoid unintentional and / or recurring errors before your tax return is filed.

7. What is the purpose of industry “benchmarks”?

Industry benchmarks help businesses assess their performance by comparing themselves to their sector in general.

Industry benchmarks are established using information that businesses report on their financial statements and tax returns. Benchmarks may include financial ratios that can be calculated using financial statements. If a business’ performance is significantly out of alignment with the performance benchmarks established for similar businesses in its sector, it may signal that there are issues related to its tax affairs that require attention.

8. Should I be concerned if my business does not fit into the benchmarks for my industry sector?

Not necessarily. Industry benchmarks are established using information that businesses report on their financial statements and tax returns. They may include financial ratios that can be calculated using financial statements.

Benchmarks can be used by a business to see how it compares to their sector in general.

9. Can I refuse to meet with the CRA Liaison Officer?

Yes, you can refuse this service. The LOI is a voluntary program intended to help small businesses. However, when a business owner or representative receives an invitation for a meeting with a CRA LO, he or she is encouraged to take advantage of the opportunity. The purpose of the LOI visit is to provide you with useful information that will help you comply with your tax obligations, and to answer any tax-related questions or concerns you may have.

10. Must I agree to the books and records review and do I have to sign the Compliance Support Arrangement (CSA)?

Both of these steps are voluntary. Businesses chosen to participate in the LOI will be asked to voluntarily participate in a books and records review and sign a CSA. In both cases, the goal is to help you avoid tax-related problems by helping you understand your tax obligations.

The purpose of the books and records review is to support small businesses in determining if they are on the right track and their affairs are in order. Based on the books and records review, unintentional and / or recurring errors may be identified and, with the aid of information provided by the CRA, self-corrected by you before your tax return is filed. Participation in a books and records review is voluntary and will not result in an audit.

The intent of the CSA is to outline the roles and responsibilities of both your business and the CRA and to reinforce the opportunity for learning and awareness by remaining as a written reminder of what was discussed. The CSA is a voluntary step to complete your LOI experience, and it won’t be used in future dealings with the CRA.

11. If I participate in the LOI and errors are found, can I still make a voluntary disclosure?

Yes, the Voluntary Disclosures Program allows taxpayers to come forward and correct inaccurate or incomplete information or to disclose information they have not reported during previous dealings with the CRA, without penalty or prosecution. You may make a voluntary disclosure if there has been no audit or criminal investigation (“enforcement action”) started on your file. LOI is not considered an enforcement action. For more details about this program, go to Voluntary Disclosures Program.

12. Where can I find more information about the LOI?

Up-to-date information on the LOI is available online. For further information, you may also call the business phone line at 1-800-959-5525.

13. What is a LOAR?

Building on the success of the Liaison Officer Initiative, the Canada Revenue Agency is piloting Liaison Officer Assistance Request (LOAR) services in the greater Toronto and Montréal areas. LOAR lets taxpayers ask for help from a liaison officer. LOAR services are designed to help businesses avoid common tax errors. This will reduce the time, effort, and cost of determining the tax obligations and entitlements of businesses.

14. What services are offered as part of LOAR?

LOAR services include the following:

• In-person support to address tax-related questions and concerns; discuss common income tax errors and financial benchmarks in the small business community; and provide information on various tools and services offered by the CRA*
• In-person support for voluntary books and records reviews to provide a basic evaluation of a business’s tax records; and to provide recommendations for strengthening their bookkeeping.*
• Seminars for the small business community to explain common tax errors, general bookkeeping concepts, and how to use financial benchmarks for a particular business sector, and as well as to provide information on the CRA’s services for businesses.

*Not every business will qualify for an in-person visit. If yours doesn’t, you may be able to attend an LOI seminar.

15. Who can ask for a LOAR service?

For your business to qualify for the LOAR service, please make sure:

• your business is not incorporated,
• you have business, professional, rental, and/or commission income,
• your postal code is within the greater Toronto or Montréal area,
• you are available during normal business hours (8 am to 4 pm, Eastern time), and
• you have not had a liaison officer visit.

16. How can I ask for LOAR service?

If your business meets all of the above criteria, you may make a liaison officer request online.

17. Can I choose to have LOAR service at my place of business? Or, can I choose to have a seminar instead?

After you send a request for service, a Canada Revenue Agency agent will contact you to gather information to make a determination on the most suitable LOAR service.

18. Why aren’t LOAR services offered in my area?

Currently, LOAR services are only in the pilot phase within the greater Toronto and Montréal areas. These two areas were selected for the pilot based on population and linguistic profiles. However, the Canada Revenue Agency is constantly evolving and looking for more ways to better serve taxpayers. In the future, the Agency expects to expand LOAR to include more cities across Canada.

19.When will you be expanding the LOAR services, if you do?

We don’t have a set date for the expansion of the LOAR services, however we anticipate that we will be offering these services nationwide within the next year.

20. Where can I find more information?

Information about the Liaison Officer Initiative and Liaison Officer Assistance Request is available online.