Canada Revenue Agency
Encyclopedia
Tax law
Tax law is the codified system of laws that describes government levies on economic transactions, commonly called taxes.-Major issues:Primary taxation issues facing the governments world over include;* taxes on income and wealth...
s for the Government of Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
and for most provinces and territories, international trade
International trade
International trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product...
legislation, and various social and economic benefit and incentive programs delivered through the tax system. It also oversees the registration of charities in Canada
Canadian Charity Law
Charitable organizations in Canada are regulated under the Canadian Income Tax Act through the Charities Directorate of the Canada Revenue Agency....
, and tax credit programmes such as the Scientific Research and Experimental Development Tax Credit Program
Scientific Research and Experimental Development Tax Credit Program
The Scientific Research and Experimental Development Tax Incentive Program provides tax incentives to Canadian businesses to support applied research and experimental development conducted in Canada.-Background:Introduced in the 1980s, the SR&ED program is intended to...
.
The Canada Revenue Agency was previously known as the Canada Customs and Revenue Agency (CCRA) until a federal government reorganization in December 2003 when it was decided to split the organization's customs and revenue responsibilities into separate organizations. Since then, Canada Border Services Agency
Canada Border Services Agency
The Canada Border Services Agency is a federal law enforcement agency that is responsible for border enforcement, immigration enforcement and customs services....
is part of the Public Safety Canada portfolio to handle customs responsibilities.
The CCRA was short-lived, having been created in a November 1999 reorganization of the federal government where it had been known for many years under its statutory name the Department of National Revenue. It was also referred to as Revenue Canada under the Federal Identity Program
Federal Identity Program
The Federal Identity Program is the Canadian government's corporate identity program. The purpose of the FIP is to clearly identify each program and service of the government or the government of Canada in general. Managed by the Treasury Board Secretariat, this program, and the government's...
of the Treasury Board of Canada. To this day, most Canadians have continued to refer to the agency as "Revenue Canada" through its CCRA and CRA official designation periods.
Income tax
The Canada Revenue Agency administers most individual income taxes in CanadaIncome taxes in Canada
Income taxes in Canada constitute the majority of the annual revenues of the Government of Canada, and of the governments of the Provinces of Canada...
except those for residents of Quebec
Quebec
Quebec or is a province in east-central Canada. It is the only Canadian province with a predominantly French-speaking population and the only one whose sole official language is French at the provincial level....
. The taxation of corporations in Canada is administered by the CRA except for the provinces of Alberta
Alberta
Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...
and Quebec. Ontario
Ontario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
administered corporate taxes for fiscal years up to 2008. The CRA administers Ontario corporate tax from January 1, 2009 except for a few tax credits Ontario continues to manage. Ontario is transferring the remainder of its corporate tax administration to the CRA.
Personal and trust taxes
The Canada Revenue Agency administers all personal and trust tax returns in Canada.Goods and Services Tax (GST)
The Canada Revenue Agency collects the Goods and Services TaxGoods and Services Tax (Canada)
The Goods and Services Tax is a multi-level value added tax introduced in Canada on January 1, 1991, by then Prime Minister Brian Mulroney and his finance minister Michael Wilson. The GST replaced a hidden 13.5% Manufacturers' Sales Tax ; Mulroney claimed the GST was implemented because the MST...
(GST) (the Canadian federal value added tax
Value added tax
A value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...
) of 5% in all provinces except Quebec. Revenue Quebec administers its own Quebec Sales Tax (QST)and the GST on behalf of the CRA. The Goods and Services Tax was introduced in 1991 at 7% added to the value of most sales of goods and services. The GST was reduced to 6% in 2006 and 5% in 2008, the current rate.
Harmonized Sales Tax (HST)
In British ColumbiaBritish Columbia
British Columbia is the westernmost of Canada's provinces and is known for its natural beauty, as reflected in its Latin motto, Splendor sine occasu . Its name was chosen by Queen Victoria in 1858...
, New Brunswick
New Brunswick
New Brunswick is one of Canada's three Maritime provinces and is the only province in the federation that is constitutionally bilingual . The provincial capital is Fredericton and Saint John is the most populous city. Greater Moncton is the largest Census Metropolitan Area...
, Newfoundland and Labrador
Newfoundland and Labrador
Newfoundland and Labrador is the easternmost province of Canada. Situated in the country's Atlantic region, it incorporates the island of Newfoundland and mainland Labrador with a combined area of . As of April 2011, the province's estimated population is 508,400...
, Nova Scotia
Nova Scotia
Nova Scotia is one of Canada's three Maritime provinces and is the most populous province in Atlantic Canada. The name of the province is Latin for "New Scotland," but "Nova Scotia" is the recognized, English-language name of the province. The provincial capital is Halifax. Nova Scotia is the...
and Ontario
Ontario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
the Goods and Services Tax (GST) has been replaced by the Harmonized Sales Tax
Harmonized Sales Tax
The Harmonized Sales Tax is the name used in Canada to describe the combination of the federal Goods and Services Tax and the regional Provincial Sales Tax into a single value added sales tax in five of the ten Canadian provinces: Ontario, New Brunswick, Newfoundland and Labrador, British...
(HST). The Harmonized Sales Tax combines the national GST and the provincial sales tax into a single transaction. HST is administered by the CRA. Each province that has Harmonized Sales Tax receives their portion of the HST from the CRA.
Tax Court of Canada
Taxpayers that believe the Canada Revenue Agency has not assessed the correct amount of tax can dispute the amount by filing an objection with the CRA. If the taxpayer is still dissatisfied after the CRA objection is resolved, an appeal can be made to the Tax Court of CanadaTax Court of Canada
The Tax Court of Canada , established in 1983 by the Tax Court of Canada Act, is a federal superior court which deals with matters involving companies or individuals and tax issues with the Government of Canada....
. The Tax Court examines the taxpayer's claim and evidence, then looks at the evidence and arguments made by the government before passing judgment. The CRA becomes a witness for the purpose of providing evidence in tax court. The CRA is ,in fact, NOT the government, as the Appellant(The Taxpayer) appeals to the court against Her Majesty the Queen (The Respondent). The role of the Canada Revenue Agency in tax court is that of a witness for the government,not the government itself. Like any other Canadian court, Tax Court operates by treating each side of a dispute as equals while applying tax law, administrative law, constitutional law and the laws of evidence.In the event the taxpayer feels there has been a clear error in assessment,he is encouraged to use The Tax Court of Canada as an accessible way of resolving disputes. In addition,the taxpayer is not responsible for costs in relation to their opponent, but only for their costs related to their own defense.In the event the taxpayer is successful, however, they can seek their costs from the CRA for erroneous assessments.
Taxpayer Bill of Rights
In 2007 the Government of CanadaGovernment of Canada
The Government of Canada, formally Her Majesty's Government, is the system whereby the federation of Canada is administered by a common authority; in Canadian English, the term can mean either the collective set of institutions or specifically the Queen-in-Council...
announced in Parliament
Parliament of Canada
The Parliament of Canada is the federal legislative branch of Canada, seated at Parliament Hill in the national capital, Ottawa. Formally, the body consists of the Canadian monarch—represented by her governor general—the Senate, and the House of Commons, each element having its own officers and...
the adoption of Taxpayer Bill of Rights and the Commitment to Small Business. Fifteen rights were listed as guarantees on how the Canada Revenue Agency will treat taxpayers while administering all tax law. A way for taxpayers to make complaints about the service they received from the CRA was established as part of one of the rights.
Taxpayer Ombudsman
The Taxpayer Bill of Rights was accompanied by the appointment of the Taxpayer Ombudsman to act as an advocate for taxpayers. The Ombudsman investigates complaints from taxpayers reporting breaches of their rights as a taxpayer by the CRA. Investigations are reported to the Minister of National Revenue and the public. Besides looking at matters reported by taxpayers, the Ombudsman has been given the power to investigate the causes of widespread rights violations by the CRA, (called systemic problems).Service Complaint Process
Taxpayers aggrieved by the conduct of the Canada Revenue Agency may file a Service-Related Complaint with the CRA. The complaint is handed to the office where the complaint originated to be looked into and get in touch with the taxpayer. If the taxpayer is not satisfied with the way the first office handles it, they may take their complaint to a higher level. The Regional office looks into the taxpayer's complaint and contacts the taxpayer. If the taxpayer remains unsatisfied, they may take their complaint to the Taxpayer Ombudsman.Audits
CRA performs audits (or reviews) to ensure compliance of tax laws. Auditors have the right to inspect, audit, or examine the books and records of a taxpayer; examine the property in an inventory of a taxpayer; enter the taxpayer's premises or place of business; require the owner or manager of a property to give all reasonable assistance and to answer questions; and, require a taxpayer or other person to provide information or documents. Taxpayers must cooperate with auditors or face obstruction charges under S. 238 of the Income Tax Act.Investigations
CRA operates four investigation program: Voluntary Disclosures Program, Informant Leads Program, Special Enforcement Program and Criminal Investigations Program.- Voluntary Disclosures Program (VDP): A program that allows taxpayers to avoid penalty or prosecution if they choose to correct inaccurate or incomplete information, or to disclose information previously withheld to CRA. In order to be accepted into this program, the taxpayer's action or omission must involve the application, or potential application of a penalty by CRA and he/she is willing to make a complete disclosure.
- Informant Leads Program (ILP): This program allows for citizens to report individuals or businesses who maybe committing tax evasionTax evasionTax evasion is the general term for efforts by individuals, corporations, trusts and other entities to evade taxes by illegal means. Tax evasion usually entails taxpayers deliberately misrepresenting or concealing the true state of their affairs to the tax authorities to reduce their tax liability,...
or other tax-related offences.
- Special Enforcement Program (SEP): As proceeds of crime are taxable, this program specifically conducts audits and undertake other civil enforcement actions on individuals known or suspected of deriving income from illegal activities. Collections Officers are responsible for collecting taxes owed and to seize assets under the Income Tax Act.
- Criminial Investigations Program (CIP): Investigators from this program are responsible for suspected cases of tax evasion, fraud and other serious violations of tax laws. Criminal Investigators are given badges and can only exercise investigative power in compliance with the Canadian Charter of Rights and FreedomsCanadian Charter of Rights and FreedomsThe Canadian Charter of Rights and Freedoms is a bill of rights entrenched in the Constitution of Canada. It forms the first part of the Constitution Act, 1982...
.
Criticism
The Canada Revenue Agency is inconsistent in regard to breaks for delinquent taxpayers, so much that there is a risk that taxpayers could begin to "shop around" to other tax offices for the best deal.The Canada Revenue Agency is also inconsistent when compensating taxpayers for mistakes. A recent case being Irvin Leroux who alleges he lost $4.5 million in assets due to a Canada Revenue Agency mistake.
See also
- Taxation in CanadaTaxation in CanadaThe level of Taxation in Canada is average among Organisation for Economic Co-operation and Development countries.-Administration:...
- Canadian efileCanadian efileEFILE is the system used by the Canada Revenue Agency as a means for electronically transmitting tax returns. It became a national program in 1993. EFILE is only available to professional tax prepares and is not to be confused with the publicly available NETFILE...
- NETFILENETFILENETFILE is a transmission service available from February through September each year that allows eligible Canadians to submit their tax return to the Canadian government using the Internet. To file using this method, you must first prepare a tax return using a Canada Revenue Agency approved...
- Canadian Federation of Independent BusinessCanadian Federation of Independent BusinessThe Canadian Federation of Independent Business is an alliance of independent small and medium-sized businesses in Canada, formed in 1971. Its current president is Catherine Swift.-External links:*...