Changing Tax Environment for Canadian Small Business

The Canada Revenue Agency (“CRA”) is becoming increasingly process-driven. While the Income Tax Act is by far the most complex piece of legislation in the country, the people administering it are not up to the job.

The reason is simple. Skilled tax practitioners are highly-trained and expensive.  The CRA is trying to reduce their costs by centralizing their services and substituting skilled staff with processes and checklists.

THINK MCTax

Contacting CRA by phone is getting. more and more difficult. Often CRA staff don’t answer phone messages.

You can’t even email auditors anymore since they no longer have email addresses.

In one file where an auditor did not respond to my telephone queries or acknowledge receipt of uploaded documents, I was forced to write to his supervisor, documenting all of the instances where he did not respond to my phone messages and mistakenly told me he had not received documents that were submitted earlier.

The general enquiries line is usually busy and often inaccessible. That means many attempts simply to get on hold. What’s more, they don’t offer an option to leave a message and receive a call back.

If you are foolish enough to try and call within about 30 minutes of closing, you are often disconnected abruptly at closing time (after 30 minutes on hold).

Field audits are mostly a thing of the past. That means that documents must often either be digitized and uploaded on their website – which is awkward to use and very time-consuming (if you even have a document scanner) – or packaged up and mailed. Of course CRA does not keep copies of documents received – they return them to you.

That means if an incompetent auditor – whom you will never meet in person –  improperly assesses your return, he or she simply returns your documents to you. If you wish to appeal – and once again you will never meet your appeals officer – you will have to gather up your documents and mail or upload the same documents to the appeals officer.

When I worked as a field auditor in the 1980s, the Appeals Section was highly skilled and independent from audit. These days appeals auditors are equally as unskilled as the auditors. Their role has apparently been re-defined as a  simple re-audit of the taxpayer’s file.

Having two incompetent people audit your file is not much of an improvement over having one incompetent person audit it. However it does introduce huge delays.