CRA In-Person Visits to Businesses Expand

Approximately 98% of Canadian business are considered to be “small to medium” sized, and CRA is hoping that personal visits with these enterprises can help to cut red tape, errors, and omissions for an overall smoother, penalty-free relationship with the tax man. 

Called the Liaison Officer Initiative, education and support will be provided in three ways by the visiting officer, but will not constitute an audit or result in changes to past filings by CRA:

• Small business support visits: tax questions raised by the taxpayer will be answered and general information about tax obligations and common errors related to the industry sector the business falls into will be discussed.
• Books and records review: advice will be provided by CRA on the accuracy and completeness of records kept by the business.
• Compliance Support Arrangements (CSA): one of two types of acknowledgements may have to be signed by the business owner to confirm they have understood their tax responsibilities. The first is a general CSA, which highlights key responsibilities of both parties, unintentional or recurring tax errors common to the business sector, and industry benchmarks that can be used to compare performance. The tailored CSA differs in that it also asks the taxpayer to correct errors noted prior to filing their next tax returns.

According to CRA, this approach has been successful in other countries including the US, UK, and Australia. Industry sectors chosen meet the following criteria:

• The sector is not the focus of significant audit treatments or special projects;
• The sector has a population base that is sufficiently large to conduct statistically valid research that accurately measures the impact of the LOI interventions;
• The sector has historically experienced low to moderate rates of change to tax returns as a result of audit activity.

While the meetings are voluntary, CRA is not specific on the  consequences of refusal. Voluntary disclosures may be made if errors or omissions are identified in order to avoid penalties. Tax advisors and industry associations can get more information on the initiative through a tax information line (1-800-959-5525).