Bill C-31: Royal Asset and New CRA Powers Could Come Soon

Changes are coming to the Income Tax Act and both you and your clients will all be affected with new tax risks including longer tax audits. Bill C-31, which passed second reading in the House of Commons on June 3 and is now at committee stage, contains elements of previous Federal Budgets that will expand the CRA’s compliance and enforcement powers. Here’s what you need to know and pass along to your clients:

Close to 2 million people still need to file their tax returns for 2019 before September 30 to avoid late filing penalties if they owe.  That means there is still an “end of tax season” rush coming for busy tax professionals. CRA released tax filing and processing statistics on August 10 which also show the numbers for average refunds and balances due for the 2019 tax year. That the average refund for 2019 was $1840 and the average balance due is $6,070. 

As Canadians face the prospect of higher spikes in COVID cases this fall, the financial fallout will be grim for millions who also face the loss of CERB and other safety nets that were available in the first wave of the pandemic. There are seven basic strategies advisors and clients can discuss now in anticipation of a 2020 tax year dominated by pandemic stress and a 2021 that may be characterized by more debt, and more tax audit potential:

Join some of Canada's leading Real Wealth Managers™ for a discussion about wealth preservation in these very uncertain times. It’s a  free virtual, national conversation that brings together advisors from the tax, bookkeeping, insurance, financial planning and legal communities to discuss true-to-life issues that require inter-advisory collaboration. Details below.

Michael Flux, Executive Vice President and Portfolio Manager at Connor, Clark & Lunn Private Capital Ltd. helps high net worth families and foundations reach their long-term financial goals by providing pension-calibre investment solutions. “My aspirational goal in life,” says Mike, “is to leave much good behind.”  He has recently enhanced his education to earn the MFA-P™ designation to help him in that quest.

Last month’s Knowledge Bureau Poll brought a surprising result from tax and financial professionals: 52% thought the extension of the Canada Emergency Response Benefit was a mistake. The 48% who agreed were more prolific in their comments, however. Here’s what you said:    

When someone in the family dies it is important to turn to the tax system to file any required tax returns  that may be outstanding and to claim specific tax benefits that can help to pay for end-of-life costs.   What are the rules for filing on time in this most unusual tax filing year?