December 2nd Internet Maintenance Shut Down

Vincent Crosby MBA, MFA, RWM, C.Mgr, FPBA, P.Mgr, ICIA

Do you prepare and file information slips for clients? If so, make sure to include an early December 2^nd closure of electronic services in your scheduling. Slips that are filed late or using the incorrect method will result in financial penalties to your business. The hard stop will be December 1^st  and services will not reopen until January 13^th, 2025. In addition to the earlier shut down, information returns filed after January 1, 2024, containing five or more slips must be filed electronically.

How may this impact your clients?

• T5018 Statement of Contract Payments must be filed 180 days after the fiscal year end or calendar year. If the client has more than 5 slips and their fiscal year ends prior to July 12, 2024, they should have to January 12^th to file, but this is not the case. They must file prior to December 1^st to avoid facing penalties and becoming non-compliant.

Example – Jim and John own a construction company that builds residential homes year-round. They use subcontractors to complete most of the work from framing, electrical, plumbing, painting, landscaping etc. A typical home may require ten to twelve different contractors. Their fiscal year-end is June 30^th, 2024, they file their T5018’s based on the fiscal year end.

Unfortunately, with their year-end falling in the middle of summer at the peak of building season you don’t receive their paperwork to complete their reporting until November. Based on the number of slips that are required to file this must be done electronically. They also must now be filed by the end of day December 1^st because the service is going off-line. In the event the slips are not filed on time they face a late filing penalty of $125 and if they file using the incorrect format i.e. by Canada Post the CRA can assess a penalty of $125.

If the number of slips is four or fewer the option to paper file is still available. It’s important to note that remitting through the mail services does have risk. The CRA considers slips filed on time if the envelope is postmarked no later than the due date.

Preparer tip: When using mail services to file information slips the use of registered mail or express post can provide a tracking number and assist in appealing against late filing penalties resulting from disputes from CRA not recognizing the date it was mailed.

Two Ways to File Electronically.  As mentioned earlier reporting of five or more of the same information slip must be done electronically. The CRA offers two methods to file slips electronically. The first is using Web Forms which allow users to enter each slip individually. This is a convenient option for small businesses and can save the expense for third party software.

The second option for small businesses to file electronically is the use of Internet File Transfer service. Preparers or businesses that require a lot of slips may use software to prepare their information slips. Then using the options in the software create a file that can be uploaded using the Internet File Transfer service on the CRA website.

Preparer tip: When using one of the CRA’s electronic methods to file information slips the system will generate a confirmation number. This number is critical in the event there is a discrepancy or error in reporting the slips. Having this number available when dealing with the CRA will save time by allowing them to quickly locate the information slips in question.

Regardless of how your file your information slips they and the information they contain must be kept confidential and secure. The CRA, though it requires tax preparers to use these services, does not accept liability for damages caused by interception, loss or theft. This leaves the burden of liability on the preparer to ensure all possible steps are taken to protect the client’s information.

The following table provides details on the different types of information slips and their due dates.

Bottom Line: When preparing information slips make sure to include the December 2^nd closure of electronic services in your scheduling. Slips that are filed late or using the incorrect method will result in financial penalties to the business.  Also remember that when remitting information slips if five or more are required they must be filed using one of the CRA’s electronic filing services. The preparer should keep the confirmation number provided by the system in the event there are future issues.

Filing four or fewer information slips this can still be done using the mail services. But use express post or registered mail so a tracking number can be obtained. This will be useful in the event there is a discrepancy regarding the filing date, which can lead to missed slip penalties for your client.