Non-Compliance with Information Requests by the CRA
The Canadian Government is providing the CRA with additional powers to collect information from taxpayers. The Taxpayers could be individuals, corporations or trusts.
The laws are not yet in force, but they are proposed by the 2024 Federal Budget.
Information and Documents provided to CRA carry criminal charges consequences
It is proposed that the current tax laws will allow the CRA to specify in any requirement letter or Notice that the information provided to the CRA (either oral or written) or as documents is to be provided “under oath or affirmation”.
What is the significance of providing information or a document “under oath or affirmation”?
Taking an oath or an affirmation to be truthful is legally binding and has legal implications when not respected. Lying under oath or affirmation is considered “perjury” in Canada which is a criminal offence. You can end up in jail for up to 14 years if proven that you intended to deceive the judicial system.
A new “Notice of Non-Compliance” issued by CRA carries penalty and no more statute-barred periods
It is also proposed that CRA can issue a new type of Notice to taxpayers, a “Notice of Non-Compliance”. It can be issued to a taxpayer or a person who is related to the taxpayer (“related” by definition of the tax law). While this Notice is outstanding and not resolved penalties will be imposed daily to a maximum of $25,000 and the CRA can look into any tax year without restriction.
Court Orders obtained by CRA against a Taxpayer now comes with penalty and extends to foreign information
When the CRA obtains a court order against a taxpayer, a new penalty will be imposed, when the tax owing is over $50,000. If the tax owing is less than 50,000 no penalty is applied. The penalty is 10% of the tax payable outstanding.
The CRA can now obtain a court order to require foreign -based information or documents. This increases the penalty already in force for T1135 or T1134 filings or other disclosure of foreign information.
The new rules will allow the CRA to open any tax year related to their compliance order, so the statute-barred periods that taxpayers usually take advantage of, will not apply anymore.
Periods open on Compliance order by the CRA
Under these new rules, the CRA can now open any tax year to look at, subject to any requirement or notice from the CRA, in relation to an audit or enforcement process or a compliance order.
Other Tax Laws
It is proposed that the above perjury, penalties and Notices/Compliance Orders matters apply to the GST/HST, Fuel Excise Tax, Underused Housing, Select Luxury Items and custom duties in respect of alcohol, tobacco, cannabis, and vaping.
These new laws will take effect once the new legislation receives royal assent.
