New CRA Powers

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Kaveh Rezaei /
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New CRA Powers

New CRA Powers

The Canadian government has officially given the Canada Revenue Agency (CRA) expanded powers under the 2024 budget, which is now law. These new measures give the CRA stricter enforcement abilities, including penalties and extended timelines for reviewing tax filings when individuals or businesses fail to respond to information requests. Additionally, the CRA has new authority to demand foreign information through legal orders.

Here are the main changes:

1) New Notice of Non-Compliance:

If you ignore the CRA’s requests for information, they can now send you what is called a “Notice of Non-Compliance”.

2) Longer Time to Reassess your Taxes:

If the CRA issues a "notice of non-compliance" due to a failure to provide requested information, the normal time limit for reassessing your taxes is paused. This suspension of the time limit will remain in place as long as the notice is unresolved. Essentially, this allows the CRA more time to review and audit your tax filings, ensuring they can gather the necessary information before the reassessment time limit expires.

3) New Penalties:

If you receive a Notice of Non-Compliance and fail to resolve it promptly, you could face a fine of $50 per day, up to a maximum of $25,000. If the CRA is forced to pursue legal action, and the unpaid taxes exceed $50,000, you could be hit with an additional penalty equal to 10% of the taxes owed.

4) Foreign Information Orders:

The CRA now has expanded powers under the 2024 budget to demand information or documents from other countries through legal orders. This can include information related to international agreements, tax treaties, and the Income Tax Act. The CRA can ask any Canadian resident, or non-resident doing business in Canada, to provide foreign-based information without charging the government.

The CRA’s request will give you at least 90 days to provide the required documents and will clearly state what is needed. If the information is not provided, the CRA can apply to the Federal Court of Canada for a compliance order. A compliance order is a legal command from the court that forces you to provide the information the CRA has requested.

Conclusion:

The expanded powers granted to the CRA under the 2024 budget significantly enhance their ability to enforce tax compliance. With new tools like the Notice of Non-Compliance, extended reassessment periods, and stricter penalties, taxpayers must be vigilant in responding to CRA requests, as failure to comply can result in substantial financial consequences and legal complications. It's crucial for individuals and businesses to stay informed and proactive in their dealings with the CRA to avoid these penalties.