From My Business Account and Represent a Client to a new T3 electronic filing program, tax practitioners will see a raft of improved digital tax services. Find out what’s new and what’s coming next.
As the Canada Revenue Agency (CRA) continues building a first-class digital tax system, CPA Canada and our members regularly offer input on the design features that will benefit taxpayers and practitioners the most. For the past several years, the CRA-CPA Canada Technology Working Group has brought together senior CRA officials, tax preparers, tax software developers and other stakeholders to share information and brainstorm ideas for making tax administration better.
At the group’s latest meeting, conducted virtually over two days in November, the CRA previewed a number of digital services improvements now in place or in the works for the coming years. In this blog, we summarize updates on the CRA’s electronic services in these areas:
Like most workplaces across Canada, the CRA’s Assessment and Benefits Services Branch (ABSB) quickly moved to remote work arrangements due to emergency lockdowns in March 2020. However, the ABSB’s services were only briefly interrupted as its staff rose to the challenges of managing the 2019 T1 filing season while also rolling out the Canada Emergency Response Benefit (CERB), Canada Emergency Wage Subsidy (CEWS) and other emergency support programs. Virtually all CRA programs are now fully operational.
The ABSB is now planning ahead for the next 12 to 18 months, which is tricky as new waves of infection and lockdowns are hard to predict. Protecting employees continues to be a priority for the CRA. Other priorities include maintaining helpline and tax centre services, although some sacrifices in service levels may be unavoidable.
For example, paper-filed returns posed challenges for the past filing season, and the ABSB expects these challenges will persist in the 2020 T1 season. Tax preparers and their clients should be aware that it may take about 10 to 12 weeks to process paper-filed returns (up from the usual 8 weeks) and paper-filed T1 adjustments (also up from 8 weeks). The service standard time for processing efiled T1s is two weeks for 95 per cent of returns.
In October 2020, the CRA released a variety of enhanced features in MyBA. These include:
The CRA’s October 2020 release added a new feature to the RAC portal that allows representatives to submit legal documents related to estates on their clients’ behalf electronically, with no need to file them in hard copy. The documents include wills, death certificates, powers of attorney, Form RC552 (for naming a representative for intestate situations) and related documents. We have asked the CRA for more information on the specific steps to take and we will provide an update. Representatives can also submit requests through RAC to update corporate ownership information along with supporting documents.
The CRA has announced that, as an enhanced security measure beginning in January 2021, all individuals calling the CRA to receive taxpayer information on behalf of an authorized firm, business or group will need to provide their RepID to the telephone agent.
Representatives (for clients and those doing work for their employers) can prepare for this change and avoid delays in accessing helpline services by ensuring they have a RepID before January. Representatives can register for a RepID on the CRA’s RAC webpage.
The CRA is modernizing its T3 trust return processes in advance of new tax rules that will greatly increase the number of T3s filed. Legislation proposed in the 2018 federal budget and expected to be enacted in 2021 will require certain trusts with a tax year-end after December 30, 2021 to file a T3 return annually to provide their beneficial ownership information. The volume of returns that will be required to be filed is expected to increase significantly.
The CRA is planning to modernize the systems and processes used to assess T3 returns, with changes projected to be released in three phases:
For paper-filed trust returns, the CRA currently accepts them without a registration number and assigns the number after the filing. In 2022, registration numbers will be needed in advance for e-filed trust returns, but the current policy will remain in place for paper-filed returns. The CRA encourages requesting a trust account number online before paper-filing a T3 return to avoid processing delays.
As a COVID-19 emergency measure, the CRA temporarily changed some of its regular security procedures. The waiver of handwritten signatures for T183 forms has been extended to the end of January 2021. CPA Canada has recommended that these temporary procedures should be retained until at least June 2021 to avoiding causing disruptions during the pandemic.
The CRA has been engaged in consultations to develop long-term permanent solutions for updating security protocols for handwritten signatures for authorizations under the Income Tax Act. This project also includes forms such as Form T1134, Form T106, Section 85 elections and Form T2201. While the current project only considers forms for income tax, forms under the Excise Tax Act will be addressed in the future. You can find out more details in the CRA’s February 2020 consultation summary report.
The CRA is pursuing a permanent, fully encrypted solution to ensure email communications with taxpayers are secure and their privacy and personal information is protected. In the meantime, the CRA will not email anything sensitive to taxpayers. Rather, the CRA will alert taxpayers by email to visit MyA or MyBA for protected communications. The CRA is also looking into other solutions, such as expanding the size of files that can be uploaded in the portals to avoid the need for taxpayers to email them.
The CRA is developing a solution to improve previously manual mailroom processes, starting by digitizing hard-copy Form RC1 new business number requests, along with any authorization form mailed with them. This is expected to improve the ability for the CRA, taxpayers and representatives to confirm receipt and track the progress of documents received on paper.
Upcoming phases of this project will entail digitizing additional forms, as well as extracting data from the digitized form.
As part of the CRA’s ongoing work to provide more options and make it easier to make tax payments online, the CRA introduced tax payment buttons within its secure portals in October 2019. In May 2020, this functionality was extended to payroll deduction payments. Since then, the CRA has worked to expand electronic payment options to third-party payment remitters and integrate payment options into tax preparation software.
The CRA’s work in this area is resulting in fewer incidents of misallocated payments, leading to fewer calls and adjustments. For example, some large corporations using the “Pay Now” feature in MyBA have not seen their payments and refunds allocated as directed. The CRA launched new software in October 2020 that should help streamline the process and resolve misallocation problems.
During the CRA-CPA Canada Technology Working Group’s meeting in November, it was noted that further functionality to adjust misallocated payments would be useful, especially for payments involving individuals.
A number of other issues were also discussed, and we will provide updates as these conversations progress. As always, we will continue to gather feedback from members for issues to discuss at future meetings.
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