The federal government’s proposed Bill C-31 includes measures that would significantly expand the Canada Revenue Agency’s ability to gather information and enforce compliance during audits and reviews.
While the legislation contains several technical amendments, the practical takeaway for business owners is straightforward: the CRA may have greater authority to request information, impose penalties, and extend certain reassessment timelines.
Some of the key proposed changes include:
- Expanded CRA authority to obtain information and documents, including information related to international tax agreements.
- New notices of non-compliance (NNCs) that could be issued when the CRA believes a taxpayer has not complied with an information request.
- A proposed penalty equal to 10% of the tax payable for a taxation year when a compliance order is obtained by the CRA in certain circumstances.
- Additional daily penalties for failing to comply with information requests, up to prescribed limits.
- Changes that could effectively extend the period during which the CRA can reassess a taxpayer while compliance issues remain unresolved.
- Clarification that foreign-based information may still need to be provided, even when it is controlled by a third-party non-resident.
Several controversial measures were revised following feedback from the tax community. Most notably, the proposal requiring taxpayers to provide answers under oath was removed, and additional safeguards were added regarding notices of non-compliance.
What This Means for Business Owners
For most businesses, these changes reinforce the importance of maintaining organized records and responding to CRA requests promptly and appropriately.
Even where a taxpayer is completely tax compliant, audits can become costly and disruptive if documentation is incomplete, difficult to locate, or not presented effectively. Businesses with international transactions, foreign investments, or cross-border operations may face additional scrutiny.
At Bateman MacKay LLP, we continue to see increasingly aggressive CRA enforcement, broad information requests with challenging timelines, and inconsistent interpretation or application of tax rules between auditors.
Against that backdrop, expanded audit powers are likely to create additional frustration and uncertainty for many business owners. The businesses that navigate these situations most effectively are typically those with strong documentation, proactive planning, and experienced advisors who understand both the technical rules and the practical realities of dealing with the CRA.
To help protect our clients, we offer Audit Shield, a program designed to help cover the professional costs associated with responding to CRA audits, reviews, and information requests. While no business can eliminate the possibility of a CRA review, having the right support in place can significantly reduce the disruption and stress that often accompanies the process.
Contact us today to discuss how proactive tax and accounting services can help your business overcome any challenges it may face now or in the future. Subscribe to our blog and follow us on LinkedIn for additional updates on tax, accounting, and business advisory matters.
