CRA’s handling of bare trust rules under ombudsperson review

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The Office of the Taxpayers’ Ombudsperson says it is reviewing the Canada Revenue Agency‘s handling of the reporting requirements for bare trusts after the CRA scrapped the 2023 filing just days before the deadline.

The preliminary review was prompted by a letter from Conservative MP Adam Chambers, who wrote to Ombudsperson François Boileau requesting an examination of an alleged lack of procedural fairness and prima facie violations of some rights under the Taxpayer Bill of Rights.

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“I agree that, at first glance, it appears as though the CRA has not respected several rights under the Taxpayer Bill of Rights,” Boileau wrote in a response to the MP’s letter. “I share some of your concerns related to this situation.”

The ombudsperson said his office is still reviewing the situation and is carrying out preliminary research as it continues to gather more detailed information from the CRA.

The review is not a formal systemic exam or a request for service improvement to the CRA, Boileau clarified, but should one be launched, he said it will be made public.

The CRA announced on March 28, just two days before the March 30 filing deadline, that it will not require bare trusts to file a T3 Income Tax and Information Return for the 2023 tax year, unless directly requested by the agency. The return includes Schedule 15, a form for beneficial ownership information of a trust.

The agency said the move is “in recognition that the new reporting requirements for bare trusts have had an unintended impact on Canadians.”

In his letter, Chambers requested the ombudsperson’s office review whether the CRA violated taxpayers’ rights including the right to be treated professionally, courteously and fairly, and the right to complete, accurate, clear and timely information.

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They also include the right to have the costs of compliance taken into account when administering tax legislation and the right to expect (the CRA) to be accountable.

He said the CRA’s announcement, coming only days before the filing deadline, shows “a complete disregard for the concerns and negative impacts felt by taxpayers.”

“The CRA indicates that there are ‘unintended impacts on Canadians’, however it waited until the last day to reverse implementation,” the MP wrote.

Chambers added that this resulted in Canadians filing T3 returns to comply with the proposed rules, therefore affecting trusts.

Boileau said his office’s research will include how the CRA is treating taxpayers who have already filed their T3 returns.

“We are also very interested in how the CRA will address this issue, as it has a responsibility to uphold the Taxpayer Bill of Rights,” he wrote.

• Email: dpaglinawan@postmedia.com

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