March 2007 Archives

CRA Tax Tip: Community Volunteer Income Tax Program

The Canada Revenue Agency offers the following Tax Tip to Canadians:

Did you know... That the Canada Revenue Agency (CRA) can help you if you're having a difficult time filing your 2006 income tax return? The CRA’s Community Volunteer Income Tax Program offers tax help for people who have a simple tax-filing situation. For tax help, please call the Community Volunteer Income Tax Program at 1-800-959-8281. You can also visit our Web site at www.cra.gc.ca for helpful forms, guides, and other information.

CRA criminal investigators given badges

The Canada Revenue Agency (CRA) has issued the following news release. Full text of this and other CRA news releases can be found on the CRA web site:
http://www.cra-arc.gc.ca/newsroom/releases/2007/march/nr070328-e.html

Ottawa, Ontario, March 28, 2007... The Canada Revenue Agency (CRA) has issued identification badges to its investigators.

The badge and accompanying identification card will serve as official identification only. CRA investigators' roles and powers will remain the same, as will the duties they perform.

The badges are a result of adjustments the CRA has made to its policies and procedures following a ruling made by the Supreme Court of Canada in the Jarvis and Ling decisions that CRA investigators could not rely on the same administrative powers as auditors to gather evidence for purposes of criminal investigations. While audits and investigations are both serious matters, an investigation can lead to a criminal charge. The badges will allow the public to easily distinguish between an auditor and a criminal investigator. This is consistent with the CRA's commitment to transparency.

The CRA takes any incident of deliberate abuse of Canada's tax laws very seriously. In 2005-2006, 252 income tax and Goods and Services Tax/Harmonized Sales Tax (GST/HST) investigations were referred for possible criminal prosecution. These referrals along with those from previous years resulted in 293 convictions in 2005-2006 with the Courts imposing $14.4 million in fines and sentenced offenders to a combined total of 33 years in prison.

You can authorize a representative online!

The Canada Revenue Agency (CRA) has issued the following Tax Tip:

Did you know...

That you can authorize your representative online if they have registered with our Represent a client service? Authorizing a representative online gives your representative instant, secure access to the information needed to help complete your income tax and benefit return and to complete certain transactions on your behalf. You can authorize a representative online 21 hours a day, 7 days a week. You can also change or revoke your representative's authorization at any time.

All you have to do is log in to the My Account service, select Authorize my representative, and complete the four easy steps.

For more information, visit www.cra.gc.ca/myaccount

CRA Taxpayer Alert: Where you live matters!

The Canada Revenue Agency has issued a Taxpayer Alert reminding Canadians of the importance of properly indicating their province of residence on tax filings.

The Canada Revenue Agency (CRA) is warning Canadians to properly indicate their province or territory of residence on their tax returns. The CRA catches and fines people who attempt to evade taxes by filing a tax return claiming to live in one province but who actually reside in another.

It's the law.

The CRA wants you to know that in addition to paying the proper amount of federal taxes, it is your legal responsibility to pay the proper amount of taxes to the provincial/territorial administration where you reside. If you don't, you are participating in inter-provincial tax avoidance. Failure to accurately report your province or territory of residence could result in undesirable consequences including fines and penalties.

For more information, see the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/alerts/2007/a070327-e.html

CRA Tax Tip: Everyone benefits from good child care

The Canada Revenue Agency has issued the following Tax Tip:

Did you know...

That if you have a child or children under the age of six you can receive the Universal Child Care Benefit (UCCB)? This benefit is designed to help Canadian families, as they try to balance work and family life, by supporting their child care choices through direct financial support. The UCCB is paid for children under the age of six years in instalments of $100 per month per child. To receive UCCB, complete the Canada Child Tax Benefit application.

For more information about UCCB, visit www.cra.gc.ca/uccb or www.universalchildcare.ca.

BC Income Tax Branch: What's New

To find out What's New in provincial taxes in British Columbia, the Government of British Columbia Income Tax Branch provides a subscription service to for email notification of new information on its web site. For more information, see:
http://www.rev.gov.bc.ca/itb/whatsnew.htm

Budget 2007: A Stronger, Safer, Better Canada

The minority Conservative government has released its second federal budget since coming to power. According to the Finance Department web site, The Honourable Jim Flaherty, Minister of Finance, tabled today "a balanced budget that moves to restore fiscal balance in Canada, cuts taxes for working families, reduces the national debt and invests in key priorities like improving health care and environmental protection."

Selected budget information as well as the full text of the federal budget appears on the Finance web site at:
http://www.budget.gc.ca/2007/index_e.html

CCPA Alternative Budget 2007

In timing with the 2007 federal budget, the Canadian Centre for Policy Alternatives has released its Alternative Federal Budget 2007: Strength in Numbers. The news release from the CCPA web site follows:

Federal surplus evaporating: Think-tank Harper plan at odds with Canadian priorities

OTTAWA--The Harper government is on the brink of exhausting its fiscal surplus on a pre-election spending plan that is at odds with what Canadians want, says the Canadian Centre for Policy Alternatives.

The Centre released a national Environics poll today showing that any government that takes concrete action to reduce Canada's growing income gap would enjoy support from the majority of Canadians.

Yet the Centre's 2007 Alternative Federal Budget, released today, warns that the federal surplus that should be used to invest in Canadian priorities could quickly disappear.

"Prime Minister Harper's tax cuts plan is so expensive, he may soon find himself having to choose between putting the nation back into deficit or slashing programs," says CCPA senior economist Ellen Russell.

The Centre predicts the 2006-07 surplus will be $9.2 billion but the Harper government will need more money than this to pay for its pre-election promises. The surplus could run out as early as next year.

"There may soon be no surplus left to address Canadians' priorities, such as child care, affordable housing and tuition," Russell says. "Prime Minister Harper is putting Canada into a no-win situation - and he's at odds with what Canadians say they want."

This year's Alternative Federal Budget shows there is a way to invest the surplus in tangible programs that support Canada's working families while keeping the nation in a balanced budget situation.

Alternative Federal Budget 2007: Strength in Numbers is available from the CCPA web site: http://www.policyalternatives.ca

CRA announces business resumption plan

The Canada Revenue Agency has indicated its timeline to bring services back on line, indicating all services will be back online by no later than Thursday March 15, 2007.

According to CRA Commissioner Michel Dorais:

“We have begun to bring some of our systems into production. We expect to have all of our taxpayer services, including EFILE, NETFILE, Change My Address and return processing back into full service no later than on Thursday March 15th, 2007.”

According to the news release, the CRA is bringing back its temporary employees Thursday morning to begin processing all outstanding files.

For more information on this fact sheet, see the CRA web site at:
http://www.cra-arc.gc.ca/newsroom/factsheets/2007/march/fs070312-e.html

Electronic Tax Filing Glitch at CRA

The Canada Revenue Agency has released an important message concerning technical difficulties the agency is experiencing with its electronic tax filing services.

From the CRA web site:

"The Canada Revenue Agency (CRA) is experiencing electronic system difficulties that prevent the public from accessing some electronic services such as NETFILE, TELEFILE and EFILE. We have temporarily shut down public access to electronic services to ensure the integrity of taxpayer information.

The CRA has a team working to restore its systems to normal operations but it will be a matter of days before the system problems are completely resolved. The security and integrity of taxpayer data has not been compromised. This problem is not the result of illegal activity, computer hackers or a virus.

We have now traced the source of the problem to software maintenance conducted on March 4, 2007. We are currently working to bring all systems back online gradually."

For more information, visit the CRA web site at www.cra.gc.ca

CRA Service Options!

The Canada Revenue Agency has provided the following Tax Tip...

"Did you know...

That the Canada Revenue Agency (CRA) offers many convenient and accessible service options such as the toll free telephone network and the Internet? On our Web site, our electronic services provide you with easy-to-use tax filing options, step-by-step instructions, and self-serve convenience designed to make your transactions with the CRA quick and easy.

Our knowledgeable and courteous telephone agents are also ready and willing to assist you. If we are unable to resolve your enquiry over the telephone, we will arrange an appointment for you to see a CRA representative at a time that is convenient for you!"

For more information on this or other CRA Tax Tips, visit the CRA web site at: http://www.cra-arc.gc.ca/newsroom/taxtips/2007/tt070306-e.html

Important Update to the Voluntary Disclosures Program in Ontario and

The Canada Revenue Agency has issued the following news release regarding an important update to the Voluntary Disclosures Program in Ontario and Nunavut.

Toronto, Ontario, March 5, 2007... As of March 5, 2007, the St. Catharines Tax Services Office, Enforcement Division will be the initial point of contact and intake centre for all Ontario and Nunavut disclosures and related enquiries. The Voluntary Disclosures Program promotes compliance by encouraging taxpayers to voluntarily correct previous omissions in their dealings with the Canada Revenue Agency.

Overall, the Voluntary Disclosures Program for Ontario and Nunavut will be handled by the St. Catharines, London and Peterborough-Kingston-Belleville Tax Services Offices - Enforcement Divisions.

The Canada Revenue Agency's Voluntary Disclosures Program policies, procedures and guidelines are not changing. What has changed is the arrangement for submitting a disclosure for Ontario and Nunavut's taxpayers. The purpose of this arrangement in Ontario and Nunavut is to facilitate better access to expertise and to enhance the efficient review of complex disclosures. The Canada Revenue Agency is committed to continue providing taxpayers with timely and excellent service in managing the Voluntary Disclosures Program.

For information on disclosures made before February 5, 2007, please contact the respective Enforcement Division of the Tax Services Office where the disclosure was submitted.

For information on disclosures submitted on or after February 5, 2007, please contact us by phone at 1-888-592-6869, by fax at 905-322-3133 or in writing: Voluntary Disclosures Program, St. Catharines Tax Services Office, 32 Church Street, P.O. Box 3038, St. Catharines, ON, L2R 3B9.

For more information about the Voluntary Disclosures Program visit our website at www.cra-arc.gc.ca or contact 1-888-592-6869.

For more information on this or other CRA news releases, please visit the CRA web site:
http://www.cra-arc.gc.ca/newsroom/releases/2007/march/nr070305-e.html

Towards a Tax-Back Guarantee & a Taxpayers Bill of Rights

The Conservative government is set to enact a tax-back guarantee after the federal budget is tabled on March 19. The proposal is to lower taxes using interest savings that occur naturally when government debt is reduced. OttawaR17;s debt stands at $481.5-billion and annual debt interest payments are more than $34-billion. Should Ottawa make debt reduction a priority, the tax-back guarantee will be a boon to taxpayers.

The challenge for Finance Minister Jim Flaherty is to ensure the guarantee mechanism triggers tax relief automatically. If the government neglects to put in place workable legislation, the initiative will be labeled a political gimmick.

Budget ’07 affords the finance minister an opportunity to deliver tax relief to Canadians. Thanks to Mr. Flaherty’s sound decision to use last year’s budget surplus of $13.2-billion to pay down debt, Ottawa will save $700-million a year on interest payments. The surplus in the current fiscal year is projected to be $7.2-billion and despite rampant public spending, many observers expect it will top $10-billion when the books close on March 31st. If this surplus is also applied against the debt, the combined interest savings will permit Ottawa to cut taxes annually by $1.2-billion. That’s a good start.

Mr. Flaherty should go further and make deeper income tax cuts, for two reasons. First, the unexpectedly large surpluses are politically embarrassing to a government that vowed to end the practice of low-balling surplus projections. Second, a surplus is just a fancy word for over-taxation and excess tax dollars should be returned to taxpayers.

Mr. Flaherty has already pledged to reduce debt by $3-billion annually until at least 2021. Each repayment saves Ottawa about $170-million in annual interest costs. Yet a tax-back pledge is not a guarantee of a tax break. If the government is serious about this commitment it should make it law to ensure future debt reduction results in automatic tax relief – as a dividend to taxpayers – in the subsequent fiscal year.

Legislation ensures interest savings are not subject to political manipulation. Interest savings must be placed in a lock box – beyond the reach of politicians – so it flows automatically to taxpayers by raising income tax thresholds, for example. The law must also state the tax refund flowing from the guarantee is permanent and will not be repealed if interest costs rise. Should borrowing rates increase, Ottawa should not solve any shortfall on the backs of families, many of whom carry mortgages and debt of their own. Ottawa will instead need to reduce its spending.

The other predicament facing Mr. Flaherty, and his cabinet colleagues, is to control year-end spending and resist spending down anticipated surpluses. Under a tax-back guarantee if debt relief is more aggressive, the corresponding tax relief could be larger. And that’s the rub: the Conservatives are hardly better at managing budget surpluses than the Liberals. Mr. Flaherty has rebuked the old Liberal government for increasing program spending by “an average of 8.2 per cent annually.” Yet unless the government slows the “March madness” spending bender, program expenditures will climb by almost 8 per in 2006/07.

The machinations of government make controlling spending difficult. There are presently no legislative constraints on federal spending. As such, parliamentarians announce new programs, tally up the costs, and pass a budget to fund them.

One way to prevent governments from spending down the surplus before the books close at year end is to enact tax/expenditure limits (TELs). Such restrictions control spending and prevent politicians from driving the budget process off the rails. Parliament should trade off spending in priority programs with cuts in lower-priority areas. A Canadian TEL should cap each year’s spending increase at the rate of inflation plus population growth and require all revenues collected above the spending cap to be returned as tax refunds. A three per cent emergency reserve would be permitted to keep the budget balanced. Passing TELs along with a tax-back guarantee ought to be enacted as part of a Taxpayers Bill of Rights.

CanadaR17;s surpluses are certainly not a direct threat to the economy, but ongoing over-taxation by the federal government does weaken the nation’s competitiveness and leave families with lower take-home pay. High taxes and high spending removes economic resources from the private sector and impedes growth and prosperity. A balanced budget does not necessarily force lawmakers to control spending because it can happen by way of higher taxes and higher spending.

Ottawa has a revenue problem and a spending problem. Mr. Flaherty can solve the first by cutting taxes on March 19, a move today’s taxpayers will thank him for. He can fix the second by legislating expenditure limits. This will ensure government programs do not grow at unsustainable rates and force higher taxes to be paid by a future generation of taxpayers.

John Williamson
Federal Director
Canadian Taxpayers Federation