Achi news desk-
Alberta’s Peter Corry says he recently paid an accountant $700 to file his bare trust tax returns, in case of a penalty for missing the April 2 deadline.
However, following the Canada Revenue Agency’s (CRA) announcement last week that it was withdrawing the reporting requirement, Corry says he feels the money was spent for nothing.
“For being a responsible citizen and filing we are losing money as the CRA changes the rules 4 days before the deadline! How do we get that money back?” Corry said in an email to Global News.
Like many Canadians who recently became aware of this year’s new bare trust reporting requirement, Corry made quick arrangements to file as soon as possible. That meant spending hundreds of dollars in accounting services and tax preparation fees.
Franco Terrazzano, federal director of the Canadian Taxpayers Federation (CTF), says Canadians “have every right to be ticked off with the CRA.”
“It’s almost like the CRA is going out of its way to make life harder for Canadians. Like, what are they doing waiting until the very last minute to announce these rule changes?” Terrazzano told Global News.
“The question is, will anyone from the CRA be held accountable for this? Because they should.”
On March 28, the CRA announced that Canadians with bare trust arrangements will not be required to file a T3 and Schedule 15 tax return unless the agency makes a direct request for these filings. The change came just days before the filing deadline.
The CRA said the decision was made “in recognition that the new reporting requirements for bare trusts have had an unintended impact on Canadians.”
The requirement to file a form for bare trust arrangements was reintroduced by the CRA this year, but it is likely that many Canadians were unaware of its existence or even that they could be part of an arrangement of the type.
A last minute change puts accountants in a difficult position
A bare trust refers to the legal ownership of a property or account that does not match who is entitled to it. The trustee has no decision-making power over the beneficiary’s assets and only acts on his instructions.
Bare trust arrangements are very popular because of their practicality. The most common examples are putting money into an account for an elderly parent or for a child to hold birthday money.
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Missing the deadline would have meant that many Canadians could face some big penalties, especially a gross negligence fee with no maximum.
However, before completely removing the bare trust filing requirements, the CRA waived the penalties to ease Canadian confusion and alarm over the new rules.
Brendan McCann, a partner at Toronto-based accounting firm McCann & Associates LLP, says many clients have taken the penalty relief as an opportunity to work with their accountants to file their returns by the deadline, without rushing them.
While the CRA’s final decision to withdraw the reporting requirements entirely was met with relief for clients who had not yet filed, McCann says many accountants were put in an awkward position.
“From an accountant’s point of view, we’re probably not going to bill our clients for that time spent,” he told Global News.
McCann says that in the months since the CRA published the new reporting rules, accountants have spent “hours and hours” researching bare trust arrangements, discussing the requirements with clients and helping them navigate all the items which are required for filing.
Canadians were billed for the returns they filed, McCann said, but accountants who didn’t file before the CRA’s latest announcement likely won’t be paid for their time and labor.
“We cannot go back and reacquire that time spent, especially in March. We have to move forward,” McCann said.
He says he hopes Finance Canada and the CRA will give Canadians more warning next year before making changes to tax reporting rules.
“Hopefully (they) will give Canada proper guidance for 2024 in a more timely manner…so things are more organized on our end and on the clients’ end, instead of at the 11th hour finding out what is needed, because of that uncertainty that worries a lot of people,” he said.
McCann says the consequences Canadian taxpayers and accountants face from the last-minute rule change “shouldn’t have been hard for (the CRA) to see coming.”
“On both sides, there are a lot of angry people right now,” he said. “Whether someone is on the title of their parents’ home, or they have guaranteed a son or daughter’s mortgage, (the CRA) should have known that thousands and thousands of people would be affected, and they should have been prepared for that. the criticism.”
Could you receive compensation from the CRA?
Asked for comment by Global News about the recent feedback, the CRA reiterated its message from its March 28 announcement.
“Over the coming months, the CRA will work with the Department of Finance to further clarify its guidance on this filing requirement. The CRA will communicate with Canadians as more information becomes available,” the agency said in an email to Global News Friday.
The CRA said that after removing the gross negligence penalty this year, stakeholders “continued to express concerns in relation to those increased filing requirements.”
“In particular, many taxpayers and representatives requested further clarification regarding the determination of whether there is a trust in certain factual situations.”
John Oakey, vice-president of taxation with the Chartered Professional Accountants (CPA) of Canada, says his organization has informed the CRA of the frustration over the last-minute change but does not expect any refunds to arise.
“From a compensation perspective, the CRA is not going to be going around compensating anybody for this,” Oakey told Global News.
Despite the criticism targeted at the CRA, Oakey says it is important to realize that there are several players behind the decision who also deserve the blame.
“There is a lot more going on behind the scenes than we are aware of. So I don’t know if we can put all the blame squarely on the Canada Revenue Agency for this late announcement,” he said.
Oakey says any Canadians who believe they have been affected by the late rule change should still take action.
“For any individuals who have incurred costs trying to comply with the rules, the best thing for them to do is to reach out to their Member of Parliament and express their frustration with the system,” he said. “That’s the best avenue they have to express their concerns.”
