Canada’s taxpayers’ ombudsperson is launching a systemic review into the Canada Revenue Agency’s handling of bare trust reporting requirements, months after Canadians were left confused on if they needed to file the returns before the agency hit pause.
The ombudsperson’s office made the announcement on Wednesday, saying François Boileau would look into whether the CRA respected taxpayers’ rights in its administration of the reporting requirements for the 2023 tax year.
“This is welcome news,” Franco Terrazzano, federal director of the Canadian Taxpayers Federation, said in an interview with Global News. “So we can kind of get to the bottom of the debacle.”
The filing requirement was new this year, but many Canadians were unaware if they may even be part of an arrangement, causing many to seek help from professionals on what to do.
Days before the April 2 deadline, the CRA announced Canadians would not be required to file a T3 tax return and Schedule 15 unless the agency made a direct request.
Global News heard from several Canadian taxpayers and those who helped with filings who were left “angry” about the sudden about-face.
Amid concerns over the handling, and what he called a “lack of procedural fairness” and potential “violation of rights” under the Taxpayers Bill of Rights, Conservative MP Adam Chambers wrote to Boileau in April asking for a review.
Boileau wrote on Wednesday that taxpayers, representatives and MPs had reached out to express concerns, including that some bare trustees already paid hundreds of dollars to meet the filing obligations.
“It is not just bare trustees that have been affected by the CRA’s last-minute announcement,” Boileau said in a statement. “Representatives also put in hours of work to understand the new requirements and file for their clients, only to find out that their efforts may have been for nothing.”
Under the review, the ombudsperson’s office said it will examine clarity and timing of the CRA’s communication and the cost of compliance issues for taxpayers and their representatives.
According to the CRA, a total of 51,578 bare trust forms for the 2023 tax year had been received as of June 14.
Chambers told Global News in an interview that he was pleased a review was being taken. He said answers are needed around the confusion of the process, and why the about-face was made so soon before the filing deadline.
“Waiting until the last minute means Canadians felt the maximum amount of pain inflicted on the maximum number of people,” Chambers said.
He added he would like to see the probe garner more information on the decision-making process and “who made the final decision on when to reverse course.”
Terrazzano said he believes the review and subsequent recommendations are good, but more needs to happen, echoing previous calls he’s made that individuals in the CRA should face consequences.
“The government needs to actually hold employees at the CRA accountable and responsible for the financial headaches that the CRA caused because of its own incompetence,” he said.
In a statement to Global News, the CRA said it welcomed the taxpayers’ ombudsperson’s review.
A spokesperson said the agency works with the ombudsperson to improve service and “routinely” takes steps to resolve issues before formal recommendations are made. They said the CRA is also working with the Department of Finance to further clarify guidance on its bare trust reporting requirements and would communicate more information once available.
Bare trusts aren’t new, but this was the first time the arrangements had to be filed and reported to the CRA for the 2023 tax year.
The agreements are when someone legally owns an asset, but it technically belongs to someone else. One example is when a parent co-signs a mortgage for their child, or a joint bank account between an adult child and elderly parent.
Boileau’s office says it will speak with stakeholders, including the CRA, to “better understand the processes in place,” and may make recommendations on ways the agency can “prevent similar issues in the future.”
— with files from Global News’ Abigail Bimman and Naomi Barghiel
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