Have a gripe over how the CRA has treated you? Here’s your chance to speak up
Last week, just as the personal tax filing deadline for most Canadians was approaching, the Canada Revenue Agency launched public consultations that will allow Canadians across the country to highlight how the CRA can improve its services.
The CRA will conduct seven in-person consultations in Vancouver, Winnipeg, Mississauga, Montreal, Moncton and Halifax during May and June 2019. Up to 20 individuals and representatives of vulnerable populations will be invited by an independent third party to participate in each consultation session. The public consultations include an online consultation (which is open now until June 18, 2019), where taxpayers can provide feedback. The CRA will publish the findings from the consultations on its site in November 2019 and, if you opt in, it will notify you when new content is posted.
In its release announcing the consultations, the CRA stated that over the past three years it has attempted to make it “easier, faster, and more secure to file taxes and get credits and benefits.” For example, the CRA has introduced online and software improvements such as Auto-fill my return, which automatically fills in parts of your personal tax return. That service was used over nine million times during the 2018 filing season. The CRA has also moved to a new, modern telephone platform featuring improved accessibility for callers after a 2017 Office of the Auditor General report found that call-centre agents answered only about one-third of calls to the CRA’s call centre, with more than half the calls it received blocked because it could not handle the volume.
Yet despite these improvements, the CRA acknowledged that “it needs to do more to meet the expectations of Canadians.” To this end, in March 2018, the role of the chief service officer of the CRA was introduced to help the agency focus “on better understanding people’s needs and expectations in order to improve service experience and deliver better outcomes for Canadians.” Prior feedback the CRA has received has shown that the CRA’s reputation as a leader in service delivery is “falling short of expectations.” While Canadians want the CRA services to be reliable, easy to use, and quick, they also want CRA employees to be helpful, trustworthy and empathetic. Canadians have told the CRA that it is sometimes seen as “intimidating and lacking empathy or a personal touch.”
For an example of how the CRA, at times, can be overly aggressive in pursuit of small sums, we need only turn to a recent case involving the deductibility of spousal support. The case involved an Ontario taxpayer who separated from his former spouse, signing a separation agreement in April 2000 which required him to pay spousal support.
The terms of the separation agreement also stated that the taxpayer “will increase the total amount payable to (his ex-spouse) each month as periodic spousal support by the full amount of the monthly premium payable … each month for her Ontario Blue Cross health-care coverage.”
His former spouse, however, requested that the taxpayer pay the amounts directly to Blue Cross “to save her time and to convenience her.” The taxpayer obliged and paid the annual premium to Blue Cross directly by way of a lump sum payment as opposed to monthly payments to his former spouse.
On his 2015 tax return, the taxpayer deducted spousal support payments totalling $17,089, consisting of $15,033 paid in cash directly to his former spouse and $2,056 paid directly to Blue Cross to cover the cost of health-care coverage for his former spouse. The taxpayer’s former spouse included both these amounts in her 2015 income.
The CRA denied the taxpayer’s deduction for the $2,056 paid to Blue Cross, presumably because it was not paid directly to his ex-spouse and therefore did not constitute deductible periodic spousal support under the Income Tax Act.
While we don’t know the taxable income of the spouses (the reported decision did not contain those details), if we assume that the payor spouse was in the top 2015 Ontario tax bracket of 50 per cent and the recipient spouse was in the bottom Ontario bracket of 20 per cent, the maximum amount of tax that the CRA could have been pursuing in Tax Court was just over $600 (i.e. $2,056 X (50% – 20%)).
The taxpayer testified that he could have easily paid his former spouse the amount prescribed in the separation agreement by increasing his monthly cheque to her and she could have deposited the cheque and written it to anyone she wanted for health care. Instead, she asked him to simplify her life and make the payment directly to Blue Cross on an annual basis.
The judge found in favour of the taxpayer, saying that the taxpayer’s ex-spouse essentially directed him to make the payment on her behalf “thereby exercising control as to how the money should be spent.” As a result, the Blue Cross premiums paid by the taxpayer were found to be properly deductible as spousal support.
Thomas McDonnell, Q.C., a tax lawyer with over 50 years of experience and the editor of the Canadian Tax Foundation’s newsletter Tax for the Owner-Manager, wonders why this case ever had to go to court. Explains McDonnell: “Although the court reached the right result in this case, it’s another example of how the inherent complexity of the tax rules and the sometimes rigid approach to them taken by CRA forces taxpayers to go to unreasonable lengths to maintain what is otherwise a very reasonable position.”
The solution, according to McDonnell, is a much more sensible approach at the lower levels in CRA and its appeals division. “There wasn’t much money involved here and I suspect that meant the file was handled at a junior level. This case just strikes me as so typical of an administration more interested in statistics (assessments made, objections rejected) that it cries out for some sort of public complaint.”
If you have concerns with how you’ve been treated by the CRA, now is your chance to have your complaints formally heard during the current public consultation process.