Taxman now has a name and number
A new era of government accountability has dawned. This past week, Canada Revenue Agency Minister Jean Pierre Blackburn announced changes to the way CRA agents respond to taxpayer enquiries received through its call centres. These call centres handled about 14.6 million calls from April, 2008, to April, 2009, of which the vast majority - 11.1 million - were individual (as opposed to corporate) inquiries.
The CRA has announced that when you phone in, you will now be able to find out the identity of the call agent who handled your tax enquiry. According to the CRA, "the policy will help reinforce the agents' accountability while also ensuring greater consistency in the way they greet callers."
Call centre agents will now greet you automatically with their first name and have been designated with a CRA employee identification number and geographic call centre location that can be requested by the caller.
While this new accountability is certainly a welcome move, it's important to remember that CRA officials are human and do make the occasional mistake. Sometimes, these mistakes can be costly.
Perhaps the two most-frequently cited cases of taxpayers pleading "incorrect CRA information" in court were the 1999 case of Joyce Watanabe and the 2002 case of Gary Moulton, both involving pension buy-backs. Both cases came before now-retired Justice Donald Bowman, who later became chief justice of the tax court.
In the first case, Ms. Watanabe, a Vancouver teacher, wanted to buy back some registered pension plan years of past service. She did so by making what she thought was a fully deductible contribution to her plan.
She contacted the CRA several times and was assured that the amount was indeed deductible. Unfortunately, the CRA's advice was incorrect, but there was nothing Judge Bowman could do to remedy this as he had to apply the law as written.
In the 2002 case, Gary Moulton, also a teacher, attempted to deduct an RPP pension buy-back in the year following the actual RPP contribution, something not permitted under the tax rules.
Mr. Moulton phoned the CRA twice and spoke to two different officials who each stated that the amount would indeed be deductible in the following year. Unfortunately, this information also turned out to be incorrect and Judge Bowman denied the deduction.
As Judge Bowman wrote: "[Moulton] argues with great conviction that he should be entitled to rely on advice given by the CRA and relied upon by him in good faith.
"I agree that the result may seem a little shocking to taxpayers who seek guidance from government officials whom they expect to be able to give correct advice. Unfortunately, such officials are not infallible and the court cannot be bound by erroneous departmental interpretations."
In both cases, Judge Bowman recommended that any arrears interest charged by the CRA be waived, but he did not have the authority to cancel the tax itself.