Jan 19, 2022
As we advised in Tax Tip 20-04 , significant additional disclosure and filing requirements for trusts were announced in the 2018 Federal Budget and are scheduled to apply for trust’s 2021 and subsequent tax years.
“File early to allow CRA enough time to confirm all information has been provided.”
CRA has recently adopted a rather controversial new policy of not providingreceipts for documents hand-delivered to their offices. This is particularly worrisome forSR&ED claimants. Whereas previously CRA would stamp a detailed receipt that itemized the documents delivered, now they will only stamp the envelope in which they are delivered.
A recent press release from CRA had the following quote:
“While CRA counter staff cannot confirm the completeness or acceptability of the contents… they will stamp the sealed envelope with the date of delivery, assuring taxpayer that a record of the transaction has been created.”
In short, this means that the taxpayer has no means of proof that the submission was filed on time if the documents get lost somewhere in CRA’s internal routing. Missing an SR&ED deadline can mean losing a substantial refund cheque. The prescribed SR&ED forms must be filed no later than the day that is 12 months after the taxpayer’s income tax return filing due date for the year in which the SR&ED expenditure is incurred.For corporations, this generally means 18 months after their year-end. There is no provision in the Income Tax Act to allow for a late-filed SR&ED claim. Therefore, if a taxpayer were to file the tax return on the last possible day, and the CRA states that it was either late or they did not receive it, there is no provision which allows for a late-filing of the SR&ED tax return.
The only relief that is possible is administrative relief wherein the CRA Assistant Director decides to accept the late-filed claim. Relying on this administrative relief is extremely risky as there is absolutely no requirement that the CRA accept the late-filed forms.
In order to avoid all of this, it is suggested that SR&ED claims be filed early enough to give CRA time to review the claims and confirm that all the information has been provided correctly. The CRA mentions in their press release that taxpayers should consider using electronic services. However, at present, a complete SR&ED claim cannot be filed electronically because CRA’s existing e-file system is not capable of accepting the technical submission document that that details the SR&ED activities which is normally filed along with the tax return itself.
TAX TIP OF THE WEEK is provided as a free service to clients and friends of the Tax Specialist Group member firms. The Tax Specialist Group is a national affiliation of firms who specialize in providing tax consulting services to other professionals, businesses and high net worth individuals on Canadian and international tax matters and tax disputes.
The material provided in Tax Tip of the Week is believed to be accurate and reliable as of the date it is written. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Neither the Tax Specialist Group nor any member firm can accept any liability for the tax consequences that may result from acting based on the contents hereof.
TAX TIP is provided as a free service to clients and friends of Cadesky Tax.
The material provided in Tax Tip is believed to be accurate and reliable as of the date of posting. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Cadesky Tax cannot accept any liability for the tax consequences that may result from acting based on the contents hereof.