New and improved CRA digital services for tax practitioners

At the latest meeting of the CRA-CPA Canada Technology Working Group — where tax practitioners, tax software developers and CRA officials came together to preview and brainstorm ways to improve CRA digital service options for taxpayers and their representatives — the CRA answered questions about a variety of upcoming changes and enhancements in these areas:

• electronic payments over $10,000
• business correspondence — “Digital by Default” approach
• communicating with the CRA — additional changes
• signing into CRA portals — registration and authentication
• special elections and returns
• underused housing tax
• new and upcoming services

In this blog we summarize the CRA’s latest news and stakeholders’ views on these developments. The dates of future changes are tentative and might change.

ELECTRONIC PAYMENTS OVER $10,000

Question 1: Newly enacted legislation requires taxpayers to remit tax payments over $10,000 electronically or pay a penalty of $100 per payment, but the CRA has not yet published any associated forms or guidance. Will the CRA be enforcing the rules when they enter into effect at the start of 2024?

CRA response: There is expected to be a grace period before the rules are enforced, during which the CRA will continue educating taxpayers on electronic payment options and encouraging them to pay electronically.

Question 2: When payments are made physically at a bank, will they be considered to be made electronically for this purpose?

CRA response: Yes. Payments made at the bank, by someone who went there physically with a remittance voucher (RV), are considered electronic. Even though there’s a manual data capture component on the CRA side (keying RV information into the system) for these types of payments, the funds and account/amount payment details are electronically transmitted to the Receiver General and CRA by the financial institutions and are therefore considered “electronic”.

Question 3: In some cases, making tax payments electronically may not be possible. For example, trusts have few options to make electronic tax payments. Power outages or unreliable internet in rural areas can also create challenges. Does the CRA plan to allow any leeway in such cases?

CRA response: The legislation makes exceptions in situations when it is not “reasonable” to make payments electronically. The CRA is considering what is “reasonable” in this context and will publicly share details about its policies once they have been determined.

CPA Canada feedback: We have asked the CRA to publish its expectations on enforcing this new requirement on their website as soon as possible, so the position is clear to affected taxpayers. We also encouraged the CRA to publish guidance on any exceptions that will be made to the electronic payment requirement.

BUSINESS CORRESPONDENCE — DIGITAL BY DEFAULT

Question 1: Budget 2021 announced that the CRA would be given the legislative authority (enacted in Bill C-47 in June 2023) to provide businesses with correspondence digitally as the default method of communication. What are the CRA’s plans to implement this “Digital by Default” approach to communicating with business taxpayers?

CRA response: Once the change is fully communicated and in place, the CRA will stop mailing most notices and statements to business taxpayers that are signed up for the My Business Account portal or have authorized their representative to access these services in Represent a Client. Businesses will be notified of delivery when they provide an email address to the CRA for that purpose.

This change is now expected to be implemented in May 2025. More information will be released in the coming months.

Question 2: Are any exceptions or opt-outs allowed for the “Digital by Default” approach?

CRA response: Some organizations with business numbers will be excluded and can continue to receive correspondence by mail. These include non-resident businesses that are unable to access My Business Account and charities.

Business taxpayers will be able to “opt-out” and request that paper statements be restored. The CRA will review these requests and reactivate paper mail as long as the mailing address is kept current.

CPA Canada Feedback:  The CRA had initially planned for a May 2024 launch. CPA Canada warned the CRA that this would be in the midst of busy season and encouraged them to consider this in their plans. The new target launch date will give the CRA more time to communicate the change, and businesses and practitioners more time to prepare.

In addition, allowing businesses to opt out is hugely important so that the CRA does not put tax practitioners in a position of receiving mail on behalf of clients. Further, many business owners only access My Business Account in order to authorize a representative. Doing so will bring them under Digital by Default whether or not they want it, so it’s critical to give them the option to opt-out at the time of the authorization.

Finally, we pointed out that Canadian corporations with non-resident directors will also encounter problems with the new approach.

As the CRA works to determine what the opt-out process will look like, we have encouraged them to consult with us and other key external stakeholders. We also encouraged the CRA to start communicating this change and the opt-out process as early as possible.

COMMUNICATING WITH THE CRA — ADDITIONAL CHANGES

Question: In addition to upcoming changes to the way that the CRA corresponds with business taxpayers, what other steps is the CRA taking to ease communications for taxpayers and representatives?

CRA response: One plan is to introduce a series of optional email notifications for businesses, which could be in place as early as May 2024. While some email notifications would be mandatory to ensure the security of accounts, such as when address or direct deposit information is changed, businesses can opt to receive additional notifications, including:

• GST/HST reminder to file
• payment notifications
• GST/HST compliance hold refund

In October 2023, a new “Connect with us” link will be added to the “Correspondence” side bar in My Account, taking users to a page with options to contact the CRA or to get help outside of the portal on specific topics. Links on this page will include:

• help with My Account
• authorize a representative
• cancel authorization for a representative
• CRA user ID, password help and FAQs
• audit enquiries, formal dispute filings and request for penalty and interest relief

SIGNING INTO CRA PORTALS — REGISTRATION AND AUTHENTICATION

Question 1: With the protection of taxpayer information a top concern, the CRA continues to reinforce its identity authentication processes to make sure taxpayers and representatives are who they claim to be. What new security features is the CRA considering?

CRA response: One measure is our drive to introduce a single CRA credential for all CRA digital services to simplify the use of our digital services and manage the number of active credentials in the CRA’s systems. Starting in October 2023, new users will only be able to register for one credential (that is, one CRA user ID and password or Sign-In Partner). In addition to this one credential, residents of British Columbia and Alberta will be able to enroll with a provincial partner (BC Services Card or Alberta.ca Account) for My Account only.

This measure affects new users only. Existing credentials are not affected.

Looking ahead, the CRA is developing a means whereby a user will only be required to sign in once to access any account available to them, including their My Account, My Business Account, Represent a Client, My Trust Account and the tentatively named My Non-resident Account, which is in development.

CPA Canada feedback: It is important for many practitioners to have a back-up credential. If a sign-in credential is disabled for some reason, it can take from 5 to 10 days to get it restored, and practitioners cannot afford the disruption to their business for that length of time. 

Question 2: Is the CRA considering introducing new requirements to verify taxpayers’ identities in addition to the current “shared secrets” method?

CRA response: Starting in October 2023, taxpayers who are registering with a CRA portal are now asked to provide their gross income (line 15000) that was calculated and reported on their most recent tax return.

CPA Canada feedback: Many taxpayers are unlikely to have this information readily at hand. In fact, some have come to rely on the portals to store their tax data and might not have access to it otherwise.

Question 3: How would this process work with first-time filers, who would have no gross income amount reported for a previous year?

CRA response: This should not be an issue. The CRA understands that users can only register for My Account after they have filed their first return, which they can do by paper, NETFILE or through an EFILE provider (with some exceptions, as long as the CRA has their contact and other details on file).

Question 4: As technology advances, is the CRA looking at better options for identity validation?

CRA response: The CRA is working to implement a digital ID validation solution in the future as an alternative to the existing CRA security code. Currently, taxpayers must enter their CRA security code to gain full access to their personal and business information online. Instead of waiting 5 to 10 days for a CRA security code in the mail, the new solution will give taxpayers a secure way to validate their identity in real time and gain full and immediate access to their personal and business information.

SPECIAL ELECTIONS AND RETURNS

Question 1: Recent years have seen the CRA advance its project to digitalize the filing and administration of special tax elections and returns (SERS). What are the latest special elections and returns that can now be filed electronically as a result of this work?

CRA response: The CRA’s Filing a special election or return webpage includes an up-to-date list of all SERS forms specifying which ones can be e-filed using commercial tax preparation software. The page also sets out instructions on how to file online or by mail.

Among upcoming changes, in February 2024, the T217, T2057, T2058 and T2059 elections will be added to the list of SERS that can be e-filed. Software developers may need some time to add these to their list of e-fileable products and go through the certification process.

In Spring 2024, three new forms will be introduced to replace the following Pertinent Loan or Indebtedness (PLOI) elections that are currently filed by letter:

• T1521 – Election Under Subsection 15 (2.11)
• T2123 – Election Under Subsection 212.3 (3)
• T2311 – Election Under Subsection 212.3 (11)

Filing electronically via EFILE and NETFILE for businesses will be available for the T1521, T2123, and T2311 in May 2024. Again, software developers will need to add these to their list of e-fileable products and have them certified by the CRA. These three forms will also be available for display in My Business Account in May 2024, as well as for the existing T2067 and T2073 elections.

Question 2: Once the new PLOI forms are introduced, will it be mandatory to file them electronically?

CRA response: The CRA would likely allow a transition period (e.g., six months) before it would enforce any such requirements.

UNDERUSED HOUSING TAX

Question 1: How can owners determine whether a residential property qualifies for the exemption from the underused housing tax (UHT) for vacation property?

CRA response: The CRA has launched an online tool to help make the determination. By entering the property’s postal code, the tool reports whether or not the property is located in an eligible area of Canada for purposes of the election, or whether eligibility is unclear. If eligibility is unclear, taxpayers are directed to contact the Business Enquiries line for more information or see technical notice UHTN14, ”Exemption for Vacation Properties: Manual Place-search Instructions.”

Question 2: What options are in place for submitting UHT forms?

CRA response: UHT forms can be submitted electronically either via a webform using a digital access code or via My Business Account and My Account. The CRA is developing a new version of the T183 form to allow representatives to electronically file the UHT form through the webform, although this will not be available in 2023.

NEW AND UPCOMING SERVICES

Question: Along with the above changes to the CRA’s digital services, what other helpful new features can practitioners use or expect to see in the near future?

CRA response: Among the biggest improvements for practitioners is the introduction of My Trust Account to allow legal and authorized representatives of trust accounts to view and manage trust information online, along with online correspondence and payment options.

Another welcome change is the ability to track the progress of more filings within the Progress Tracker in My Business Account. Progress tracking was introduced in January 2023 for:

• T2 corporate tax returns and tax adjustment requests
• registered charity information returns
• applications for registration as a charity and Canadian amateur athletic association
• objections and requests for penalty and interest relief

The Submit Documents service remains a popular way for taxpayers to submit unsolicited documents in all portals to the CRA. Changes to the service include:

• In October 2023, representatives will be able to submit bulk taxpayer relief requests through Submit Documents in My Account, My Business Account and Represent a Client.
• In May 2023, a new picklist item “None of the above” was added in order to improve the routing of submissions and reduce processing delays.

Finally, the look and feel of My Business Account is being refreshed to mirror recent changes to My Account. Also, the “Outstanding balance” section of My Business Account is being equipped with a new “Proceed to pay” button allowing business taxpayers to pay an amount related to a period that has been assessed but is not yet due.

WE’LL KEEP YOU POSTED

For more information on the above and other recent tax topics, be sure to check our Canadian tax news webpage regularly for updates.

Disclaimer

The views and opinions expressed in this article are those of the author and do not necessarily reflect those of CPA Canada.