CRA moves to slash 'excessive' fees charged by disability tax credit companies
139 Comments
Commenting is now closed for this story.
John
Sollows The
business that has grown up around helping people apply for various
government programs tells me that procedures need to be simplified.
Under the current system. those who are the most needful stand to be
marginalized the most.
Not OK.
David Amos
Reply to @John
Sollows: "While we recognize that reaction from various stakeholders
will be varied, the CRA believes it has found the right balance," Dany
Morin said.
Yea Right
Kenneth
Hewer
and the KPMG gets a pass: CRA guest listed for every tax evasion gala held for the ultra rich.
Paul Whittaker
Reply to @Kenneth
Hewer: The bigger the graft the more likely the company will get away
with it, a portion going to political donations and "trusts".
Arthur Seamon
Reply to @Paul Whittaker: Including trusts held by finance minister and Prime Minister.
@Ken Likness I have a
communication from Diane Lebouthillier as well It concerns my disgust
towards the incompetence of these overpaid CRA bosses and the KPMG no
joke Just Google
Diane Lebouthillier KPMG David Amos
---------- Original message ----------
From: "MinFinance / FinanceMin (FIN)"
<fin.minfinance-financemin.fin@canada.ca>
Date:
Wed, 30 Aug 2017 20:48:25 +0000
Subject: RE: Your various correspondence
about abusive tax schemes - 2017-02631
To: David Amos <motomaniac333@gmail.com>
The
Department of Finance acknowledges receipt of your electronic
correspondence.
Please be assured that we appreciate receiving your
comments.
Le
ministère des Finances accuse réception de votre correspondance
électronique.
Soyez assuré(e) que nous apprécions recevoir
vos
commentaires.
---------- Original message
----------
From: Green Party of Canada | Parti vert du Canada <info@greenparty.ca>
Date:
Wed, 30 Aug 2017 20:48:45 +0000
Subject: Re: Fwd: Your various correspondence
about abusive tax
schemes - 2017-02631
To: David Amos <motomaniac333@gmail.com>
Thank you for your various correspondence about abusive tax
schemes,
and for your understanding regarding the delay of this
response.
This is an opportunity for me to address your concerns about
the way
the Canada Revenue Agency (CRA) deals with aggressive tax
planning,
tax avoidance, and tax evasion by targeting individuals and
groups
that promote schemes intended to avoid payment of tax. It is also
an
opportunity for me to present the Government of Canada’s
main
strategies for ensuring fairness for all taxpayers.
The CRA’s
mission is to preserve the integrity of Canada’s tax system,
and it is taking
concrete and effective action to deal with abusive
tax schemes. Through
federal budget funding in 2016 and 2017, the
government has committed close
to $1 billion in cracking down on tax
evasion and combatting tax avoidance at
home and through the use of
offshore transactions. This additional funding is
expected to generate
federal revenues of $2.6 billion over five years for
Budget 2016, and
$2.5 billion over five years for Budget 2017.
More
precisely, the CRA is cracking down on tax cheats by hiring more
auditors,
maintaining its underground economy specialist teams,
increasing coverage of
aggressive goods and service tax/harmonized
sales tax planning, increasing
coverage of multinational corporations
and wealthy individuals, and taking
targeted actions aimed at
promoters of abusive tax schemes.
On the
offshore front, the CRA continues to develop tools to improve
its focus on
high‑risk taxpayers. It is also considering changes to
its Voluntary
Disclosures Program following the first set of program
recommendations
received from an independent Offshore Compliance
Advisory Committee. In
addition, the CRA is leading international
projects to address the base
erosion and profit shifting initiative of
the G20 and the Organisation for
Economic Co-operation and
Development, and is collaborating with treaty
partners to address the
Panama Papers leaks.
These actions are
evidence of the government’s commitment to
protecting tax fairness. The CRA
has strengthened its intelligence and
technical capacities for the early
detection of abusive tax
arrangements and deterrence of those who participate
in them. To
ensure compliance, it has increased the number of actions aimed
at
promoters who use illegal schemes. These measures include
increased
audits of such promoters, improved information gathering,
criminal
investigations where warranted, and better communication
with
taxpayers.
To deter potential taxpayer involvement in these
schemes, the CRA is
increasing notifications and warnings through its
communications
products. It also seeks partnerships with tax preparers,
accountants,
and community groups so that they can become informed observers
who
can educate their clients.
The CRA will assess penalties against
promoters and other
representatives who make false statements involving
illegal tax
schemes. The promotion of tax schemes to defraud the government
can
lead to criminal investigations, fingerprinting, criminal
prosecution,
court fines, and jail time.
Between April 1, 2011, and
March 31, 2016, the CRA’s criminal
investigations resulted in the conviction
of 42 Canadian taxpayers for
tax evasion with links to money and assets held
offshore. In total,
the $34 million in evaded taxes resulted in court fines
of $12 million
and 734 months of jail time.
When deciding to pursue
compliance actions through the courts, the CRA
consults the Department of
Justice Canada to choose an appropriate
solution. Complex tax-related
litigation is costly and time consuming,
and the outcome may be unsuccessful.
All options to recover amounts
owed are considered.
More specifically,
in relation to the KPMG Isle of Man tax avoidance
scheme, publicly available
court records show that it is through the
CRA’s efforts that the scheme was
discovered. The CRA identified many
of the participants and continues to
actively pursue the matter. The
CRA has also identified at least 10
additional tax structures on the
Isle of Man, and is auditing taxpayers in
relation to these
structures.
To ensure tax fairness, the CRA
commissioned an independent review in
March 2016 to determine if it had acted
appropriately concerning KPMG
and its clients. In her review, Ms. Kimberley
Brooks, Associate
Professor and former Dean of the Schulich School of Law at
Dalhousie
University, examined the CRA’s operational processes and decisions
in
relation to the KPMG offshore tax structure and its efforts to
obtain
the names of all taxpayers participating in the scheme. Following
this
review, the report, released on May 5, 2016, concluded that the
CRA
had acted appropriately in its management of the KPMG Isle of
Man
file. The report found that the series of compliance measures the
CRA
took were in accordance with its policies and procedures. It
was
concluded that the procedural actions taken on the KPMG file
were
appropriate given the facts of this particular case and
were
consistent with the treatment of taxpayers in similar situations.
The
report concluded that actions by CRA employees were in accordance
with
the CRA’s Code of Integrity and Professional Conduct. There was
no
evidence of inappropriate interaction between KPMG and the
CRA
employees involved in the case.
Under the CRA’s Code of Integrity
and Professional Conduct, all CRA
employees are responsible for real,
apparent, or potential conflicts
of interests between their current duties
and any subsequent
employment outside of the CRA or the Public Service of
Canada.
Consequences and corrective measures play an important role
in
protecting the CRA’s integrity.
The CRA takes misconduct very
seriously. The consequences of
misconduct depend on the gravity of the
incident and its repercussions
on trust both within and outside of the CRA.
Misconduct can result in
disciplinary measures up to dismissal.
All
forms of tax evasion are illegal. The CRA manages the Informant
Leads
Program, which handles leads received from the public regarding
cases of tax
evasion across the country. This program, which
coordinates all the leads the
CRA receives from informants, determines
whether there has been any
non-compliance with tax law and ensures
that the information is examined and
conveyed, if applicable, so that
compliance measures are taken. This program
does not offer any reward
for tips received.
The new Offshore Tax
Informant Program (OTIP) has also been put in
place. The OTIP offers
financial compensation to individuals who
provide information related to
major cases of offshore tax evasion
that lead to the collection of tax owing.
As of December 31, 2016, the
OTIP had received 963 calls and 407 written
submissions from possible
informants. Over 218 taxpayers are currently under
audit based on
information the CRA received through the OTIP.
With a
focus on the highest-risk sectors nationally and
internationally and an
increased ability to gather information, the
CRA has the means to target
taxpayers who try to hide their income.
For example, since January 2015, the
CRA has been collecting
information on all international electronic funds
transfers (EFTs) of
$10,000 or more ending or originating in Canada. It is
also adopting a
proactive approach by focusing each year on four
jurisdictions that
raise suspicion. For the Isle of Man, the CRA audited
3,000 EFTs
totalling $860 million over 12 months and involving approximately
800
taxpayers. Based on these audits, the CRA communicated
with
approximately 350 individuals and 400 corporations and performed
60
audits.
In January 2017, I reaffirmed Canada’s important role as a
leader for
tax authorities around the world in detecting the structures used
for
aggressive tax planning and tax evasion. This is why Canada
works
daily with the Joint International Tax Shelter Information
Centre
(JITSIC), a network of tax administrations in over 35 countries.
The
CRA participates in two expert groups within the JITSIC and leads
the
working group on intermediaries and proponents. This
ongoing
collaboration is a key component of the CRA’s work to develop
strong
relationships with the international community, which will help
it
refine the world-class tax system that benefits all Canadians.
The
CRA is increasing its efforts and is seeing early signs of
success. Last
year, the CRA recovered just under $13 billion as a
result of its audit
activities on the domestic and offshore fronts.
Two-thirds of these
recoveries are the result of its audit efforts
relating to large businesses
and multinational companies.
But there is still much to do, and
additional improvements and
investments are underway.
Tax cheats are
having a harder and harder time hiding. Taxpayers who
choose to promote or
participate in malicious and illegal tax
strategies must face the
consequences of their actions. Canadians
expect nothing less. I invite you to
read my most recent statement on
this matter at canada.ca/en/revenue-agency/news/2017/03/
statement_from_thehonourabledianelebouthillierministerofnational.
Thank
you for taking the time to write. I hope the information I have
provided is
helpful.
Sincerely,
The Honourable Diane Lebouthillier
Minister
of National Revenue
CRA moves to slash 'excessive' fees charged by disability tax credit companies
It's been 5 years since legislation passed to tighten rules around firms that help Canadians apply
Yvonne Colbert · CBC News · Posted: Jun 14, 2019 6:00 AM AT
Cathy
Publicover of Eastern Passage, N.S., said she welcomes proposed
regulations to limit how much companies can charge to help Canadians
apply for the disability tax credit. (Dave Laughlin/CBC)
The Canada Revenue Agency is proposing
to dramatically slash what it calls "excessive" fees some companies
charge to help Canadians apply for the disability tax credit, nearly
five years after it was told to do so.
The move, which according
to the CRA could put millions of dollars back in the hands of disabled
people, is being applauded by some advocates, but panned by companies
that last year collected up to $25 million in fees.
"The
government of Canada decided that measures were needed to protect
Canadians living with disabilities and their supporting family members
from being charged more than what is considered adequate compensation
for the services rendered," according to a CRA analysis released earlier
this month.
More
than a million Canadians receive the disability tax credit, which can
be worth thousands of dollars and is designed to provide help for people
who have mental or physical impairments that are "severe and
prolonged."
Up to 40% in contingency fees
Over the years,
businesses have sprouted up to help people apply for the tax credit.
They charge anywhere from 15 to 40 per cent in contingency fees and last
year collected between $9.5 million and $25.4 million, according to the
CRA.
The proposed restrictions will significantly reduce that
take. Companies will only be permitted to charge $100 for an application
to determine eligibility, another $100 to actually apply, and then $100
for each year the credit is retroactive.
One of the biggest disability tax credit companies in Canada is National Benefit Authority. It has advertised in Halifax. (Susan Allen/CBC)
There
have long been calls for a crackdown. Legislation introduced by the
Harper government in 2014 intended to tighten the rules, but it's only
now that federal officials have released draft regulations.
"I think it's a great change," said Eastern Passage, N.S., resident Cathy Publicover.
Those who apply for the disability tax credit are required
to fill out a small portion of a form with their personal information,
while the remainder is completed by the patient's doctor or nurse
practitioner.
Patrick
Curran, national executive director of Independent Living Canada, calls
fees in the thousands of dollars "unconscionable." (Submitted by Patrick Curran)
Companies
currently charge as much as $4,663 to help an adult, and $7,383 for an
eligible minor, depending on the amount of the disability tax credit and
the number of retroactive years, according to the CRA.
Those
kinds of fees are "unconscionable," said Patrick Curran, the national
executive director of Independent Living Canada. The organization
advocates for the disabled and has 25 offices across the country that
help people fill out the disability tax credit (DTC) forms for free.
"Our position has been that there should not be any charge whatsoever for the filing of an application for a DTC," Curran said.
He welcomes the proposed changes and said he's fine with setting the fee at $100 an application.
Monique
Brooks operates a one-person business helping people apply for the
disability tax credit. She said the process can take more than a year
and she doesn't get paid if the tax credit is not approved. (Paul Brooks)
But
Monique Brooks, who owns and operates Disability Tax Credit Consultant
Services in Harrowsmith, Ont., told CBC she was "horrified" when she
learned about the plan to replace contingency fees with a $100 flat rate
per application.
"Some of these businesses have employees and so therefore it's going to cause job loss," she said.
One of the biggest companies is National Benefit Authority. It has not replied to a request to comment on this story.
She
charges 20 per cent for helping people access the disability tax
credit, although she said she provides free advice in other areas where
people may need help. She said the government makes people in her
business sound like "we're vultures, and it makes it sound like we're
taking advantage of the disabled."
She said while that may be
partly true of some companies, people who are denied the tax credit need
help reapplying from those who know "the ins and outs of the system."
She
said 20 per cent is reasonable because "that same Canadian without my
support might have a 90 per cent chance of being denied and then they
would get zero."
The Canada Revenue Agency said it is working to simplify the disability tax credit application process. (Sean Kilpatrick/Canadian Press)
She
said the application process is not as easy as the government makes it
sound, and she's spent two-and-a-half years helping applicants get
approval. She notes she does not get paid until the application is
approved and receives nothing if it's rejected.
The executive director of an organization that represents companies like Brooks's calls the regulations "an unprecedented move."
Nicola
Moorhouse, with the Association of Canadians Disability Benefit
Professionals, said in a news release that taxes are complicated and
"dealing with CRA can be a nightmare."
She said the direct result
will be unavailability of services to disabled Canadians, near total job
loss within the industry and fewer benefits for those who need them
most.
"It should be obvious that the intent and effect of the
proposed regulations is to wipe out the service-provider business and
reduce the availability of the DTC to disabled Canadians." Moorhouse
said.
CRA 'balancing act'
A CRA spokesperson calls the
regulations "an important balancing act." On the one hand, it wants to
protect persons with disabilities, who can be some of Canada's most
vulnerable people, but it also recognizes that some may need help with
their tax credit requests and that companies can play a role.
"While
we recognize that reaction from various stakeholders will be varied,
the CRA believes it has found the right balance," Dany Morin said.
He
added the CRA is also continuing to work to simplify and clarify the
disability tax credit application process and expects to make
significant progress on this front in the coming months.
Morin
said once the consultation period has ended, the CRA will consider the
feedback and may revise the proposal. It will then be up to the minister
of national revenue to approve it.
Yvonne
Colbert has been a journalist for nearly 35 years, covering everything
from human interest stories to the provincial legislature. These days,
she's focused on helping consumers get the most bang for their bucks and
avoid being ripped off. She invites story ideas at
yvonne.colbert@cbc.ca.
Liked the article. I got an email from that National Benefit Authority saving I should pay them $50 to protect my credit limit. I’m so broke now I don’t care about that anymore. Since I lost my house I guess they can’t find me anymore! Email doesn’t say why I should pay them!
Liked the article. I got an email from that National Benefit Authority saving I should pay them $50 to protect my credit limit. I’m so broke now I don’t care about that anymore. Since I lost my house I guess they can’t find me anymore! Email doesn’t say why I should pay them!
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