Proposed Expansion Of CRA Audit Powers: Where From Here For Taxpayers?

The Department of Finance recently released draft legislation that would implement certain amendments to further expand the Canada Revenue Agency's (CRA) audit powers.

The new legislation would allow the CRA to, among other things, (i) require taxpayers to give information under oath or affirmation, (ii) issue notices and impose financial penalties for non-compliance with information requests, and (iii) pause the normal limitation period for reassessment in certain circumstances involving non-compliance.

In the current audit environment, taxpayers should consider five key measures to protect their interests.

1. Preserve and assert privilege. The CRA cannot compel the disclosure of information or documents that are subject to solicitor-client privilege. Moreover, the new proposed penalties will not apply if a taxpayer has not complied with a demand because it reasonably believes that the information or documents sought are privileged.