A Conservative MP is calling on the taxpayers’ ombudsperson to conduct a “systemic review” of the Canada Revenue Agency‘s recent handling of bare trust reporting requirements.
Adam Chambers, the Member of Parliament for Simcoe North, said in a letter to François Boileau’s office Monday that he wants an examination of “a lack of procedural fairness,” as well as “prima facie violations of rights” under the Taxpayers Bill of Rights.
The CRA filing requirement for bare trust arrangements was new this year, but many Canadians were likely unaware of its existence or even that they may be part of such an arrangement.
However, on March 28, the CRA announced that Canadians with bare trust arrangements would no longer be required to file a T3 tax return and Schedule 15 unless the agency makes a direct request for these filings. The change came just days before the April 2 deadline to file.
The CRA said the decision was made “in recognition that the new reporting requirements for bare trusts have had an unintended impact on Canadians.”
Chambers noted that in his own letter, and raised concern that no new information was made available within the last week of the filing deadline.
“The rules were seen as confusing as they were when they were initially proposed and professionals had been seeking guidance from the CRA with little substantive response,” he wrote.
In his letter, Chambers wrote that while the CRA’s decision to retract the reporting requirement was welcomed by some, it showed a “complete disregard for the concerns and negative impacts felt by taxpayers.”
Bare trusts aren’t new, but this was the first time the arrangements had to be filed and reported to the CRA for the 2023 tax year.
The agreements often involve people who have a joint bank account like an adult child and elderly parent, or a parent who co-signed and are on title for their child’s mortgage.
Global News heard from several Canadians and those helping with the filings who were left “angry” by the sudden about-face by the agency, with the Canadian Taxpayers Federation asking if anyone would be held accountable for “waiting until the very last minute.”
When asked for a comment from Global News about the recent feedback, the CRA reiterated its message from its March 28 announcement.
“Over the coming months, the CRA will work with the Department of Finance to further clarify its guidance on this filing requirement. The CRA will communicate with Canadians as further information becomes available,” the agency said in an email to Global News Friday.
Accountants like Chris Dyck told Global News that many colleagues were put in an awkward position, saying they would probably not bill clients whose trusts were not filed despite that time spent.
“We’re not going to charge the clients for these because just in good conscience, like I say, it doesn’t make any sense,” he said.
According to Chambers, the last-minute decision “denied taxpayers timely information and fair treatment,” adding that the agency needs to be held accountable.
“The CRA’s mishandling of the new reporting requirements for bare trusts undermines confidence in the tax system, which has already eroded over the last few years,” he wrote. “I would like to understand how a failure in process could result in this last-minute change and when the relevant decision maker was first informed and why it took so long to act.”
In an email to Global News Tuesday, Boileau’s office said several individuals had reached out to them since the reporting requirement was retracted on March 28. They said since the first individuals reached out, they have been monitoring the issue and carrying out preliminary research, and are watching to see how the CRA will address the issue “as they work to respect the taxpayers’ rights under the Taxpayer Bill of Rights.”
The office said they would be in a better position to determine the “best course of action” once they have “all the facts.”
Canadian Taxpayers Federation federal director Franco Terrazzano told Global News Tuesday he believes the review needs to happen because someone needs to be held responsible.
“Whether it’s the CRA incompetence or someone else’s incompetence in government, someone needs to be held accountable,” he said.
— with files from Global News’ Abigail Bimman and Naomi Barghiel
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