Budget 2024: New Measures Affecting Information Gathering by the CRA 

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    11 Jun 2024

    Budget 2024: New Measures Affecting Information Gathering by the CRA 

    Owning a small business in Canada is full of opportunities. However, it's crucial to understand the ever-changing tax landscape to deal with business challenges and opportunities. With the onset of Budget 2024, we saw many measures introduced for small, medium, and large businesses. One major change this year was the strengthening of the CRA’s ability to gather information for tax audits and assessments. Being an experienced corporate tax filing Canada firm, we had to keep our readers up-to-date with the latest changes happening in the taxation and accounting landscape in the country. Let’s explore the change in CRA’s ability to gather more information and how it can potentially impact your small business in the short and long run.

    Understanding the current challenges

    Previously, the CRA faced limitations in gathering taxpayer information on time.  Sometimes, taxpayers used tactics like claiming misplaced records, keeping complex business structures. It can ultimately lead to delays in audits, assessments, and tax collection. Besides, it was also causing issues for small businesses, such as disruptions in cash flow, tax liabilities uncertainties, and unnecessary stress. All these problems in turn would affect the government’s ability to collect tax revenue that will fund essential programs and services, as highlighted in the 2018 report of the Office of the Auditor General. Budget 2024 acknowledged these challenges and proposed solutions, which were designed to improve the efficiency and effectiveness of the CRA's information-gathering process. Concerned? Book an expert in our Corporate Planning & Compliance Canada firm with first consultation FREE for small businesses.

    What are some new measures for information gathering?

    There are many benefits and considerations for all the measures introduced in the budget for 2024. In the information gathering process, there are many key things one must not miss. For example: 
    • Notice of Non-Compliance: CRA will issue this notice if your business fails to comply with a CRA request for information or assistance. CRA and the courts can review this notice.
    • Penalties for Non-Compliance: Businesses that receive a non-compliance notice have only two options for the daily penalty to stop. Either comply promptly or wait till the notice is vacated.
    • Questioning Under Oath: CRA can now demand documents and information under an oath or solemn affirmation. This will add a layer of seriousness to requests for information.
    • Strengthened Compliance Orders: If a business is persistently non-compliant, there are harsh consequences. CRA can seek a court order that compels disclosure of information. If the business still refuses to comply, they’ll have to pay a 10% penalty on the tax payable by the business. Even though it is limited to situations where tax owed exceeds $50,000, it is still a significant amount for small businesses. 
    • "Stop the clock" Rules: With these rules, the reassessment period of a business extends while they are still seeking judicial review of a CRA request. It will also happen during the time a notice of non-compliance is outstanding. 
    Consult a Compliance and Business Planning Solution Canada firm to deal with a tax audit smoothly.

    What does this mean for your small business?

    Such changes introduced in the budget for 2024 clearly highlight how important it is for small businesses to maintain accurate and complete financial records for their operations. To avoid penalties and delays, they must respond timely to CRA’s information requests. Besides, having well-maintained records goes beyond just avoiding penalties. When there is accurate financial information, it will help businesses make informed decisions, manage cash flow, and identify tax saving opportunities on time. If there isn’t a system in place, we suggest you have a setup that clearly manages CRA communications and document requests. Seeking help from chartered professional accountants would be a great start for your business. 

    How can CJCPA help?

    Experienced tax professionals at CJCPA can help you get through the right documentation and audit. Here’s how we assist our corporate clients:
    • First, we understand your obligations when dealing with information requests.
    • Then, we prepare a comprehensive response to CRA inquiries.
    • Further, we’ll represent your business during interactions with the CRA.
    • Besides, we’ll also advise you on strategies that minimize the risk of non-compliance penalties.
    Want to talk to experts in person? If you are in British Columbia, we’ll love to host you. Directly connect with our chartered professional accountant BC team and get the right advice for your tax audit.

    Summing it up!

    The new information gathering measures introduced in Budget 2024 aim to further simplify the tax audit process. As the owner of a small business in Canada, it’s crucial for you to stay informed and work with a qualified tax advisor to get through the challenges and take advantage of opportunities. Connect with CJCPA for corporate tax filing Canada or consulting services for unbiased advice. What’s more? Your first consultation is on us! Discuss your specific business needs, and we’ll ensure that we protect your interests and keep you well-prepared for any CRA requests. Get in touch with us now!   
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