One of the biggest issues that many small to medium businesses face is, non compliance problems with the Canada Revenue Agency. Often these are not intentional but are as the result of lack of knowledge or proper administrative procedures. It could include not keeping the proper books and records or incorrect receipts. More blatant non compliance issues entail the lending of registration numbers or inflating costs in order to increase the expenses.
The new LOI program is focusing on helping small to medium sized business be more compliant which in turns ensures the companies are meeting their tax obligations, and the government in turn can reduce their operating costs regarding audits and re-assessments.
Currently this is a voluntary program where the CRA is hoping that some Companies will concede to trying this program. It means an actual visit from a LOI officer and some interaction.
To begin with the LOI is going to select various companies amongst some business sectors and invite them to participate. The CRA is indicating that the businesses that are chosen from the various business sectors will be randomly selected.
If the company invited chooses to participate they will be able to take advantage of various tax services that the CRA offers, but these may vary according to the needs of the Company which will have to be identified.
It may be the focus of the LOI officer to identify potential errors that the company is making and how they can be corrected. There could be an option for a CRA support visit as well as invitation to allow a review of the Company’s books and records.
The concept of a CSA may be introduced. This is a Compliance Support Arrangement. In this case the arrangement would not be court binding. Remember that the purpose of this LOI program is to help the small to medium business become compliant and not acting a covert operation to gather information on the Company. The CRA is indicating that the purpose of the CSA is to clearly outline the responsibilities of both the company and the Canada Revenue Agency.
Some companies who are keen on this type of learning experience with the CRA are curious as to where this would leave them standing in regards to a voluntary disclosure. The CRA is stating that the voluntary disclosure opportunity exists if you there has been no audit conducted or any type of enforcement action commenced regarding your file.
It remains to be seen what the reception of this program is going to be on behalf on small to medium sized businesses. In order to ensure that your business is Canada tax compliant make sure you utilize the services of a quality accountant.
