Audit of CRA Reveals Inconsistent Treatment of Taxpayers

On November 20, 2018, the Office of the Auditor General of Canada released its 2018 Fall Reports, including a report on the compliance activities of the Canada Revenue Agency.  The Auditor General’s audit focused on whether the CRA consistently applies the provisions of the Income Tax Act and whether it accurately reports the results of its compliance activities, such as audits and reassessments of taxpayers.

The Auditor General concluded that during the period under audit, the CRA “did not consistently apply tax rules when it audited or reviewed taxpayers’ files, even though the Taxpayer Bill of Rights includes the right to have the law applied consistently.”  The report found differences in the treatment of taxpayers depending on their region and type (e.g. individual vs. corporation), and the particular auditor conducting the file.

The Auditor General recommended a number of changes to the CRA’s practices, including implementing proactive interest and penalty relief to taxpayers, addressing variations in the length of time it takes to complete audits based on the taxpayer’s region, and changing performance markers of auditors to be based on results of audits and actual tax revenue collected.  The CRA agreed with most of the Auditor General’s recommendations, and aims to address many of them by March 2020.

Prepared by: Tyler Berg

Tyler is an Associate working in the Vancouver office. During his law degree, Tyler participated in the Law Students’ Legal Advice Program and the UBC Law Review, and played intramural ice hockey for the UBC Law Legal Eagles. Tyler also… more »