Regulatory Initiatives - Forward Regulatory Plan

Disability Tax Credit Promoters Restrictions Regulations

Enabling Act: Disability Tax Credit Promoters Restrictions Act

Description: These new regulations will set the maximum fee that disability tax credit (DTC) promoters can charge for helping prepare a DTC claim. The regulations will also identify who is exempt from the reporting requirements in the Disability Tax Credit Promoters Restrictions Act (the Act).

The Act limits the fee that DTC promoters can charge to help prepare a DTC claim to the amount set out in the regulations. It also states that any DTC promoter, other than a person exempted by the Regulations, who charges a claimant more than the regulated amount must notify the Minister of National Revenue and can be charged a penalty.

Regulatory cooperation efforts (domestic, international): No regulatory cooperation efforts are required.

Potential impacts on Canadians, including businesses: There may be business impacts. The Small Business Lens may apply.

While the proposed Regulations are expected to result in a loss of revenue for promoters, some of which may be small businesses, the proposed Regulations do not impose any compliance or administrative costs on businesses, including small businesses.

Consultations: The Canada Revenue Agency held public consultations in November and December 2014 to obtain input from stakeholders about the maximum fee and who should be exempt from the reporting requirements. The consultations included professional associations, tax preparers, medical practitioners, lawyers, persons with disabilities and their families, as well as associations representing persons with disabilities. For more information, go to Disability tax credit consultations.

In October 2018, the Agency presented a number of options for setting the maximum fee to the newly re-established Disability Advisory Committee.

The next opportunity to provide input on the proposed regulations will be when they are pre-published in Part I of the Canada Gazette. This will give stakeholders the chance to comment on the draft regulations before they are finalized.

Further information:

• Disability tax credit
• Disability Tax Credit Promoters Restrictions Act
• Disability Tax Credit Consultations Summary – 2017

CRA contact:
Brenda Watkins
Director, Division Partnerships and Services Division
E-mail: Brenda.Watkins@cra-arc.gc.ca

Date the regulatory initiative was first included in the Forward Regulatory Plan: June 2015

Regulations Amending the Income Tax Regulations – Agricultural Cooperatives

Enabling Act: Income Tax Act

Description: The Income Tax Act currently allows members of agricultural cooperatives to defer the inclusion in income of patronage dividends they received in the form of shares until the disposal of the shares. This temporary tax deferral regime was extended in the 2015 federal budget until the end of 2020.

The proposed amendments would require agricultural cooperative to issue an information slip in respect of tax deferred cooperative shares at the time of disposition of the shares. The objective of this proposal is to ensure that both the person receiving the shares and the Canada Revenue Agency have the necessary information to determine the correct reporting of income in respect of the shares.

Regulatory cooperation efforts (domestic and international): No regulatory cooperation efforts are required.

Potential impacts on Canadians, including businesses: There may be business impacts. The Small Business Lens may apply.

Agricultural cooperative corporations that issue tax deferred cooperative shares will be required to prepare and file an information slip in order to report the amount of patronage dividends their members received in the form of shares at the time of disposition of the shares.

Consultations: Given the administrative nature of these regulatory amendments, no public consultation opportunities are planned at this time.

Approval by the Treasury Board for an exemption from pre-publication in Part I of the Canada Gazette will be sought.

Further information:

Self-employed Business, Professional, Commission, Farming, and Fishing Income: Line 9605 – Patronage dividends

CRA contact:
Laurier Shank
Director, Third Party Reporting Division
Telephone: 613-941-6826
Email: Laurier.Shank@cra-arc.gc.ca

Date the regulatory initiative was first included in the Forward Regulatory Plan: April  2016

Regulations Amending the Income Tax Regulations (Northern Residents Deductions)

Enabling Act: Income Tax Act 

Description: As part of the Northern Residents Deductions, the travel benefits deduction can be claimed for trips taken by the individual, or their household members living with them at the time of the trip, for vacation, family or medical reasons (maximum of two non-medical trips per person) that start from a prescribed zone. Currently, the maximum deduction for each eligible trip is the lowest of the following three amounts:

• the value of the travel benefit received from the employer;
• the actual cost of the trip (supported by receipts); and
• the lowest return airfare available at the time of the trip between the airport closest to the taxpayer’s residence and the nearest designated city to that airport.

These maximum deduction rules, including the list of designated cities, are contained in the Regulations.

The objective of this proposal is to reduce the administrative burden for taxpayers and their representatives when claiming the travel benefits deduction, specifically regarding the requirement to determine the lowest return airfare ordinarily available at the time a trip is made. The proposed amendments would instead require that a reasonable amount in respect of return airfare be obtained for the date of travel within a reasonable amount of time of when the trip is made.

Under the amended wording, the airfare amount could more easily be obtained as it could be documented prior to the date of travel and there would no longer be the requirement to ensure that it was the lowest airfare available. The airfare would still have to correspond to the day of travel.

Regulatory cooperation efforts (domestic, international): No regulatory cooperation efforts are required.

Potential impacts on Canadians, including businesses: There may be business impacts. The small business lens may apply.

The small business lens requires federal regulators to identify and take into account the needs of small businesses when designing regulations. If small businesses will be impacted, further analysis must be undertaken.

Consultations: The Canada Revenue Agency (Agency) travelled to northern Canada in 2016 as part of the Serving You Better consultations. Senior officials met with small and medium businesses and accountants in sessions hosted by local chambers of commerce and accounting organizations in Whitehorse, Yellowknife, and Iqaluit.

As indicated in the Report on the Canada Revenue Agency’s consultations with northern residents, the Agency heard during those consultations how difficult it is to identify the lowest return airfare available at the time of a trip. In response, the Agency committed to exploring options that could help taxpayers identify the lowest return airfare.

A regulatory consultation paper detailing the proposal to simplify the lowest return airfare requirement is planned for release on Canada.ca.

Canadians will have a further opportunity to provide input when the proposed regulations are pre-published in Canada Gazette, Part I for a 30 day comment period.

CRA contact:
Tracy Annett
Director, Legislative Amendments Division
Legislative Policy and Regulatory Affairs Branch
Canada Revenue Agency
Telephone: 613-670-9568
Email: Regulations-Reglements@cra-arc.gc.ca

Date the regulatory initiative was first included in the Forward Regulatory Plan: October 2018

Regulations Amending the Income Tax Regulations - Miscellaneous Amendments

Enabling Act: Income Tax Act

Description: This regulatory amendment proposal consists of three unrelated amendments to the Income Tax Regulations (the Regulations):

1. An amendment to add the Part XIX information return to the existing list of prescribed returns to which the reduced late-filing penalty applies;
2. An amendment to provide for the exclusion of an employee’s additional contributions to the Canada Pension Plan and/or the Quebec Pension Plan for purposes of determining the base income for the purposes of withholding of income tax at source;
3. An amendment to section 6301 of the Regulations in order to make the provision gender neutral.

1. Common Reporting Standard - Part XIX Information Return
   
   In order to combat international tax evasion and avoidance, beginning in 2018, every Canadian financial institution is required to provide the Minister of National Revenue with information regarding their non-resident account holders by filing, with the Canada Revenue Agency (Agency), a Part XIX information return on or before May 2nd of each year in electronic format.
   
   The Act currently provides for general penalties for failing to file on time. However, since these penalties are considered to be excessive in cases where the non-compliance is with respect to large numbers of information returns, lesser, graduated penalties are available where numerous information returns of a type prescribed in the Regulations are filed late by the same filer.
   
   Amendments to the Regulations are required in order to add the Part XIX information return to the existing list of prescribed returns to which the reduced penalties apply.
   
   
2. Exclusion of an employee’s additional contributions to the Canada Pension Plan and/or the Quebec Pension Plan from the base income used for calculating withholding
   
   The Canada Pension Plan Act was amended in 2016 in order to enhance the Canada Pension Plan (CPP) retirement and supplemental benefits. These enhancements became effective in 2019 and are being funded by additional contributions by employees, employers and self-employed individuals. As part of the CPP enhancement, the Income Tax Act was later amended to provide for a tax deduction for employee additional contributions (as well as the “employee” share of contributions by self-employed persons) to the enhanced portion of the CPP.
   
   In 2018, the Quebec Pension Plan (QPP) was also enhanced in a manner similar to the CPP. In 2018, the Income Tax Act was again amended to provide a deduction for employee additional contributions, as well as the employee share of contributions by self-employed individuals, to the enhanced portion of the QPP.
   
   As a result of the introduction of these new tax deductions, amendments to the Income Tax Regulations are required to ensure that the amount of the employee’s additional CPP and/or QPP contributions are not taken into account when calculating the individual’s base income for purposes of deducting or withholding income taxes.
   
   
3. Section 6301 of the Regulations in order to make the provision gender neutral.
   
   Section 122.6 of the Income Tax Act defines a number of terms for the purposes of the Canada Child Benefit. In order to be the “eligible individual” of a “qualified dependent”, the individual must be a resident of Canada for tax purposes and must reside with the dependent and be the parent who primarily fulfils their responsibility for the care and upbringing of the qualified dependent and who is not be a shared-custody parent. It is presumed that the female parent is the “eligible individual” if she resides with the dependent.
   
   However, definition of “eligible individual” also provides that the female presumption referred to above does not apply in certain prescribed circumstances.
   
   Section 6301 of the Regulations outlines the circumstances where the presumption does not apply. Paragraph 6301(1)(a) provides that the presumption will not apply where the female parent of the qualified dependent declares in writing that the male parent with whom she resides is the parent of the qualified dependent who fulfils the responsibility for the care and upbringing of the each of the qualified dependents who reside with both parents.
   
   It is proposed that this paragraph be amended to replace the reference to the “male” parent to a more gender-neutral reference.

Regulatory cooperation efforts (domestic, international): No regulatory cooperation efforts are required.

Potential impacts on Canadians, including businesses:

1. Common Reporting Standard - Part XIX Information Return
   
   The proposed amendment only affects one specific sector (financial institutions) and does not impose any additional administrative burden on that sector. The ‘One-for-One’ Rule and the small business lens do not apply.
   
   The proposed amendment is relieving in nature in that it will allow a lesser penalty to be applied where a financial institution files a Part XIX information return late.
   
   
2. Exclusion of an employee’s additional contributions to the Canada Pension Plan and/or the Quebec Pension Plan from the base income used for calculating withholding
   
   The proposed change to the Regulations will serve to provide that the employee’s additional CPP and/or similar QPP contributions are not to be taken into account for purposes of calculating the individual’s remuneration from with income tax deductions are determined. The proposed amendment does not impose any additional administrative burden of the employers. The “One-for-One” Rule and the small business lens do not apply.
   
   
3. Section 6301 of the Regulations in order to make the provision gender neutral.
   
   The proposed amendment will serve to render the provision gender neutral. It does not impose any additional administrative burden on businesses. The “One-for-One” Rule and the small business lens do not apply.

Consultations:

1. Common Reporting Standard - Part XIX Information Return
   
   No further consultations are planned given that the requirement to file the information return is found in the Income Tax Act. This proposed amendment only affects one specific sector (financial institutions) and does not impose any additional administrative burden on that sector.
   
   
   
2. Exclusion of an employee’s additional contributions to the Canada Pension Plan and/or the Quebec Pension Plan from the base income used for calculating withholding
   
   No further consultations are planned given that the amendment is consequential to amendments to the Income Tax Act and only serves to provide that the amount of the employee’s additional CPP and QPP contributions are to be taken into account in the calculation of the base income used for calculating the amount to be withheld for income tax purposes.
   
   
3. Section 6301 of the Regulations in order to make the provision gender neutral.
   
   No further consultations are planned given that the presumption is preserved but that the paragraph in question will be amended to render it more gender neutral. The proposed amendment does not impact any businesses.

Further, we plan to request that this regulatory proposal be exempted from pre‑publication in Part I of the Canada Gazette. Therefore, we do not anticipate any additional opportunities for public consultations.

Further information:

• Guidance on the Common Reporting Standard
• Common Reporting Standard
• Part XIX Information Return – International Exchange of Information on Financial Accounts
• How to complete and file a Part XIX Information Return – International Exchange of Information on Financial Accounts slips and summary
• Guidance on the Canada-U.S. Enhanced Tax Information Exchange Agreement
• Changes to the rules for deducting Canada Pension Plan (CPP) contributions
• Payroll deductions and contributions
• Canada child benefit - Overview
• Topics - Child and family benefits

CRA contact:
Tracy Annett,
Director
Legislative Amendments Division
Canada Revenue Agency
Telephone: 613-670-9568
Email: Regulations-Reglements@cra-arc.gc.ca

Date the regulatory initiative was first included in the Forward Regulatory Plan: 2019-04-01