Question 1
What is the CRA’s practice in respect of legislative amendments that have not yet been enacted?
Response 1
It is the CRA’s longstanding practice to ask taxpayers to file on the basis of proposed legislation. This practice eases both the compliance burden on taxpayers and the administrative burden on the CRA. However, where proposed legislation results in an increase in benefits (e.g. Canada child tax benefit) to the taxpayer or a significant amount of rebate or refund is at stake, generally, the CRA’s past practice has been to wait until the measure has been enacted.
Question 2
What practical guidance can the CRA provide to taxpayers with respect to the proposed legislation involving Non Resident Trusts (NRTs), Foreign Investment Entities (FIEs) and Foreign Affiliates (FAs), where there has been uncertainty with respect to the final wording of the proposed legislation?
Response 2
With respect to the existing legislative proposals concerning NRTs, FIEs and FAs that have been made public by the Department of Finance, when deciding whether or not to file based on the wording of the existing law rather than the wording of those legislative proposals, taxpayers should be conscious of the proposed application dates for those legislative proposals. Taxpayers that choose to file based on the wording of the existing law rather than the wording of the existing legislative proposals are expected to bring their tax affairs up-to-date, in a timely manner, once the legislative proposals become law. In this case, the CRA may waive penalties as appropriate.