As accountants, we communicate with the Canada Revenue Agency (CRA) almost every day. In fact, I think I talk to CRA more often than my parents (sorry, Mom, I will visit soon).
What I have gleaned from this constant interaction is simple – CRA is not always right. Or, at least, the people answering the phone are not always right.
First of all, like many organizations, your best and brightest are not usually answering the 800 number. We interviewed a summer student a few years back who had barely taken an accounting course and was already a supervisor at the call center. Having said that, there are many good people at CRA trying to help you out, but their knowledge may be limited to what is in their training manuals.
Recently, we completed tax returns for a young widow and her late husband. A very sad story, and CRA was determined to make it worse. They denied her late husband’s dependent claim for their three children. When I called, the person on the phone said it was because the children had not lived with their father for the entire year. When I pointed out that, since their father passed away in July, it was not possible for them to live with him for the entire year, the CRA person stuck to her guns and said sorry, that was the law. When I further pointed out that the Income Tax Act and CRA’s own guide “Preparing Returns for Deceased Persons,” allows such a claim, she just became frustrated with me. After escalating to a manager, we were able to resolve it for the widow and get her several hundred dollars back.
Another recent incident occurred when CRA called a corporate bakery client of ours to tell them that they had not filed their corporate tax return, it was late, and they owed tax, interest and penalties. Panicked, our client called M Group – always wise to call your accountant first – before paying the amounts demanded by CRA. We checked online with CRA and the return had in fact been filed, and the payment made. CRA had just put in the wrong place. We were easily able to correct this and our client went back to making their sinfully delicious cupcakes.
So, if you receive a letter or phone call from CRA and something doesn’t seem right, don’t panic, and call us first. CRA may have it wrong, and we can help make it right.