CRA Liason Officer Program – An audit in sheep’s clothing?

Posted on: May 19th, 2015 by Real Estate Accountants 1 Comment

CRA Liasion Officer Program - Audit in sheep's clothing? In 2014 the Minister of National Revenue announced The Liaison Officer Initiative. The CRA will provide in-person information to small and medium enterprises at key points in their business cycle to help them get “right from the start”. Sound innocuous enough right? In fact, it sounds wonderfully helpful.

Maybe not.

Now that the initiative is rolling out, you may be receiving letters like this one below. The letter itself is, frankly, intimidating. If you receive one of these letters, we definitely want to know right away. (And, according to discussions with the CRA, as CPAs, our original impression was that this letter would be sent to us, and not directly to you.)

Although this initiative seems friendly, note that as part of this friendly visit, the CRA can “review books and records”. This sounds perilously close to an audit to me.

As well, we have heard unofficially that if someone refuses this “friendly visit”, he or she has a greater chance of being chosen for audit. As well, unofficially, if you do allow the review, and then don’t follow what CRA suggests to improve your books and records, you may be subject to gross negligence penalties and penalties under ITA 230. In other words, that was your first and final warning, now you’re playing with the big boys and girls.

Not so friendly anymore, is it?

Please, if you are a client, let us know as soon as you receive such an invitation so that we can help. Please do not sign any documentation the CRA requests of you without consultation with us. If you are not yet a client, we’d also appreciate learning if you have received the letter and ultimately the results.

This CRA project has been initiated in Ontario and Quebec. The remainder of Canada has much to look forward to! While better than an official audit in some ways, not by much in others.

George E. Dube, CPA, CA

@GeorgeEDube | 519-576-5220

Example Letter

CRA Liason Officer Program

 

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One Response

  1. From my personal experience, every interaction with the CRA has been both painful and expensive. I truly wish we lived in a less complicated tax regime.

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