The recent announcement by Ministers Shea and Kenney yesterday
in a press release (the "Press Release")
is much welcomed by Albertans as the Province has been hit by the
worst flooding in its recent history. However, the Press
Release is ambiguous as to exactly which taxpayers and what filings
will qualify for the relief measures announced. See our
blog of June 26, 2013 for detailed information on the taxpayer
The Press Release states that "taxpayers affected by
flooding in Alberta will have until August 2, 2013 to file their
returns". The Press Release then states that
"the CRA will proactively adjust the due date for all federal
business and other returns filed in Alberta that were due during
the flooding". Pursuant to subsection 220(3) of the
Income Tax Act and section 281 of the Excise Tax
Act, the Minister may extend the time for filing a return.
At first blush, it appears that the Press Release is
automatically extending the deadline for the filing of all business
and other returns; however, upon closer review the wording of the
press leaves many questions unanswered.
The first question is whether payroll and GST returns are
included in the phrase "federal business and other
returns". Many businesses may also have election forms
or other information requests that are due during the period in
question, not to mention that such taxpayers may be attempting to
file a notice of objection. The Income Tax Act and
the Excise Tax Act assess penalties for late filed returns
and election forms.
At top of mind for tax preparers, is whether the Press Release
applies to the tax and other business returns that are due on June
30, 2013. It is arguable that a filing due on June 30, 2013
is not covered as such filing was not due "during the
flooding"; however some portions of the Province still remain
in a state of emergency.
Further, how do tax preparers obtain relief for their
clients? What if a taxpayer is affected by the Alberta
flooding by virtue of the fact that their tax professional has been
affected? Arguably such a taxpayer should similarly be
entitled to relief. The Institute of Chartered Accountants of
Alberta announced to their members that they are in discussions
with the CRA in respect of obtaining relief for tax preparers.
The next question is what is meant by the phrase "filed in
Alberta"? How will the CRA determine if a taxpayer was
(or was not) affected by the flooding in order to be eligible for
the proactive adjustment of the taxpayer's filing deadline(s)
to August 2, 2013? There is no CRA Taxation
Centre (as opposed to Tax Service Office) in Alberta and Alberta
taxpayers are directed to send their tax filings to the Winnipeg
Taxation Centre. Will the CRA be using the business address
on the return? What if a taxpayer was not affected by the
flooding, do they get automatic relief if they have an Alberta
address? What if the address on the return (for example a T2
return) is outside of Alberta but the books and records of the
taxpayer were in Alberta and were damaged by the flooding?
Perhaps of greater concern to many businesses is whether their
remittance obligations will also be subject to the same proactive
relief. Is the deadline for these obligations automatically
extended until August 2, 2013? The Income Tax Act
and Excise Tax Act may assess penalties for late
remittances, but assess interest (accrued daily) to a taxpayer in
respect of balances owing. Under the taxpayer relief
provisions, found in subsection 220(3.1) of the Income Tax
Act and section 281.1 of the Excise Tax Act, the
Minister has the discretionary authority to waive or cancel both
penalties and interest, in practice such authority is delegated to
Taxpayers should also be cognizant of the fact that the Province
of Alberta administers its own corporate taxation system, and as of
today has not announced parallel relief in respect of their
corporate filing deadlines.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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