Fairness is a very powerful and important principle for most people.
As a result of the federal Conservative government's April 21 federal budget, dealing with the Canada Revenue Agency just got fairer.
Lack of fairness is at the heart of many of the complaints we hear about tax authorities.
For example, it feels unfair to get a letter from the taxman using language that makes you feel guilty of a crime you didn’t commit, or the ultimate in unfairness not being able to rely on the government’s own tax compliance advice.
Several years ago, the Canadian Federation of Independent Business made 145 “secret shopper” calls to the Canada Revenue Agency (CRA) and found that 20 per cent of the time the agency staff gave incomplete or incorrect answers to standard questions from small business owners.
More recently, it was reported that the Canada Revenue Agency’s own study found its agents provided wrong advice even more often – 25 per cent of the time.
Bad tax advice can be a big problem if you are audited.
We dealt with one case when an owner was assessed $93,000 for following advice in a government tax bulletin for her industry. She told us that paying the tax bill would cost her house or her businesses.
The obvious unfairness of cases like these led the Canadian Federation of Independent Business (CFIB) to advocate for changes to tax administration policies, both provincially and federally.
The B.C. Liberal government was an early leader in this area in 2005 when then-revenue minister Rick Thorpe introduced a Taxpayer Fairness and Service Code that committed to respect written tax advice — even if it was wrong.
Thorpe championed the code passionately with the bureaucracy, and his commitment greatly improved the relationship between small business and provincial government. Beyond that, his policy changes proved a model for Prime Minister Stephen Harper's government in Ottawa.
The CRA took its first step toward fairness when its agents started identifying themselves with caller ID numbers a few years ago. Then it agreed to respect its own written information provided through CRA’s MyBusiness Account, which represented a huge fairness breakthrough for small business taxpayers.
Last week’s budget takes tax fairness to new levels. The CRA will now respect written advice in tax bulletins, letters and information on its website. Further, it will put its 100 most commonly used written communication pieces in plain language.
Finally, CRA plans to make permanent a new program it was testing to visit businesses to help with compliance rather than just to audit.
The CRA currently has a strong minister, Kerry-Lynne Findlay, who places a high premium on improving the agency’s culture. She is from British Columbia and knew what she was doing when she appointed Thorpe to chair the CRA’s board of management in 2013.
Laura Jones is executive vice-president of the CFIB. She can be reached at laura.jones@cfib.ca. Follow her on Twitter @CFIBideas.