Canada’s New Registration Of Tax Preparers Program

 
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On January 17, 2014, the Canada Revenue Agency ("CRA") finally announced its intention to introduce a registration system for tax preparers who prepare tax returns for a fee. The new registration system, entitled Registration of Tax Preparers Program ("RTPP"), if implemented, will require tax preparers to register with the CRA during its 2016-2017 fiscal year. The CRA released information on its website regarding the new RTPP and announced that it will be consulting with stakeholders until the end of May 2014. The CRA also released a Consultation Paper where it explains its position on the new RTPP. It also discusses some brief examples of other countries (United States, Australia and the UK) that have introduced tax registration programs.

When announcing its objective with the new RTPP, the CRA released a number of FAQs relating to this new initiative and stated the following when describing the purpose of the new program:

[The new RTPP] will allow the CRA to assess individual tax preparer compliance, identify and assess risks, and evaluate where recurring errors occur. As a result, taxpayers and their representatives will have a better understanding of their tax obligations and responsibilities and it is expected that the need for traditional, "after the fact" interventions with taxpayers, such as auditing a taxpayer's tax return, will decrease.

A well-informed and competent tax preparer community can prevent recurring errors, possibly saving taxpayers from costly problems later on and reducing red tape for business.

As part of the RTPP, the CRA will implement a strategic compliance approach to help tax preparers improve the accuracy and completeness of returns. Where errors are found in returns prepared by a tax preparer, the CRA will visit the tax preparer and discuss the errors. Where errors continue, possible interventions include follow up visits, action plans, or auditing of the tax preparer's clients.

CRA had been openly musing for over a year that it was considering introducing such a system. Some commentators, including our firm, have been very supportive of the CRA exploring this and we've written about this many times before. Our December 23, 2013 blog predicted that Canada would introduce a tax preparer registration system. Others, however, argue there is no upside to a registration system and ultimately people should be free to exercise their freedom to do business in Canada. Some great tax professionals argue that forced...

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