Principal Issues: (1) How will the Income Tax Rulings Directorate determine remissions for rulings and pre-ruling consultations? (2) Will the fees for Rulings and Pre-rulings Consultations remain the same?
Position: (1) Remissions will apply to rulings and pre-ruling consultations received by the Directorate after April 1, 2021. Information on how to calculate remissions is described in Appendix H of IC 70-6R11 Advance Income Tax Rulings and Technical Interpretations. (2) Beginning April 1, 2021, the fee for Rulings and a Pre-rulings Consultations will be $221.24 for each hour or part of an hour worked on a file to be increased to $281.22 per hour or part of an hour effective April 1, 2023. Such fees will be increased each year in accordance with the Consumer Price Index.
FEDERAL TAX ROUNDTABLE, OCTOBER 7, 2021
APFF CONFERENCE 2021
Question 19
Service charges - advance rulings and prior consultations
The service fees charged by the CRA in connection with an advance income tax ruling and a supplementary advance income tax ruling ("Advance Income Tax Ruling") and a pre-advance income tax ruling consultation ("Pre-advance Income Tax Consultation") are governed by the Service Fees Act (footnote 1).
Section 7 of the Service Charges Act provides for an obligation to refund a portion of the service fees charged ("Remission") when a performance standard is not met.
Questions to the CRA
- Can the CRA clarify how a Remission will be made for service fees charged for an Advance Ruling and Advance Consultation?
- Will the fees for an Advance Ruling and Advance Consultation be revised in the near future?
CRA response to question 19(a)
The objective of the Income Tax Rulings Directorate ("ITRD") is to issue an Advance Income Tax Ruling or to hold an Advance Consultation teleconference within an agreed-upon time frame.
The service standard for an Advance Ruling is to issue the ruling within 90 working days after the ITRD has received from the applicant all of the information listed in Appendix A - Advance Ruling Request Checklist of Information Circular IC70-6R11 (IC 70-6) (footnote 2). The service standard for an Advance Ruling Consultation is to hold a teleconference within 15 business days of the date the DFA confirms to the applicant that the advance ruling request meets the requirements of IC 70-6.
Where a preliminary analysis of the Advance Ruling/Advance Consultation request determines that the 90 and 15 business day service standards cannot be met, the ITRD will inform the applicant that the target service date will need to be adjusted. In such circumstances, a mutually agreed service target date will be established with the applicant in relation to the request.
The Remission will be made when the Advance Ruling/Preliminary Consultation is made/held after the service target date applicable to the request, in accordance with Appendix H - Remissions of Information Circular IC 70-6.
The amount of the Remission will be calculated on an incremental basis as a percentage discount on the rate applicable to the hours worked subsequent to the service target date, and then applied to reduce the amount billed to the requestor.
The Remission will be applicable, where required, to Advance Ruling and Pre-ruling Consultation requests received by the ITRD after April 1, 2021.
Further information on the application and calculation of the Remission can be found in Annex H - Rebates of Information Circular IC 70-6.
CRA response to question 19(b)
The CRA has always charged for services related to the issuance of an Advance Ruling and the setting up of an Advance Consultation ("File"). The CRA is now proposing to amend the fee schedule applicable to a File to better reflect the costs associated with it.
When the CRA last updated the fee schedule in 2000, the fee for ITRD services was $100 per hour for the first 10 hours worked on a File, and $155 per hour for each subsequent hour worked on the File. As of 2019, those amounts are increased annually in accordance with the Consumer Price Index ("CPI") pursuant to section 17 of the Service Fees Act. As a result, the fee applicable to a File is currently $104.04 per hour for the first 10 hours and $161.26 per hour for each subsequent hour.
Over the next two years, the ITRD will change the fee for a File. From April 1, 2022, the rate will be $221.24 per hour worked on a File and will increase to $281.22 per hour from April 1, 2023. The new amounts payable in respect of a File will also be increased annually in line with the CPI.
The changes to the fee structure for services rendered by the ITRD were published in the Canada Gazette, Part II on July 21, 2021 (SOR /2021-173) (footnote 3).
François Mathieu
(613) 670-9044
October 7, 2021
2021-090112
FOOTNOTES
Note to reader: Because of our system requirements, the footnotes contained in the original document are shown below instead:
1 S.C. 2017, c. 20, s. 451.
2 CANADA REVENUE AGENCY, Information Circular IC70-6R11 "Advance Income Tax Rulings and Technical Interpretations", April 1, 2021 (online: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/ic70-6.html).
3 GOVERNMENT OF CANADA, Order Amending the Advance Income Tax Ruling Fees Order: SOR/2021-173, Canada Gazette, Part II, Volume 155, Number 15 (online: https://gazette.gc.ca/rp-pr/p2/2021/2021-07-21/html/sor-dors173-eng.html).