The Canada Revenue Agency (CRA) says it will establish physical tax centres and reach out to improve its Northern services after a consultation found Northerners struggle to complete tax returns and fully access the benefits to which they are entitled.
Avery Zingel/NNSL photo
The CRA is establishing physical offices in Iqaluit and Yellowknife after piloting the program in Whitehorse.
CRA employees will support individuals and businesses year-round and will establish agency phone lines to connect Northerners with employees who are have expertise in Northern tax matters.
Six of the 12 employees in each territorial capital will do outreach and run a community volunteer income tax program to file returns free of charge for vulnerable people or folks with modest income. A liaison officer will make on-site business visits and provide seminars on Northern tax issues.
"All Canadians, regardless of where they live, deserve to receive quality services from the CRA. Northern residents face unique challenges when the time comes to file an income tax return to receive benefits such as the Canada Child Benefit and Northern residents deductions," federal National Revenue Minister Diane Lebouthillier stated in an Aug. 24 news release.
Three new service centres will bridge that gap, Lebouthillier stated.
Nunavut Premier Joe Savikataaq lauded the improvements.
"I'm pleased that Nunavummiut will have access to permanent services with the Canada Revenue Agency right here in the territory. This is a much-needed service in Nunavut, and will certainly provide relief and aide all year round, but especially during tax season," Savikataaq stated in the release.
Northerners have difficulties complying with lowest-return airfare because "depending on who you talk to, depends on if the CRA agrees with you," said Shawn Lester, a chartered accountant with Lester Landau.
The CRA is consulting residents on possible regulatory amendments to clarify its rules on airfare.
"It's always a grey area and always a big question mark. Instead of everyone having to figure out their own number and being challenged by CRA, have the CRA produce that number so that it's consistent," he said.
The agency should provide assistance to Northerners whether or not it produces incremental revenue – and it should do so in Inuktitut to eliminate language issues, said Lester.
In the mid-2000s, the CRA established a 1-800-Nunavut line, at first only in English until there were "too many complaints," said Lester.
The centre was soon staffed with three Inuit women, making the Nunavut team "effective and helpful," he said.
"Once they got their compliance rates up, it wasn't worth the cost, so they disbanded," said Lester.
"It is a challenge for Nunavut taxpayers to deal with CRA," he said, adding that communities outside Iqaluit are also entitled to better CRA service.
In 2005 the number of audits sat around 25 per cent – a number Lester's agency proved by keeping track of reassessment letters. Between 2005 and 2007, 15 to 20 per cent of filings went to audit. At the time, the Canada-wide average was four per cent.
Communicating with the CRA is "scary" for many taxpayers, he said.
Barring a complete overhaul, the CRA should end its practice of challenging Northern residency over multiple years because it "borders on harassment," said Lester.
"When they challenge someone's residency – and its been proven that they really are a Nunavut resident – don't be challenging it every year for multiple years in a row."
Responding to letters and "administrative flaws" creates stress for taxpayers, he said.
"They end up just accepting it. A lot of taxpayers lose money because they don't understand the system and how to deal with it," said Lester.
The following year, portions of a return can be garnished because of a failure to respond to the previous year's reassessment, he said.
The new changes should be met with cautious optimism, after previous programs were axed, he said.
"Very few people have had a positive interaction with CRA. I just hope they actually do what they say they're going to do and it's not just putting a couple people in an office for window dressing," he said.
A study on tax filing in the North found that the CRA can improve its services by offering face-to-face communications and outreach with Indigenous and Northern communities.
Northern tax literacy is low and while vulnerable populations know they must file returns, there is only "moderate understanding" that continuity of benefits is contingent upon filing, the report states.
Participants in the study suffered disruptions in their benefits after not filing taxes, and people have a "limited awareness" of what they are eligible for.
People who did not file returns did so because of health conditions, personal ability, a desire to keep their income and fear of wages being garnished through taxes owing, the report says.
They also chose not to file because of "a lack of trust in the government," the report states.
Difficulties completing tax returns are more pronounced in the North, where there are few options for assistance and none are available free of charge.
A document tabled in the House of Commons on June 20 reported that Nunavummiut were reassessed at a rate of 13 per cent, compared to the national average of nine per cent. Yukoners were reassessed at the highest rate – 15 per cent.
In 2016, 12 per cent of Northerners who filed for the deduction were reassessed. The percentage of reassessments dropped to 8.9 per cent for those who did not file for the deduction.
The CRA will also provide a new checklist on claiming Northern Residents Deductions.
The "complex nature" of the deduction makes correct claims difficult, resulting in an influx of reassessments, a CRA news release states.