Improving the HST audit process
July 8th, 2019
CADA has been engaged in a multi-year, multi-level campaign to ensure the Canada Revenue Agency (“CRA”) treats dealer finance and insurance income correctly for HST purposes.
Earlier this year, the CRA decided not to appeal a ruling by the Tax Court of Canada that insurance commissions are HST-exempt (Applewood Holdings Inc. v. The Queen). However, the CRA is a large organization with auditors across the country and the level of awareness at the audit level, for both finance and insurance income, has been inconsistent and remains a challenge for a small group of dealers, according to Huw Williams, CADA’s Director of Public Affairs.
“While CADA has been successful in assisting those dealers on a case-by-case basis, the resources required by those dealers, and the national resources expended by CADA in terms of senior staff time and legal counsel, have been substantial and out of step with CRA’s own ruling on finance outcome and the Applewood position,” said Williams, in an interview with CADA Newsline.
Williams said the association has been working with CRA to have them improve the audit process for dealers across the country.
In June 2019, in an effort to resolve the concerns of dealers dealing with inconsistent audit activity, CADA met with the assistant commissioner of CRA and the Director General of the GST/HST Directorate in an attempt to focus senior management at CRA on the issue at hand — improving and eliminating unhelpful audit activity that wastes CRA and dealer resources.
“The meeting was led by CADA’s Ottawa office and attended by President and CEO John White, the association’s tax counsel, and senior officials at CRA,” said Williams. “CRA pledged to strike a senior-level working group to resolve the issue and focus resources on improving the process for everyone. Our overall objective coming out of the meeting was to communicate the issue to the highest levels within CRA, and to create a direct contact for those in auditing who need to be educated.”
CADA will be keeping dealers up-to-date with its work on the issue. Dealers with questions can consult the association’s website or contact CADA’s Ottawa office at 1-800-465-3054.