Dealing with the CRA through a representative

Although the Canadian tax system is a “self-assessing” one, in which taxpayers calculate and report their income to the federal government on an annual basis, the fact is that the returns of many, if not most, individual taxpayers are actually prepared by someone else—perhaps a willing family member or friend, one of the many tax return preparation services or an accountant. It follows, therefore, that most taxpayers will, at least on occasion, find it necessary to deal with the Canada Revenue Agency (CRA) through a representative, either in the preparation of the annual tax return or with respect to any queries or re-assessments which might follow from the CRA, or both.

Two important consequences follow from this reality. First, taxpayers are sometimes surprised to learn that, even if their return for the year is prepared by someone else, and even if they pay for that service, they remain responsible for the accuracy and completeness of the information provided on the return. Second, despite the fact that a return was prepared by someone other than the taxpayer, the CRA cannot, by law, provide any information about the taxpayer to that person (or to any other person, including the taxpayer’s spouse, parent, or child) without specific prior authorization.

Traditionally, a taxpayer designates another person or persons to act as his or her representative by filing a Form T1013 with the CRA. A taxpayer who completes a T1013 naming an authorized representative must specify the level of access (Level 1 or Level 2) that the representative is to have. The CRA will disclose the following information to an authorized representative who has been provided with Level 1 access:

• information given on the taxpayer’s tax return;
• adjustments to the taxpayer’s tax return;
• information about the taxpayer’s Registered Retirement Savings Plan, Home Buyers’ Plan, Tax Free Savings Account, and Lifelong Learning Plan;
• accounting information, including balances, payments made on filing, and instalments or transfers;
• information about benefits and credits (i.e., Canada Child Tax Benefit, goods and services and harmonized sales tax credits); and
• marital status (but not information about a spouse or common-law partner).

Authorized representatives who have Level 2 access may receive any of the information listed above and may, in addition, ask for changes to be made to the taxpayer’s account. Those changes might include such things as adjustments to income, deductions, and non-refundable tax credits and accounting transfers. As well, a Level 2 representative is able to submit a request for relief under the CRA’s Taxpayer Relief Program, or to file a Notice of Objection or appeal on behalf of the taxpayer.

Where the taxpayer does not specify the permitted level of access, the CRA will assume that only Level 1 access has been authorized.

In addition to specifying the level of permitted access, a taxpayer who is allowing a representative to have access by telephone, in person, or in writing, must specify the tax years for which authorization is being given. It is possible to give authorization for all tax years, or to specify certain tax years, past or present. As well, different levels of access (i.e., Level 1 or 2) can be specified for different tax years. Where online access is being provided to the representative, however, such access must be for all taxation years—the CRA’s online services do not have a year-specific option, although it is possible to specify the level of access permitted. Finally, the taxpayer can specify the date on which the consent will expire. Where no specific expiry date is provided, the authorization will stay in effect until it is cancelled by the taxpayer or the representative, or until the CRA is notified of the taxpayer’s death. And, while an authorization to the CRA designating a representative must be done in writing, any existing authorization can be cancelled, with immediate effect, by means of a phone call to the CRA—specifically to the CRA’s individual help line at 1-800-959-8281 or online, on the CRA Web site at http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/chng_rps/cncl-eng.html. In order to effect a cancellation online, it is necessary that a taxpayer have access to the CRA Web site feature My Account. If the taxpayer hasn’t already registered for that service (anyone who has done so will have received an access code from the CRA to enable them to access the My Account service) but wishes to cancel a representative’s authority immediately, it would be best to do so by telephone.

Where a taxpayer engages the services of a tax return preparation service, that service will frequently ask the taxpayer to provide it with an authorization to act as the taxpayer’s representative with the CRA. It’s a reasonable request, given that the tax return preparer may need to contact the CRA to obtain information—for example, from prior year returns—which is needed to prepare the tax return for the current year. Taxpayers who authorize a representative in such circumstances should, however, be careful to ensure that the authorization is limited, usually to the specific time during which the return will be prepared. Not infrequently, taxpayers have been asked to sign an authorization which does not specify any time frame and are surprised to find that such authorization is still in effect, giving the representative the right to obtain information about that taxpayer, even years later, long after the taxpayer had finished his or her dealings with the tax return preparation service.

Where a taxpayer authorizes a representative, he or she must decide on the means by which that representative will be permitted to obtain information from the CRA. A representative can deal with the CRA by telephone, in writing, in person, or online, and authorization must be given separately for each method of communication. As outlined in the CRA’s instructions for completion of the T1013:

• If the taxpayer wants to authorize his or her representative to deal with the CRA
• online as well as via the telephone, in person and in writing,

Parts 1, 2, 4 and 6 should be completed;

• If the taxpayer wants to authorize his or her representative to deal with the CRA
• only via the telephone, in person and in writing, Parts 1, 3, 4 and 6 should be completed.

The difference between Part 2 and Part 3 is that Part 2 grants online access and Part 3 does not. Therefore, both cannot be completed. If both parts are completed, the CRA will only process Part 2, and the representative will be able to obtain information via the telephone, in person, in writing, and online.

No matter what the level of authorization specified on the T1013, or the method by which the representative deals with the CRA (i.e., by phone, in person, or online), there is some information which can never be disclosed to a authorized representative and some actions which an authorized representative is not allowed to take. Specifically, a representative authorized to act under a T1013 cannot effect a change in the CRA’s records with respect to a taxpayer’s address or marital status, or alter any direct deposit information on file with the CRA. As well, the CRA will not provide an authorized representative with a taxpayer’s eight-character access code.

Form T1013 is specific to a situation in which an individual taxpayer wants to authorize a representative to deal on his or her behalf with the CRA. The need to designate a representative to deal on one’s behalf with the CRA is fairly commonplace. However, giving another person access to your personal tax information, even for a limited purpose or a limited time, is a significant step which should not be taken without some thought. Where it is determined that providing such access is necessary, careful consideration should be given to the level of access needed, the tax years for which access is required and, possibly most important, the length of time for which that access should be provided.