CRA e-service improvements: Key initiatives

As the Canada Revenue Agency (CRA) works to create an increasingly digital tax system, practitioners will soon enjoy new e-service options for information returns, special elections and more. Find out what’s in the CRA’s pipeline.

The CRA has several projects on the go to enhance and extend its digital services for taxpayers and practitioners. The organization often seeks practical input from CPA Canada and our members on the best way to design and implement new digital features.

As part of these ongoing consultations, the CRA-CPA Canada Technology Working Group regularly brings together senior CRA officials, tax preparers, tax software developers and other stakeholders to share information and brainstorm ideas. At the group’s latest virtual meeting in June, the CRA previewed several service improvements now in place or in the works for the coming years.

In this blog, we summarize updates on the CRA’s digital services in the following areas:

  • information slips and summaries — going digital
  • updating processes for special elections and returns (SERS)
  • improving security with multi-factor authentication (MFA)
  • improving security for representative authorizations
  • correspondence with businesses — digital by default
  • eliminating EFILE thresholds for T2 and GST/HST returns

Information slips and summaries: Going digital

With its Information Declaration (InfoDec) Modernization Project, the CRA aims to update the systems it uses to process third-party information returns, including T3, T4 and T5 slips and summaries. The CRA receives 27 different types of information returns and associated slips through InfoDec and currently processes about 2.7 million information returns and 204 million slips annually. Taxpayers and their representatives can access information slip data through the CRA’s secure, self-service options, including My Account, My Business Account and Auto-fill my return.

While the InfoDec Modernization Project is in its early stages, the CRA ultimately plans to:

  • enable electronic filing for more types of information returns and slips
  • provide near to real-time feedback to information return filers regarding errors within their information return
  • allow information return filers to correct errors
  • deliver additional information and electronic communication via My Business Account
  • make more information available to taxpayers through My Account and Auto-fill my return

Updating processes for special elections and returns

The CRA has been working on modernizing its paper-based processes for SERS. The goal is to develop a system that would automate steps in the processing of elections. The CRA currently processes about 46 of these election forms, and four of them — namely, T2054, T2057, T2059, T2 schedule 89 — make up the most volume.

Improvements already in place because of this project include the ability to validate the accuracy of capital dividend account (CDA) balances, a new referral system to prioritize enquiries from call centres, and the transmission of letters to acknowledge receipt of elections.

Upcoming improvements in the works include:

  • updating of CDA balances in real time in My Business Account as T2 returns are processed (scheduled to be introduced in October 2022)
  • enabling electronic transmission of T2054, Schedule 89, T2057, T2058, and T2059 (also scheduled for October 2022)
  • fully automating T2 Schedule 89 CDA balance validation requests, except for a few special cases, such as those related to life insurance, that will still require manual intervention (scheduled for December 2022)

The CRA also plans to give call centre agents the ability to access specific taxpayer information, such as whether a form has been filed and whether a CRA information request has been issued. Stakeholders with the Technology Working Group suggested that it would also be useful to make this information available to taxpayers and representatives through the portals.

Stakeholders also pointed out that giving taxpayers and representatives the ability to confirm receipt online would save time and effort for everyone involved. The CRA is looking into ways to provide acknowledgement that an election filed through the SERS portal has been received.

Stakeholders in industry asked whether web access codes could be expanded to various foreign reporting forms so that they can be filed internally within their respective tax or finance departments, as opposed to having their accounting firm EFILE the forms. The CRA confirmed that the process for web access codes is being reviewed in the context of the SERS modernization project.

More generally, stakeholders suggested that the CRA’s digital services could benefit from more consistency across programs, with more coordination and uniformity in areas such as slip transmission, tax form design and terminology. When the CRA is designing its digital services, stakeholders agreed that it would be helpful to standardize data import and export formats among tax preparers, software developers and the CRA’s systems.

Improving security with MFA

The CRA plans to reinforce the security of its online self-service portals by introducing mandatory MFA for access, starting in September 2021. When logging in, users will receive a one-time passcode by SMS or in an automated message to the phone number they provided, which they will need to enter to gain portal access. This code is good for a single log-in session. A new one-time passcode will be sent each time a user attempts to log in to the CRA services in the future.

In addition, the CRA is introducing a passcode grid which contains static grids of numbers similar to a bingo card. Instead of receiving a one-time passcode by phone to gain portal entry, users will be prompted to enter the number from a particular row and column of their passcode grid. This alternative can be used, for example, by people who do not have telephone access or do not have a North American telephone number.

Stakeholders had previously noted that smaller firms may not have direct lines for their staff or want their staff using their personal phones to deal with the CRA. The passcode grid provides another option in these cases. The CRA has stated that the phone number provided would be used for MFA only and not for other CRA communications.

To avoid inconvenience for users who need to log in repeatedly for various tasks, stakeholders advised it would be important to allow an appropriate length of time before a new MFA must be entered, including for passcode grid users. Stakeholders also noted that it would be useful for representatives to access multiple clients through a single MFA log-in, as they can do now through Represent a Client (RAC).

Improving security for representative authorizations

When the CRA receives a request to authorize someone to represent a taxpayer in their dealings with the CRA, rising concerns over identity theft are prompting the CRA to contact more taxpayers to verify the authenticity of representatives before the request is granted. Sometimes if a representative cannot be verified, the request for authorization is cancelled to prevent the taxpayer’s information from falling into unauthorized hands.

In October 2021, the CRA plans to improve this process by introducing Confirm my Representative, a new second step in a two-factor authorization procedure for confirming the representative. As currently planned, once the representative submits the signature page for an authorization request using Represent a Client, the request will go into a “Pending” state. The request will be activated when the client logs into My Account or My Business Account and selects the Confirm my Representative option. CPA Canada is working with the CRA to further streamline this process and the CRA is exploring options for taxpayers who cannot access My Account or My Business Account.

The CRA also noted that representatives who are already authorized on a client’s account will not need to submit a new authorization request. The new process will only apply to new authorizations (including those from a representative already authorized if they choose to submit a new request for some reason).

Confirm My Representative is currently scheduled to be extended to registered EFILE users in mid to late 2022, and it may also apply for paper authorizations. Stakeholders suggested that the CRA revisit the timing of this change, so that it does not take effect so close to the start of the 2022 tax season.

Correspondence with businesses: Digital by default

Another Budget 2021 proposal has given the CRA legislative authority to provide businesses with correspondence digitally as the default method of communication. The move to electronic correspondence is urgent for the CRA, given the hundreds of thousands of items of mail returned annually and the security risk of physical mail being delivered to incorrect addresses. However, only 10 percent of businesses have voluntarily opted into electronic correspondence.

Once electronic communication becomes the default method of business correspondence, which is expected in October 2022   , the CRA intends to stop mailing millions of notices and statements to business taxpayers that are signed up to view their correspondence online in My Business Account. Businesses will be notified of delivery when they provide an email address to the CRA for these purposes.

As currently envisioned, it may be possible for representatives to become recipients of clients’ email notification by default. CPA Canada and the Technology Working Group members have explained to the CRA that many practitioners would not want to assume this responsibility on their clients’ behalf, and we will continue to work with the CRA to find an appropriate solution.

In any event, business taxpayers will be able to request to have paper-based communication restored. The CRA will review these requests and re-activate paper mail, as long as the mailing address is kept current. Certain organizations with business numbers will be excluded, including charities and non-resident businesses who do not access the portal.

Eliminating EFILE thresholds for T2 and GST/HST returns

The CRA is working out its plans to administer the Budget 2021 proposal to eliminate the electronic filing thresholds for corporate income tax returns for tax years that begin after 2021 and GST/HST returns for post-2021 reporting periods (other than charities or selected financial institutions). However, legislation to enable the proposal remains outstanding, and details of its implementation remain to be seen.

For corporations, it is not confirmed whether the threshold will be subject to phase-out or a blanket removal. Certain exceptions under the regulatory definition of prescribed corporation that were the result of system limitations no longer apply. For GST/HST, the current exceptions for charities and others will remain but thresholds would be eliminated.

Watch for further developments

There are numerous technology-related initiatives the CRA is working on to improve its services to taxpayers. We will continue to provide CRA with our feedback and keep you informed as new changes are introduced.

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About the Author

Bruce Ball, FCPA, FCA, CFP

Vice-president, Taxation, CPA Canada