Vol. 147, No. 24 — November 20, 2013

Registration

SOR/2013-199 November 8, 2013

INCOME TAX ACT

Regulations Amending the Income Tax Regulations (Late Filing Penalty — Prescribed Information Returns)

P.C. 2013-1152 November 7, 2013

His Excellency the Governor General in Council, on the recommendation of the Minister of National Revenue, pursuant to section 221 (see footnote a) of the Income Tax Act (see footnote b), makes the annexed Regulations Amending the Income Tax Regulations (Late Filing Penalty — Prescribed Information Returns).

REGULATIONS AMENDING THE INCOME TAX REGULATIONS (LATE FILING PENALTY — PRESCRIBED INFORMATION RETURNS)

AMENDMENTS

1. (1) Section 205 of the Income Tax Regulations (see footnote 1) is amended by adding the following after subsection (2):

(3) For the purpose of subsection 162(7.01) of the Act, the following types of information returns are prescribed:


Government Service Contract Payments

T1204

Past Service Pension Adjustment (PSPA) Exempt from Certification

T215

Pension Adjustment Reversal (PAR)

T10

Registered Retirement Savings Plan (RRSP) Contribution Information Return

  

Statement of Amounts Paid or Credited to Non-residents of Canada

NR4

Statement of Benefits

T5007

Statement of Canada Pension Plan Benefits

T4A(P)

Statement of Contract Payments

T5018

Statement of Distributions from a Retirement Compensation Arrangement (RCA)

T4A-RCA

Statement of Employee Profit Sharing Plan Allocations and Payments

T4PS

Statement of Employment Insurance and Other Benefits

T4E

Statement of Farm-support Payments

AGR-1

Statement of Fees, Commissions, or Other Amounts Paid to Non-residents for Services Rendered in Canada

T4A-NR

Statement of Income from a Registered Retirement Income Fund

T4RIF

Statement of Investment Income

T5

Statement of Old Age Security

T4A(OAS)

Statement of Pension, Retirement, Annuity and Other Income

T4A

Statement of Registered Retirement Savings Plan (RRSP) Income

T4RSP

Statement of Remuneration Paid

T4

Statement of Securities Transactions

T5008

Statement of Trust Income Allocations and Designations

T3

Tax-free Savings Account (TFSA) Annual Information Return

  

Universal Child Care Benefit Statement

RC62

(2) Subsection 205(3) of the Regulations is amended by adding the following in alphabetical order:

Pooled Registered Pension Plan (PRPP) Information Return

APPLICATION

2. (1)Subsection 1(1) applies after December 31, 2011.

(2) Subsection 1(2) applies after December 13, 2012.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue

The Income Tax Act (the Act) and the Income Tax Regulations (the Regulations) impose various reporting obligations, including the requirement for certain taxpayers to file information returns with the Canada Revenue Agency (CRA) by a specific date. For example, an employer is required to file a copy of each Statement of Remuneration Paid (T4 Slip) issued no later than on the last day of February. The Act provides, with some exceptions, that when a person fails to file an information return on time, a penalty equal to $25 per day late may apply, subject to a $100 minimum and a $2,500 maximum. This penalty is applicable to each information return that is filed late.

Although the individual slips (for example T4 Slip, Statement of Remuneration Paid) and the related summary (T4 Summary, Summary of Remuneration Paid) are filed together, each individual slip is considered to be a separate information return. For example, where an employer fails to file 500 slips on time, the Act would impose a penalty of $50,000 to $1,250,000, depending on the number of days the submission is late.

Recognizing that this penalty could be excessive in cases where a large number of returns of the same type are required to be filed, the Government announced, in Budget 2009, that amendments would be introduced to the Act to provide for a separate, less severe, graduated penalty that would be applicable where “prescribed” information returns were filed late. These amendments were contained in the Budget Implementation Act, 2009, which received Royal Assent on March 12, 2009. The purpose of these amendments to the Regulations is to “prescribe” the information returns to which this graduated penalty will apply.

As the new graduated penalty remained inoperative until the Regulations were put in place, a reduced penalty similar to that announced in the budget has been administratively applied. This administrative solution underwent various adjustments between 2010 and 2012. However, since January 2012, the Canada Revenue Agency has been applying a late-filing penalty that reflects the announced graduated late-filing penalty.

This administrative penalty structure was applied pursuant to the existing power under the Act to assess a late-filing penalty and the authority of the Minister of National Revenue to waive all or a portion of any penalties assessed.

Objectives

Description

Section 205 of the Regulations is amended to

Consultation

The new graduated penalty for late filed prescribed information returns was announced in Budget 2009. Discussions regarding the new penalty structure were held at that time with various CRA stakeholder organizations, including the Canada Federation of Independent Business and the Canadian Payroll Association.

Various CRA publications since 2009 have described the new graduated late-filing penalty and the information returns to which it will apply. In addition, CRA Web pages that explain the reporting obligations of businesses include information with respect to the new penalty structure, including a list of the information returns to be prescribed. The CRA has received no comments with respect to this information.

“One-for-One” Rule

The “One-for-One” Rule does not apply, as no additional administrative costs are being imposed.

Small business lens

The small business lens does not apply, as there are no additional administrative or compliance costs imposed on small business.

Rationale

The amendments to section 205 of the Regulations make operative the amendments to the Act which introduced the graduated penalty structure. As a result, the Minister of National Revenue will no longer need to utilize the more administratively cumbersome process of waiving penalties to obtain the result intended by the legislative amendments.

As the previous penalty structure was deemed to be too onerous when applied in situations where a large number of returns are filed late, the list of information returns to be prescribed are those that the CRA determined were most commonly filed in bulk.

CRA has been administratively applying a graduated penalty since 2010 and the information returns to which the graduated penalty applies have been described in various CRA publications and on the CRA Web site since then. Employers, businesses and other payers have therefore been aware of the graduated penalty for some time and no objections have been raised about the information returns to which the penalty will apply.

Contact

Catherine Chorniawy
Manager
Information Returns Programs Section
Telephone: 613-952-7021

Appendix A

Name of Information Return

Prepared By

Government Service Contract Payments (T1204)

Federal departments, agencies and Crown corporations

Past Service Pension Adjustment (PSPA) Exempt from Certification (T215)

Registered pension plan administrators

Pension Adjustment Reversal (PAR) (T10)

Registered pension plan administrators

Pooled Registered Pension Plan (PRPP) Information Return

Administrator of PRPP (payers or carriers)

Registered Retirement Savings Plan (RRSP) Contribution Information Return

Administrator of RRSP (payers or carriers)

Statement of Amounts Paid or Credited to Non-residents of Canada (NR4)

Payers or agents

Statement of Benefits (T5007)

Any provincial, territorial, municipal agency, worker’s compensation board, or similar person that makes social assistance payments or pays workers compensation

Statement of Canada Pension Plan Benefits [T4A(P)]

Service Canada — CPP
Régie des rentes du Québec — QPP

Statement of Contract Payments (T5018)

Individual, partnership, trust or corporations whose primary business activity is contracting

Statement of Distributions from a Retirement Compensation Arrangement (T4A-RCA)

Custodians of an RCA trust

Statement of Employee Profit Sharing Plan Allocations and Payments (T4PS)

Employers and payers

Statement of Employment Insurance and Other Benefits (T4E)

Employment and Social Development Canada

Statement of Farm-support Payments (AGR-1)

Government bodies and producer associations

Statement of Fees, Commissions, or Other Amounts Paid to Non-residents for Services Rendered in Canada (T4A-NR)

Employers and payers

Statement of Income from a Registered Retirement Income Fund (RRIF) [T4RIF]

Administrator of RIF (payers or carriers)

Statement of Investment Income (T5)

Employers and payers

Statement of Old Age Security [T4A(OAS)]

Service Canada

Statement of Pension, Retirement, Annuity and Other Income (T4A)

Payer of other amounts related to employment

Statement of Remuneration Paid (T4)

Employers

Statement of Registered Retirement Savings Plan (RRSP) Income (T4RSP)

Administrator of RRSP (payers or carriers)

Statement of Securities Transactions (T5008)

Traders or dealers in securities

Statement of Trust Income Allocations and Designations (T3)

Trustees, administrators, liquidators, executors

Tax-free Savings Account (TFSA) Annual Information Return

Administrator of TFSA (payers or carriers)

Universal Child Care Benefit Statement (RC62)

Canada Revenue Agency