Ottawa just did something very big for small business. Recently, National Revenue Minister Gail Shea announced that for the first time business owners will be able to get questions answered in writing from the Canada Revenue Agency through My Business Account.
But the really big news is that CRA will honor its response even if it is later found to be incorrect, as long as CRA was provided with all the relevant information.
It all started with a B.C. fabric-store owner who decided to fight against an unfair tax situation that threatened to close her down.
The business owner had been following written B.C. government tax information that turned out to be wrong. A provincial government bulletin said she didn’t have to charge tax.
But when a government tax auditor arrived at her business, he said she owed the government $93,000. That she was following government advice was not considered a meaningful defense.
She called the Canadian Federation of Independent Business for help. She was afraid she would lose her house or her businesses if she couldn’t successfully fight the audit.
Small-business owners live in fear that an auditor will discover an overlooked or misinterpreted government rule. They also live with frustrating difficulty in getting reliable information on how to com-ply with governments’ rules.
Many accountants have told us that as a routine practice they call Canada Revenue Agency repeatedly because they get different answers to the same questions. Taking the most frequent answer after four or five calls provides some assurance that it might be right.
Like business owners, government agents sometimes make mistakes. Unlike business owners, government agents don’t face big consequences.
While the fabric store owner lost sleep over whether she could stay in business, it’s doubtful the provincial government representative who wrote the misleading bulletin even knew of the mistake.
CRA touches every business with its rules. Earlier this year, the CFIB released a report showing that 78 per cent of tax practitioners do not believe that CRA is accountable for the mistakes it makes.
The fabric storeowner’s story has a happy ending. The CFIB helped get her off the hook for the $93,000 she was unfairly assessed, and her case was a catalyst for us to successfully lobby for sensible changes to tax policy provincially and federally. These changes will protect business owners from relying on bad government advice.
Score one for common sense. Score two for successfully fighting proverbial city hall. We used her story, survey results from thousands of other businesses and the success of the tax policy changes in B.C. to convince the federal government to also provide and honor its written advice.
Score three for sensible made-in-B.C. policy making it across the Rockies and influencing the federal government.
– Laura Jones is senior vice-president research, economics and western Canada with Canadian Federation of Independent Business
