CRA Proposing Mandatory E-Filing Requirements after 2012

A surprise measure was introduced in the 2012 federal budget legislation (Bill C-38), a mandatory e-file requirement, which will be effective for 2012 income returns filed after December 31, 2012. The proposal will impact tax preparers engaged to prepare more than 10 income tax returns annually.

The proposal contains a new definition of “tax preparer” for this purpose, which includes a person or partnership that accepts consideration to prepare more than 10 “returns of income” of corporations or more than 10 “returns of income” for individuals (other than trusts) in a calendar year. An employee who prepares these returns in performing their employment duties is not considered a tax preparer for these purposes. These tax preparers must electronically file “any return of income that they prepare for consideration” under proposed subsection 150.1(2.3), although up to 10 corporate returns and 10 individual returns may be filed by other means. Bill C-38 also introduces penalties for non-compliance of $25 for each individual return and $100 for each corporate return that is not e-filed.

Specific e-file exceptions have been proposed. More information on Bill C-38 is available on the Parliament of Canada’s website. All of these amendments come into force on January 1, 2013.

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