We are all eagerly awaiting a return to normal life following the fifth wave of the COVID-19 pandemic. The impact of this pandemic has been felt in many areas of our lives, including the Canadian economy. In this respect, the Government of Canada announced that the deficit in 2021 would be nearly $330 billion. This deficit is linked notably to the strategic choices that were made, and the assistance measures that were implemented, by the Government of Canada. The Canada Emergency Wage Subsidy (“CEWS”) program alone has cost the Government of Canada more than $100 billion since its inception in March 2020.
We have been informed that employees at both the Canada Revenue Agency (“CRA”) and the Agence du revenu du Québec (“ARQ”) will gradually return to work, in person, in the coming weeks. This gradual return to work will inevitably result in a resumption of tax audits that have been delayed or suspended over the past two years.
Such resumption of tax audit activities leaves us wondering what approach the CRA and ARQ will take to maximize the amount of tax collected as they seek to reduce the enormous deficits of recent years. CRA tax audits relating to CEWS have already begun, for example, and a stringent attitude is being adopted by the teams in place.
We would like to take this opportunity to remind you that caution should be exercised in respect of tax audits. It is advisable, where a business is targeted by a tax audit, to consult a tax professional for assistance with this process, which may be quite intrusive. The tax team at Fasken specializes in providing such support at the tax audit stage, at the objection stage and before the courts. Our approach ensures a better protection of the rights of Québec and Canadian taxpayers as we seek positive solutions that respect the obligations of all parties involved. For example, our team is currently hard at work ensuring that CRA correctly computes CEWS-eligible income, takes into account all applicable exceptions, and grants the CEWS to all eligible applicants in respect of all eligible employees.
We are available to answer your questions and to ensure that your rights are protected. Do not hesitate to contact us in relation to any litigation-related matter, whether or not it be related to COVID-19 measures.