CRA to Continue to Pay Rebates and Refunds to Tax-Exempt Entities
This summer, the Canada Revenue Agency (CRA) announced that it will continue to pay rebates and refunds to tax-exempt entities, even if all required returns under various Tax Acts have not been filed. This administrative concession will apply to all taxation years up to and including 2010. This announcement is welcome news for a variety of tax-exempt corporate entities, including municipalities, universities, schools, non-profit organizations, federal crown corporations and Indian band councils that are exempt from paying income tax, and who may not have been filing a corporate income tax return (Form T2).
This became an issue when legislation was enacted, effective April 1, 2007, that requires the CRA to withhold the payment of rebates and refunds until all required returns under the Income Tax Act, the Excise Tax Act and the Air Travellers Security Charge Act have been filed. Concerns raised with this requirement resulted in the CRA delaying the implementation of this change as it applied to corporate tax returns for taxation years ending on March 31, 2008 and before. Now the CRA has announced that it is conducting an internal review on this matter, and will not withhold the payment of rebates and refunds in the interim.
If you have any questions about filing requirements for tax-exempt corporate entities, contact your BDO advisor.
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