Advance Income Tax Ruling Fee Increase

Summary#

The Canada Gazette published a proposal from the Canada Revenue Agency to change the fee for advance income tax rulings through the Order Amending the Advance Income Tax Ruling Fees Order. If approved, the hourly fee would rise to $221.24 starting April 1, 2022, and to $281.22 on April 1, 2023 (replacing the current CPI-adjusted rates of $104.04 for the first 10 hours and $161.26 for each subsequent hour).

What it does#

• Replaces the current two-tier fee for advance income tax rulings with a single hourly fee of $221.24 from April 1, 2022 to March 31, 2023, then $281.22 as of April 1, 2023.
• Applies the single fee to all billable time spent on:
  • pre-ruling consultations,
  • advance income tax rulings,
  • supplemental rulings.
• The proposal is being published for public comment (interested parties have 30 days to respond after publication).
• The change is presented by the Canada Revenue Agency as a cost-recovery measure based on its estimate of the actual cost of providing the service.

Who's affected#

• Requesters of advance income tax rulings: businesses, taxpayers, and their advisers who ask the Canada Revenue Agency for written rulings on planned transactions.
• Tax professionals and firms that regularly prepare or submit ruling requests, such as Chartered Professional Accountants of Canada, Canadian Bar Association, Canadian Tax Foundation, International Fiscal Association of Canada, and Tax Executives Institute (these groups were informed of the upcoming increase).
• The general public indirectly: the government says keeping the fee with users avoids shifting about $3 million in annual ruling costs onto all taxpayers.

Why it matters#

• Getting a formal ruling from the CRA will become noticeably more expensive. That can raise the cost of planning or confirming tax treatment for business transactions.
• Higher fees could change who asks for rulings or make some taxpayers rely more on private advice instead of official CRA rulings.
• The change follows the government’s policy that people who get a special, identifiable benefit from a service should pay the cost of that service rather than all taxpayers.
• It is a proposal, not yet final law, and may be adjusted after the public comment period.