Increase to Advance Income Tax Ruling Fees

Summary#

This order updates the fee charged for asking for an advance income tax ruling. Starting April 1, 2022, the fee rises to $221.24 per hour and then to $281.22 per hour as of April 1, 2023.

What it does#

• Amends the Advance Income Tax Ruling Fees Order to change how much the government charges for advance income tax rulings.
• Sets the fee at $221.24 per hour (or part of an hour) for the period beginning April 1, 2022 and ending March 31, 2023, and at $281.22 per hour as of April 1, 2023.
• The fee applies whether or not the ruling request is later withdrawn, and it covers every hour or part of an hour spent preparing the ruling.
• Replaces the old two-tier fee (previously $104.04 for the first 10 hours and $161.26 for subsequent hours as adjusted for CPI in 2020) with a single hourly rate.
• The same hourly fee applies to related services such as pre-ruling consultations and supplemental rulings.

Who's affected#

• Canada Revenue Agency users who request advance income tax rulings.
• Businesses, corporate tax departments, law firms and accounting firms that request rulings or pre-ruling consultations to check tax consequences of planned transactions.
• Small number of taxpayers who use this paid service; the rule notes the service is largely used by tax professionals.

Why it matters#

• Requesters will see higher out-of-pocket costs when they ask the CRA for a written ruling about how tax rules apply to planned transactions.
• The change is meant to recover more of the actual cost of providing the service; the CRA reported about $1.6 million in revenue and $3 million in costs for this service in 2019–2020. If the service were provided for free, taxpayers generally would cover roughly $3 million a year.
• The fee increase was announced publicly (published April 17, 2021 for comment) but the Canada Gazette consultation received no submissions.
• In practice, higher fees could make some people or firms decide not to request a ruling and instead take on more uncertainty about tax treatment.