Tax Chaos Exposed: No Bare Trust Filings for 2023 and How Last-Minute Policy Flip-Flops Are Costing Canadian Businesses Big-Time

In an all-too-familiar pattern of last-minute policy reversals under the current administration, the Canada Revenue Agency (CRA) has once again demonstrated a troubling trend of indecision and lack of clarity in administering the Department of Finance’s tax policies.

This is not the first time businesses have been left scrambling due to abrupt changes; a notable example isthe eleventh-hour delay of the 2022 Underused Housing Tax (UHT) filings, accompanied by a backtrack on targets through exemptions added for 2023 filers. Such actions are not only frustrating but also amplify the compliance costs for honest taxpayers who diligently attempt to navigate the ever-shifting landscape of tax obligations.

The announcement this past hour that bare trusts are temporarily exempt from filing a trust return or Schedule 15 for 2023, unless specifically requested by the CRA, is yet another testament to this haphazard policy-making approach. The exemption was declared just days before the filing deadline, echoing the government’s previous pattern of decision-making under pressure, which does little to alleviate the burdens on Canadian businesses.

This indecisiveness comes at a real cost to honest taxpayers who, in anticipation of meeting their legal obligations, may have already incurred expenses for the preparation of these now-unnecessary documents. Those who acted in good faith, hiring accountants and lawyers to prepare bare trust agreements and other related filings, are left questioning the value of their investments in these professional services. What recourse is available to them for these sunk costs, and how does the CRA plan to address the wasted resources of both taxpayers and the professionals they engaged?

Moreover, the repeated instances of backpedaling and the introduction of complex regulations underscore a significant disconnect between policymakers and the realities of tax compliance. The administrative burden and financial strain placed on businesses and their advisors to stay abreast of these changes are not trivial concerns. They represent a tangible impact on the efficiency, confidence, and financial health of the Canadian business ecosystem.

Given this backdrop, it’s imperative that future tax policies undergo rigorous vetting by the very professionals who understand their nuances best—accountants and lawyers. These stakeholders are on the front lines, assisting clients to comply with tax laws and should be consulted to ensure that policies are both practical and equitable before they are enacted. Such a collaborative approach could help avert the confusion, frustration, and needless expenditure that seem to have become hallmarks of the current administration’s approach to tax policy. By involving tax professionals in the policymaking process, the government can foster a more stable, predictable, and fair tax system that supports honest taxpayers rather than penalizing them for policy shortcomings.

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1. Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning service.