The Minister of National Revenue and the Canada Revenue Agency (CRA) have consulted territorial residents and businesses, and have heard about the challenges they face in meeting their tax obligations and receiving benefits. Territorial residents face unique realities that can include a higher cost of living, environmental hardships, and limited access to services. To this end, the Government of Canada is strengthening CRA support for territorial residents through the Northern Service Improvement Strategy that will include the opening of three new CRA Northern Service Centres and enhanced services in Yukon, Northwest Territories and Nunavut.
Listening to territorial residents
In the fall of 2016, the CRA travelled to northern Canada as part of the Serving You Better consultations in the North. Senior officials met with small and medium businesses and accountants in sessions hosted by local chambers of commerce and accounting organizations in Whitehorse, Yellowknife and Iqaluit.
As indicated in the Report on the Canada Revenue Agency’s consultations with northern residents, the CRA heard about the challenges they face when attempting to meet their tax obligations. In particular, the CRA heard that it needs to provide more assistance to territorial residents so they can file tax returns and receive the benefits to which they are entitled and that it is difficult to comply with the lowest return airfare element of the northern residents deductions.
In addition to the Serving You Better consultations and roundtables with the Minister, the CRA also conducted public opinion research (POR) to improve its understanding of tax-filing barriers faced by Canadians. For example, CRA research entitled The Experiences of Indigenous Communities with Tax Filing and Barriers Associated with Tax Filing in Vulnerable Populations gave the Agency insight into the challenges faced by many Indigenous communities and those living in the North. This study noted that some of the most effective ways for the CRA to interact with these populations was through face-to-face communications and outreach.
Northern Service Improvement Strategy
The Serving You Better consultations, research and feedback from northern residents have helped to give a more complete picture of the challenges that northern residents face every single day. The CRA has taken this information and has been working to improve its tax-filing services for Canadians.
In September 2017, the CRA launched the Yukon pilot project. Operating out of the Elijah Smith Building in Whitehorse, this project offered tax services tailored to residents of the area. We knew, however, that offering these services only in Yukon would not be enough, and that many other communities throughout the Territories would also benefit from service improvements.
With the Northern Service Improvement Strategy, the CRA is using recommendations from the Serving You Better consultations in the North as well as comments gathered from northern residents who participated in roundtables with the Minister to build on its initial efforts in Yukon. With this strategy, the CRA is further enhancing service in Whitehorse, and extending that enhanced service to Yellowknife and Iqaluit. Positive feedback has been received from the Yukon pilot project and lessons were learned. This is informing the Northern Service Improvement Strategy.
The Northern Service Improvement Strategy will include:
- New Northern Service Centres from which CRA employees will provide a year-round physical presence to support individuals and businesses in Yukon, Northwest Territories and Nunavut. Up to 12 employees will be working in the Territorial capitals, representing an investment of up to $6 million.
- Dedicated phone lines that connect individuals in Yukon, Northwest Territories and Nunavut directly to CRA employees familiar with northern tax matters will be made available.
- Up to six of the 12 employees working in the Territorial capitals will support increased outreach and Community Volunteer Income Tax Program (CVITP) activities in the territories.
- Up to six of the 12 employees will focus on extending Liaison Officer capacity with on-site business visits and seminars adapted to include specific issues related to living in the territories.
The CRA is also taking steps to reduce the administrative burden associated with the lowest return airfare element of the northern residents deductions. In the coming months, Canadians will be consulted on potential regulatory amendments to reduce the administrative burden associated with the lowest return airfare element of the deductions.
Altogether, the Northern Service Improvement Strategy provides a comprehensive response to many of the concerns the CRA has heard from territorial residents. The strategy will help to improve territorial residents’ access to benefits, credits and deductions, including the northern residents deductions.
Northern residents deductions
One specific area where the CRA needs to provide more help to individuals is when they claim the northern residents deductions. Almost 60% of the filing population in Yukon, Northwest Territories and Nunavut claims these deductions.
The Minister of National Revenue heard about high levels of reassessments of northern Canadians during her trips to Yukon, Northwest Territories, and Nunavut. The CRA undertook a review of the northern residents deductions verification activities and determined that the complex nature of the credit makes it difficult for individuals to claim them correctly. This often results in errors and, ultimately, more reassessments.
To that end, the CRA has taken steps to improve the available guidance given to those claiming the northern residents deductions. For example, Information Sheet RC4650, Northern Residents Deductions, which contains a checklist for claiming the deductions, was developed based on feedback provided by northern residents.