Discounter information for individuals
A discounter is a tax preparer who calculates your refund, and immediately pays you part of your refund—called a discounted tax refund—before filing your income tax and benefit return with the Canada Revenue Agency (CRA).
1. What can I expect from a discounter?
If you choose to have a discounter prepare your return, at the time of the discounting transaction the discounter has to:
- pay you immediately the discounted tax refund;
- give you a completed and signed Form RC71, Statement of Discounting Transaction; and
- give you a copy of your return and any related information slip(s), if you ask for them.
After the CRA has processed your return, the discounter will receive your notice of assessment (or notice of reassessment) and any refund. The discounter has to:
- send you immediately Form RC72, Notice of the Actual Amount of the Refund of Tax, as well as the notice of assessment (or notice of reassessment) received; and
- pay you the full amount of any difference, if the amount of the refund is $10 or more than the refund the discounter calculated. However, the discounter can keep any refund interest.
Please carefully read all the forms and documents a discounter gives you, and make sure you fully understand these before you sign anything.
2. How much do discounters charge?
According to the Tax Rebate Discounting Act, a discounter must pay you, at the time of your transaction, and before filing your return, at least 85 cents for each dollar of the first $300 of an estimated refund, plus 95 cents for each remaining dollar. This amount you receive is referred to as a "discounted tax refund." A discounter who pays you less is guilty of an offence.
The difference between the refund calculated by the discounter and the discounted tax refund paid to you is the fee the discounter can charge, and it is paid to the discounter when he or she receives the refund from the CRA.
A discounter cannot charge you extra for preparing your income tax and benefit return, since the discounting fee covers the preparation service, the filing of your return, and any other services for the discounting transaction.
The following chart shows examples of refund amounts and the fee that would be deducted from your refund amount if you used a discounter to prepare your return. These fees do not include taxes such as:
- goods and services tax/harmonized sales tax
- provincial sales tax
- retail sales tax
|Refund calculated by the discounter
|Fee deducted from your refund
|Discounted tax refund paid to you by the discounter
3. What are the other options besides working with a discounter?
- File your return electronically through NETFILE (free certified software options are available).
- Get help from the Community Volunteer Income Tax Program.
- File your return on paper.
- Use a fee-for-service tax preparer.
4. Does the CRA regulate discounters?
The CRA conducts compliance programs to make sure those individuals who use discounting services are protected under the Tax Rebate Discounting Act and that tax discounters meet their responsibilities under the law.
The Act regulates the practice of tax discounting. The purpose of the Act is to protect your rights and interests when you use a discounter to get your refund.
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