Unnamed persons requirements at the CRA
On this page
- What is an unnamed persons requirement
- What happens when you are part of a UPR
- If you were a client of a business that was issued a UPR, does it affect you
- What are the difference between an audit and a UPR
- How the CRA protects your information
- Correct your tax affairs
- Report non-compliance
- Related links
What is an unnamed persons requirement
The Canada Revenue Agency (CRA) has a range of tools to ensure compliance with tax laws and to maintain the integrity of Canada’s self-assessment tax system. One of the tools the CRA uses to check for non-compliance is the unnamed persons requirement (UPR).
A federal court authorizes this type of requirement so the CRA can get information from an individual or business about third parties who are identified but, not explicitly named in the requirement. These third parties are called unnamed persons. After the CRA gets this information, it can verify if the unnamed person:
- reported their income correctly
- sent the applicable goods and services tax/harmonized sales tax (GST/HST) to the CRA, and
- fulfilled their tax filing obligations under the legislation the CRA administers
To proceed with a UPR, the CRA must submit documents to the Federal Court.
The Federal Court will authorize a UPR only if the CRA is able to satisfy the following requirements:
- A person or group is ascertainable
- The Federal Court would be issuing the UPR to verify that the person or the persons in the group are complying with their tax obligations under the legislation the CRA administers
The CRA can get information from a business or individual about the unnamed persons only if the Federal Court determines there is enough justification to authorize the UPR.
The CRA can also act on behalf of other countries that have international legal exchange of information agreements, such as tax treaties, with Canada.
Recently, the CRA issued UPRs to detect non-compliance in the construction, crypto-assets, e-commerce, and real estate industries.
What kind of personal information can we request
Under subsections 231.2(2) and 231.2(3) of the Income Tax Act and subsections 289(2) and 289(3) of the Excise Tax Act the CRA can submit a request to the Federal Court to issue a UPR to a business or individual for information about unnamed persons. When issuing a UPR, the CRA seeks information it believes is necessary to determine whether the unnamed persons have met their tax obligations. For example, the CRA can ask a business, such as a big box store, to provide information about their clients. The requested information could include:
- client information, such as:
- phone numbers
- dates of birth
- books and records, such as:
- sales and purchases records
- legal and public records
What happens when you’re part of a UPR
If the Federal Court authorizes the UPR, the business or individual must submit information to the CRA about their clients. The CRA will analyze information about the business or individual’s clients and checks the information received to the CRA’s internal systems for verification. The CRA will share the data across its various compliance programs to verify reporting, filing, withholding, registering, deducting, remitting, and payment compliance. If the CRA finds unnamed persons to be non-compliant with their obligations, they may be subject to penalties or legal action under the legislation the CRA administers.
A contractor bought $100,000 worth of construction material from a home improvement retailer for home renovation services. The contractor offered his clients a discount in exchange for payment, but he did not report this income on his income tax return. As well, the contractor did not register for the GST/HST, even though his gross annual sales were more than the threshold of $30,000 before expenses.
As part of its compliance actions, the CRA may issue a UPR to the home improvement retailer for information on their clients, which could include the contractor mentioned above.
If the CRA determines that any of the home improvement retailer’s clients did not correctly report income or did not pay the GST/HST due, the CRA can propose adjustments to the client’s tax returns. The CRA will assess taxes and interest and may apply penalties.
If you were a client of a business that was issued a UPR, does it affect you
Clients of a business who complied with the legislation will not be subject to any more compliance actions. Compliance with the legislation means:
- filing your personal or business tax returns and remitting any amount owing on time
- reporting all income earned from taxable activities on your returns
- registering, collecting, and filing your GST/HST returns and remitting any amount owing on time
- requesting only the benefits and credits you are entitled to
However, those who don’t meet their tax reporting obligations may be subject to further verification, collection actions, and potential criminal investigation. These actions could result in fines, penalties, and interest.
What are the differences between an audit and a UPR
A UPR is not the same as an audit. The information requested from a business in an audit generally pertains to a specific entity.
For a UPR, the requested information pertains to an identified group of the business’ clients. The CRA is unaware of the identities of the individuals and businesses included in this group of clients. The CRA would be aware only of the group identified in the request to the Federal Court.
For more information on tax audits, go to What you should know about audits.
How the CRA protects your information
Legislation, such as the Privacy Act and section 241 of the Income Tax Act, governs how information collected through the UPR process is managed. CRA policies and standard practices also protect the privacy of personal information.
The CRA takes the security and confidentiality of all taxpayer information seriously. We collect information when it is lawful and directly related to compliance activities.
How do we manage to protect your personal information?
The CRA takes the security of all taxpayer information very seriously in order to prevent unlawful attempts to get your tax information and to make sure that your privacy rights are protected. The CRA keeps personal information physically and digitally secure, and we mark all of our forms and documents containing taxpayer information “Protected.” This helps the Agency to make sure that sensitive information is handled securely. To read more about protection of personal information at the CRA, go to the Integrity and security at the CRA: Keeping taxpayer information safe web page and in our Privacy Commitment, which is part of our Privacy Management Framework.
The CRA keeps your personal information for as long as necessary to fulfill the purposes for which the Agency collected it. When the CRA no longer needs your information, the Agency disposes of it according to Library and Archives Canada disposition authorities. Information is securely deleted or shredded or, if deemed of archival value, sent to Library and Archives Canada. For more details on program-specific retention and disposal standards, please see our related personal information banks.
To reduce risks to privacy, the CRA does privacy impact assessments to determine how the Agency’s programs and services using personal information could affect the privacy of an individual and propose measures to reduce these risks.
Correct your tax affairs
If you did not report some of your income to the CRA or have not met your tax obligations, you may qualify for penalty relief through the Voluntary Disclosures Program (VDP). The CRA offers taxpayers the chance to come forward and correct or complete their information through this program.
Please note that the VDP does not apply if the CRA has:
- issued an enforcement action, such as a UPR, to the taxpayer, or
- received information about potential tax non compliance
To qualify for relief, the application must:
- be voluntary
- be complete
- involve a penalty or, for GST/HST applications, a penalty or interest
- include information that is at least one year past due for income tax applications and, for GST/HST applications, at least one reporting period past due
- include payment of the estimated tax owing
Please note that applications may be subject to exceptions as listed under “Conditions of a Valid Application,” in Information Circular IC00‑1R6, Voluntary Disclosures Program Footnote 1. This information circular provides information on the discretionary authority of the Minister.
The CRA is committed to combatting tax evasion and tax avoidance at all levels. It does this in collaboration with international partners.
If you suspect that a business or an individual has not complied with their tax obligations, you can report a lead on tax cheating in Canada. The CRA reviews all information from the public to help identify taxpayers who are not complying with their tax obligations.
- Unnamed persons requirements in real estate
- How we combat tax evasion and avoidance
- The underground economy: Be part of the solution
- 2022+ Underground Economy Strategy
- Voluntary Disclosures Program (VDP)
- Unnamed Persons Requirements, subsections of the Income Tax Act
- Unnamed Persons Requirements, subsections of the Excise Tax Act
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