Compliance Bulletin No. 9
March 15, 2016
What to expect during a registered pension plan audit
An audit makes sure that a registered pension plan (RPP) is administered in line with the Income Tax Act and Regulations, the plan as registered, and serves to inform and educate plan administrators.
An RPP may be chosen for an audit for various reasons, including random and risk-based selection. Audits may also result from a referral or cross-reference from another audit or another area. In some cases, we test the compliance of a particular group of plans. If test results show that there is significant non-compliance, we may audit plans or members on a local, regional, or national basis. An RPP may also be chosen for an audit if significant non-compliance was found in a prior audit.
Some audits are conducted from the Registered Plans Directorate (RPD) offices (desk audits), while others involve on-site interviews and an examination of records and accounts (field audits).
During an audit, the auditor will answer your questions, explain rules under the various federal tax laws, and address any issues that require attention (for example, issues with pensionable earnings or service). The auditor may verify that pension adjustments (PAs), past services pension adjustments (PSPAs), contributions, benefits, and transfers have been properly calculated and reported.
Audits are not limited to these issues. If we discover other issues while performing the audit; we might expand our audit scope.
To conduct an efficient and quality field audit, we will:
- arrange a start date with you, generally with a 15-working day notice
- give you an initial list of the information we will need, and the name and telephone number of the auditor who will be conducting the audit
- confirm the people that can speak on your behalf during each segment of the audit, and get your authorization
- generally conduct the audit during your normal business hours with minimal disruption to your business operations
- keep your information confidential, and safeguard and handle your records with due care. In some situations, the auditor will borrow your documents and give you a detailed receipt. The auditor may also have to make copies of your electronic records
- prepare a summary of proposed adjustments reflecting the audit results
- explain any proposed adjustments and give you information to help you comply in future
- give you 45 days to respond to the adjustments with more information/arguments, if any, before the audit is concluded
- give you the final audit results and notification that the audit has been concluded
Some of the above steps may also apply to desk audits.
What can an auditor ask for and examine during an RPP audit?
The auditor can ask for any information related to the administration and enforcement of the Act and Regulations.
The auditor will examine books, records, documents, and information (collectively called records). These records can include information available to the Canada Revenue Agency (such as plan texts, annual information returns, actuarial valuation reports, financial statements, tax returns and information slips previously filed). In addition to these documents, the auditor may also request to see participating employers’ business records such as payroll information, ledgers, journals, invoices, receipts, contracts, and bank statements.
How much time is needed to complete an RPP audit?
The time needed to complete an RPP audit depends on the state of the records, the size and complexity of the business and pension plan, and potential delays for missing records.
Well-kept records and co-operation with the auditor will limit the time needed to complete an audit. To get more information, go to Keeping records.
There may be delays if you do not give us the records we ask for. If you no longer have certain records, you can generally get copies from the parties that originally created them (for example, financial institutions or consultants). If this is not possible, discuss it with the auditor. In certain situations, the auditor may need to speak with other CRA tax specialists. This may cause the audit to take longer than expected.
Objection to an assessment or reassessment
If you disagree with the proposed assessment, you are encouraged to contact the auditor to try and resolve factual disagreements. The auditor will carefully consider your explanations and respond to your questions. If issues can’t be resolved, you can contact the auditor’s manager.
If you disagree with the reassessment, you have the right to appeal. To get general information on your appeal rights, go to Complaints and disputes. You can also call our individual income tax enquiries line at 1-800-959-8281.
Proactive disclosure program
If a plan administrator voluntarily discloses non-compliance with the Act and Regulations, the RPD may consider giving administrative relief and will work with the plan administrator to bring the pension plan back into compliance. An example of administrative relief can be found in our Compliance Bulletin No. 8. A disclosure made after the RPD has told you that your pension plan is under audit will not be treated as a proactive disclosure.
How to contact us
If you have questions about this bulletin, contact us at the Registered Plans Directorate.
Our telephone enquiries service is available Monday to Friday from 8:00 a.m. to 5:00 p.m., Eastern Time. There is a voice mailbox system to take messages outside of these hours. We will return calls on the next business day.
In the Ottawa area
For service in English: 613-954-0419.
For service in French: 613-954-0930.
Elsewhere in Canada
For service in English: 1-800-267-3100.
For service in French: 1-800-267-5565.
Write to us
Plan administrators who need guidance on issues related to a specific plan can write to us at the Registered Plans Directorate, Canada Revenue Agency, Ottawa ON K1A 0L5. Our fax number is 613-952-0199.
We welcome feedback on this bulletin and any comments related to auditing RPPs. Email your comments to RPD.LPRA2@cra-arc.gc.ca.
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