TEI Montreal chapter - Ministry of Revenue of Quebec liaison meetings.

• Position: Feb. 6, 1997 meeting

On February 6, 1997, members of TEI's Montreal Chapter were briefed on the results of recent liaison efforts between the Institute and the Ministry of Revenue of Quebec. The report, which was made during the chapter's Annual Quebec Conference, was presented by Andre Brochu, Assistant Deputy Minister-Legislation Branch, Ministry of Revenue of Quebec; Yves Magnan, chair of the Montreal Chapter Income Tax Committee, and Michel Ducharme, chair of the Montreal Chapter Sales Tax Committee. Reprinted below is the translation of the summary which was distributed to the conference participants.

1. Audits

   1. Audit Protocol and

      Real-Time Audit

      The Ministry of Revenue of Quebec (MRQ) has observed the developments (pros and cons) in the procedure used at Revenue Canada and plans further evaluations before implementing similar programs. Since some corporations have already signed a protocol with Revenue Canada, we have asked the MRQ to examine the possibility of endorsing the protocol on a case-by-case basis for the companies that want it. If the occasion arises, the MRQ will inform us of the conditions and of the procedure to be used.

      Discussions are under way between the MRQ and Revenue Canada with regard to the operating procedure for the audit protocol and with respect to the experiences encountered up to this point. One must, among other things, take into account the fact that the objectives and extent of the audits undertaken by each organization can vary according to the cases and thus avoid restricting an auditor's autonomy. Also, the MRQ is interested in conducting shorter and less expensive audits. A directive has been issued to this effect. The audits will primarily concern:

      * Provincial allocation * Capital tax * Taxable benefits * Source deductions

      Lastly, in the near future, taxpayers should see greater open-mindedness on the part of auditors with respect to discussions concerning audits.

   2. GST/QST Audits

      With few exceptions, the MRQ always conducts combined GST/QST audits. On average, the comprehensive audits take 10 to 20 percent more time than the GST audits carried out by Revenue Canada in the rest of the country. However, they cover two taxes, not one. The amount of time spent on Quebec taxpayers' premises is generally similar to the amount spent on the premises of taxpayers audited by Revenue Canada. MRQ auditors receive the same training as Revenue Canada auditors. They also have access to the same documents and information as Revenue Canada auditors.

      The main items targeted are as follows:

      * Input tax credits/input tax refunds too high * Taxes collected, but not remitted (undeclared sales) * Uncollected taxes (especially transactions between affiliated companies) * Taxable benefits

2. MRQ Reluctance to Accept Notices of Waiver From a Taxpayer

   The procedure used is in accordance with the structure of the act (Section 1010), which grants the MRQ (not the taxpayer) the prerogative of exercising its discretion to reassess or not reassess a taxpayer...