Toronto Chapter Income Tax Committee's busy course.

• Position: Chapter News ...

On April 17, 2012, during the TEI Professional Development Day, the Canada Revenue Agency (CRA) provided TEI attendees with an update regarding the taxpayer risk profile program that was rolled out to the first 50 large corporations. The CRA issued a standardized letter requesting a meeting with senior executives to have discussions regarding the company's initial risk assessment (high, medium or low), and to obtain better insights regarding tax risk management and corporate governance. For example, the CRA raised questions pertaining to the following:

* the company's internal tax functions, roles and responsibilities;

* the company's framework to identify and assess major tax risks or grey areas;

* systems and processes used to gather tax data and ensure complete and accurate reporting;

* use of tax intermediaries in the tax compliance or planning process; and

* how senior executives become involved with the company's tax matters.

CRA had developed its initial risk assessment based on the company's compliance history, its aggressive tax positions, its relationship with CRA and its corporate governance policies. Approximately half of the first 50 large corporations were risk-assessed as "high risk" and the remaining were risk-assessed as "medium or low-risk." The ultimate objective of the risk profile is for the CRA to tailor their compliance response based on the risk-rating.

The TEI Toronto Chapter Income Tax Committee learned that corporations in certain industries, with complex corporate structures, and/or with significant related party transactions with nonresidents, are presumed to have a "high" risk profile, regardless of their compliance history or strong corporate governance programs. Additionally, the standard letters were not addressed to the senior tax person at the corporation, but rather directly to the senior...