Reporting fees for service external stakeholder working group – What we heard – Summary
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Background information
Reporting fees for service (RFS) is the legislated obligation requiring Canadian businesses and organizations to report fees paid for services in prescribed form to the Canada Revenue Agency (CRA). Collecting data on these payments allows the CRA to validate the income and expense amounts businesses and organizations report on their tax returns to ensure everyone pays their fair share promoting tax fairness for Canadians. However, this requirement is posing challenges for businesses and organizations, ranging from administrative burdens to clarity of reporting obligations.
Working group overview
To help understand these challenges, the CRA established an external stakeholder working group in March 2024. This group included representatives from key organizations including the National Payroll Institute (NPI), Chartered Professional Accountants Canada (CPA Canada), the Canadian Federation of Independent Business (CFIB), and the Tax Executives Institute (TEI).
The intent of the working group was to validate the CRA’s understanding of existing concerns, identify any additional concerns and potential solutions to improve services to businesses and organizations. As well, it was to seek qualitative feedback on the current parameters and future amendments or modifications surrounding the enforcement of the RFS requirement, such as:
- reporting vehicle options (slip, schedule, other)
- reporting threshold
- program design and implementation that minimizes administrative burden
- clarity around the description of reportable services and how to enhance CRA guidance
- preparedness of businesses and organizations to comply with filing obligations
- potential exemptions
- communication activities
Takeaways
Participants of the working group recognized the importance RFS could play within the tax system and were appreciative of the opportunity to engage. Many expressed that the CRA needs to review and clarify the key parameters of RFS. Here are the highlights of what we heard from the participants. They:
- emphasized that the T4A slip is not the appropriate reporting vehicle for RFS since this slip is typically associated with payroll – this could create confusion and administrative challenges for businesses and organizations
- thought the current $500 reporting threshold may be too low because it would likely increase the administrative burden without offering added compliance benefits
- noted a lack of clarity on what constitutes a reportable service, particularly in cases when goods and services are not distinguished on an invoice
- called for enhanced communication and educational resources to ensure businesses and organizations fully understand their RFS reporting obligations
- recommended a phased implementation approach focusing on specific sectors first to help businesses and organizations become aware of and comply with the RFS requirement
- supported the creation of exemptions to alleviate administrative burden based on size and type of business
These findings underscore the importance of creating a streamlined, flexible, and accessible reporting process that accommodates the diverse needs of businesses and organizations while advancing the CRA’s goals of addressing the underground economy and promoting tax fairness.
The CRA will review this feedback and explore the feasibility of potential solutions and help businesses and organizations comply with the RFS requirement.
Contact us
For more details on the findings from the working group, you can request a copy of the Reporting fees for service external stakeholder working group – What we heard report by sending an email to ReportingFeesService-DeclarationHonorairesService@cra-arc.gc.ca.
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