Consultation on enabling electronic signatures for the T183, Information Return for Electronic Filing of an Individual’s Income Tax and Benefit Return, and T183CORP, Information Return for Corporations Filing Electronically 

Summary Report

Overview

In February 2020, the Canada Revenue Agency (CRA) held an online consultation on enabling electronic signatures for the T183 and T183CORP. Canadians provided their feedback on the CRA's proposed changes that would allow taxpayers to use electronic signatures on the T183 and T183CORP. In order to do this, subsection 150.1(4) of the Income Tax Act would need to be added to Schedule 2 of the Personal Information Protection and Electronic Documents Act (PIPEDA). Along with this change, regulations would be introduced to reflect that electronic signatures that meet specific requirements will be accepted for information returns (Form T183 and T183CORP) made under that subsection.

As outlined in the proposal, in order for the CRA to accept an electronic signature from a taxpayer whose identity has been verified by the filer, the electronic signature will generally need to be provided in one of the following ways:

• It may be provided if the taxpayer sends the information return, including the electronic signature using the electronic address most recently provided by the taxpayer to the electronic filer;
• It may be provided in person by the taxpayer, in the presence of the electronic filer. e.g., using a stylus or finger on a tablet; or
• It may be provided through an access controlled, secured electronic location such as a secure website that is accessible to the taxpayer only because the location of the secure website has been made known to the taxpayer and access has been granted by the filer.

Consultation Method - Online

The consultation was posted online using the CRA's engagement platform and was open from February 3, 2020 to March 4, 2020, during which time Canadians were invited to provide their feedback on the proposed regulatory changes. Invitations to participate in this consultation were sent to key industry stakeholders in order to encourage engagement from those who would be most impacted by these changes.

Attached as an Annex, please find a copy of the consultation survey for more information.

Consultation highlights

• A total of 6,091 Canadians participated in the consultation.
• Of those 6,091 participants, 92% supported the proposed changes, 5% were unsure of the proposed changes, and 3% did not support the proposed changes.
• In addition to asking for their opinion, participants were asked a series of demographic questions, some of which were optional. When asked to identify with a province: 38% of respondents identified Ontario, 18% identified British Columbia, 17% identified Quebec, and 16% identified Alberta, followed by varying percentages for the remaining provinces and territories.
• Participants were also asked if they were located in an urban or rural area. Of the 5,942 participants who responded to this optional question, 22% of participants identified as being in a rural area. It is important to note that 91% of rural participants supported the proposal.
• The first question of the survey asked participants to identify with a category that best describes them (please see Annex A for the complete list of categories). Participants were able to identify with as many categories as were applicable to them. The categories most commonly identified by participants were: individual (3,074 participants), corporation (1,492 participants), and tax preparer / electronic filer (4,844 participants).
• Of the participants who identified as tax preparers/electronic filers, 92% of them indicated that they support the proposed changes. This participant category represents the industry groups who would be most impacted by the changes outlined in this proposal. This is an indication that the consultation reached the intended audience.

What we heard

In addition to casting their vote, participants had the opportunity to provide comments. Some highlights from those comments are included below. The majority of consultation participants (92%) indicated that they supported the proposed changes, to enable electronic signatures on the T183 and T183CORP.

• Many of the participants who supported these changes provided positive feedback, indicating that these changes are long overdue and should be implemented as soon as possible. In fact, of the 1,573 comments received, 83% of those comments came from participants who supported the proposed changes.
• Based on the feedback provided by those who were unsure about the proposed changes, it is clear that there was a lack of understanding of the signature options. While the proposal pursues the ability to use electronic signatures on the T183 and T183CORP, the use of electronic signatures would be optional and would not replace the current signature requirements.
• One of the concerns highlighted in the comments is fraud. Participants had concerns with the security of electronic signatures, and whether this could enable taxpayer fraud. This will be addressed in guidance that is provided to the tax preparation and software industry. As mentioned in the consultation document, electronic signature will not replace the "know your client" requirements of a tax preparer. Ultimately, it will remain the tax preparer's responsibility to verify the identity of their client prior to preparing and filing a tax return.
• Participants who had reservations concerning electronic signatures seem unclear on precisely what electronic signatures are and how they work. The communication strategy and plan will cover off additional communications and guidance for industry on how they can inform their clients and obtain consent to use electronic signature.

The following quotes were taken directly from the feedback received from Canadians on this consultation:

"Environmentally friendly, less printing, saves taxpayers unwanted travel, gas and time, convenience which encourages taxpayers to file on time. IRS has been accepting e-signature for many years. Its use is common practice in real estate and many other trades" – Participant #504, voted "I support"

"I hope if the new changes are done the old way of signing is still continued" – Participant #213, voted "I am not sure"

"My concern is for taxpayer fraud" – Participant #104, voted "I do not support"

Update

Due to the global pandemic brought on by COVID-19, the CRA introduced temporary measures to alleviate some of the difficulties Canadians were experiencing while trying to file their taxes. In March 2020, the CRA announced that electronic signatures on the T183 and T183CORP, that meet specific criteria as outlined in the above overview, would be accepted as having met the requirements of the Income Tax Act. The news of the temporary measure was well received. The CRA is still pursuing implementation of electronic signatures for the T183 and T183CORP as a permanent measure.

Outcomes and Next Steps

Future communications will highlight the following:

• In order to address fraud concerns, guidance will be provided to tax preparers and taxpayers on the use of electronic signatures. Of utmost importance are the "know your client" provisions which requires a tax preparer to verify the identity of their client.
• The use of electronic signatures would be optional and would not replace the current signature requirements.
• Finally, the CRA will develop a clear communication plan, using specific examples, so that Canadians have a better understanding of not only the concept of electronic signatures, but what the process of using electronic signatures looks like in practice. It is important that the rules and responsibilities are made clear, so that taxpayers can make informed decisions when it comes to the use of electronic signatures.

The CRA will continue to pursue the implementation of electronic signatures on the T183 and T183CORP. The next steps include seeking approval on proposed regulations from the Department of Justice Canada and the Minister of National Revenue. The CRA is committed to communicating the results of this consultation to address the concerns raised by Canadians.

Annexes

Annex A: consultation Overview and Survey

If an individual or a corporate taxpayer wishes to file their income tax return through an electronic filer, they must authorize the electronic filer to do so by completing a T183, Information Return for Electronic Filing of an Individual's Income Tax and Benefit Return, or a T183CORP, Information Return for Corporations Filing Electronically.

Subsection 150.1(4) of the Income Tax Act requires an individual's signature on these information returns before the electronic filer can transmit the income tax return to the Canada Revenue Agency (CRA). The electronic filer is also required to keep a copy of the information return containing the individual's signature for six years and may be asked to provide proof of the signed return during the CRA's monitoring process.

Electronic filers have told the CRA that the need for a signature can create unnecessary complications in the interaction between the tax preparer and the individual. For example, an individual living in a remote location could suffer a financial burden as a result of having to travel to their electronic filer's place of business twice, once to drop off the information required to prepare their tax return, and a second time to sign Form T183 when the return has been prepared. The tax preparation and software industry have also told the CRA that without provisions for an electronic signature, there are barriers to innovation, thereby limiting efficient and responsible tax filing systems that benefit Canadian taxpayers.

In response to these concerns, the CRA is proposing changes that will allow taxpayers to use electronic signatures for these forms. Under the Personal Information Protection and Electronic Documents Act, an electronic signature means a signature that consists of one or more letters, characters, numbers or other symbols in digital form incorporated in, attached to or associated with an electronic document.

Canadians are invited to provide comments on the proposed changes.

Proposed changes

The CRA is committed to improving and enhancing the services it offers to Canadians, including digital services, and is continuously striving to ease the burden imposed upon taxpayers and tax preparers when filing income tax returns. To meet the evolving expectations of taxpayers and electronic filers, and to reduce administrative burden, the CRA is pursuing the ability to recognize a Form T183 or T183CORP that contains an electronic signature as having met the signature requirements of the Income Tax Act. An electronic signature would provide taxpayers and their representatives with further options to have these information returns signed. Electronic filers are already responsible for verifying the identity of the taxpayer, both to protect their own interests and the integrity of the tax system. This will not change.

This proposal would require subsection 150.1(4) of the Income Tax Act to be added to Schedule 2 of the Personal Information Protection and Electronic Documents Act. In conjunction with this change, regulations would be introduced to reflect that electronic signatures that meet specific requirements will be accepted for information returns (Form T183 and T183CORP) made under that subsection. In order for the CRA to accept an electronic signature from a taxpayer whose identity has been verified by the filer, the electronic signature will generally need to be provided in one of the following ways:

• It may be provided if the taxpayer sends the information return, including the electronic signature using the electronic address most recently provided by the taxpayer to the electronic filer;
• It may be provided in person by the taxpayer, in the presence of the electronic filer. e.g., using a stylus or finger on a tablet; or
• It may be provided through an access controlled, secured electronic location such as a secure website that is accessible to the taxpayer only because the location of the secure website has been made known to the taxpayer and access has been granted by the filer.

The number of tax returns filed electronically by tax preparers continues to grow and industry stakeholders have been requesting this change. The proposed change is expected to better meet the needs of this population, and will reduce an unintended burden that the current signature requirement imposes on some individuals.