Canadian Tax Adviser
January 10, 2012
CRA's Tax Governance Interviews — Are Your GST/HST Processes Up To Snuff?
John Bain
GTA, Indirect Tax
The CRA is planning GST/HST audits in which it will take a similar
approach as it will in its upcoming risk-based income tax audits of large
corporations. In these GST/HST audits, the CRA will interview senior tax
executives, such as the Tax Director, to understand the types of tax
governance structures that corporations have for their tax function. (Note
that the income tax risk-based audit approach involves interviews with
non-tax senior executives.)
As part of this initiative, the CRA has asked tax personnel to provide an
overview of their organization's tax governance structure for indirect
taxes. Specifically, the CRA auditor will assess whether the organization
has implemented a framework to manage indirect taxes using documented
processes and controls.
Background
The CRA is increasingly focusing on indirect taxes in Canada, consistent
with other tax authorities across the globe. Organizations handling
significant amounts of tax have been under pressure due to recent regulatory
reform (e.g., GST-PST harmonization), increasingly complex rules and higher HST tax
rates (e.g., 5% to 13% in Ontario)
Indirect tax rates will likely continue to increase over time. The
CRA has stated that it will increase its scrutiny of indirect tax in the
future, and will soon take on
approximately 1,000 employees from Ontario that
will be dedicated to auditing GST/HST files.
KPMG’s Sales Tax Process
Consulting team can implement a strategy of effective indirect tax management
that can reduce the risk of indirect tax errors. This approach can help you
- Gain visibility over indirect taxes and understanding the effect of GST/HST on business
- Reduce overall tax risk while satisfying tax authority requirements
- Free up staff time to seek “value add” opportunities
- Minimize or eliminate human interaction in the process and any associated errors
- Create or strengthen preventative and detective controls.
Indirect tax governance review
You could benefit from KPMG Sales Tax Process Consulting if you have:
- A large volume of transactions or large number of products with differing tax status (e.g. consumer markets, industrial markets, etc.)
- High-risk indirect tax compliance obligations (e.g., financial institutions, cross-border transactions with related and third parties, etc.)
- Indirect tax obligations in multiple jurisdictions
- Under-resourced tax departments
- Significant indirect tax assessments
- Concerns over the integrity of their data.
For more information, contact your KPMG adviser.
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