Information for discounters

• What's New
• Important dates
• Reminders
• Change in your mailing address
• Tax Rebate Discounting Act
• Guide for Discounters
• The System for Electronic Notification of Debt (SEND)
• Forms for discounters
• Direct deposit for discounters
• Convictions

For information about electronic filing, please see our EFILE for electronic filers Web page.

What's New

• For the 2009 tax year, our System for Electronic Notification of Debt (SEND) will show if a client has unused tuition, education, and textbook carry forward amounts available for the current year.
  
  
• The Manitoba Department of Finance administers the regulations governing discounting under the Manitoba Income Tax Act. Before you start discounting activities in Manitoba, you have to comply with the provincial statutes governing matters such as registration and approval of forms. The prescribed annual registration fee in Manitoba has increased for the 2009 income tax year. It is $1,000 plus $200 for each additional discounting location.
  
  
• Under proposed changes, the provinces of Ontario and British Columbia will harmonize their provincial sales tax (PST) with the federal goods and services tax (GST) effective July 1, 2010. The proposed new harmonized rates will be 13% and 12%, respectively, and this will change the rate of tax currently applicable to discounting transactions in those provinces.
  
  

Important dates

• December 7, 2009: we will start accepting SEND requests.
  
  
• January 25, 2010: we will start accepting EFILE On-Line Plus transmissions.
  
  
• February 15, 2010: we will start processing returns.
  
  
• February 2010 - We anticipate receiving information on Employment Insurance and Other Benefits (T4E), Social Assistance and Worker's Compensation Benefits (T5007), Universal Child Care Benefits (RC62), and Statement of Working Income Tax Benefit (RC210). Our systems are updated and revised as we receive and process submissions from the filers of these information slips. Once updated, SEND results will be displayed for taxpayers who were issued these information slips.
  
  

Reminders

• Discounter code
  
  You do not need to renew your discounter code each year. A revised application is only required when information you provided on a Form RC75, Application and Agreement to Obtain a Discounter Code, a Form RC115, Direct Deposit Enrolment Request, or a Form RC76, Application and Agreement to Obtain a Discounter Code / Discounter Direct Deposit Enrolment, has changed.

• Paper filed returns
  
  If you use tax preparation software to prepare your client's return, and you file your client's return on paper, complete the electronic copy of Form RC71, Statement of Discounting Transaction, before printing the return. This will ensure that the electronic version of Form RC71 is an exact copy of the paper version of Form RC71 which has been signed and dated by the discounter and the client.

• Electronic and paper versions of Form RC71
  
  If you use EFILE to file discounted returns, the electronic version of the Form RC71 transmitted to the CRA must be an exact copy of the paper version of the Form RC71 which has been signed and dated by the discounter and the client.
  
  Some discrepancies may occur between the two versions. The following situations are the most likely to occur:
  
  
  • The estimated refund is reduced by a debt to be collected by the CRA. Some tax preparation software packages automatically transcribe the calculated refund, from line 484 of the client's tax return, to box A of Form RC71. If the client has a debt to be collected by the CRA, the refund shown on line 484 should be reduced by that amount. You must enter the actual amount to be discounted in box A of the electronic version of Form RC71.
    
    
  • The date in box 14 is different from the date on the electronic version of Form RC71. This can happen when you prepare the EFILE return on a date that is different from the date you print on Form RC71. Make sure that the date on the electronic version is the same as the date on the paper version of Form RC71.
    
  
  You may have to manually override and lock these fields in your software before electronically transmitting the form to us to ensure the EFILE version matches the paper version.
  
  

• What if you receive an additional refund?
  
  After you have received the first refund and sent the required Form RC72, Notice of the Actual Amount of the Refund of Tax, to the client, you may receive an additional refund amount or a notice of reassessment. In such cases, you have to file a new Form RC72. If the additional refund amount results because you filed additional information, complete Form RC72, in the usual way. Enter the amount of the additional refund in box A. Enter, in box B, the additional estimated refund from box A of Form RC71 that was filed with the reassessment request.
  
  

• Charging fees
  
  Any discounter who charges fees in addition to the allowed discount fee (15% - 5%) violates subsection 3(1) of the Tax Rebate Discounting Act. Extra fees cannot be charged for the service of preparing a client's income tax and benefit return of income or any other service directly related to the discounting transaction.
  
  

• Interest charged on clients' debts owed to CRA
  
  When you acquire a right to a client's refund, and you are aware of a client's debt to the CRA, you must enter in box A, on Form RC71, Statement of Discounting Transaction, the estimated refund from line 484, minus the amount owing. Administratively, we accept that interest may be added to the debt to allow for the period between the time the outstanding balance is provided to you, and the time the tax return is assessed. In such cases, the interest must be calculated using an interest rate not higher than the CRA prescribed interest rates for a period no longer than our published EFILE processing standard of two weeks (or our paper-processing standard, if you are filing paper returns). Our rates and standards are available on our Web site at www.cra-arc.gc.ca. Documentation on your clients' files must show the amount of the debt, the interest charged, to whom it was owed, and the source of this information.
  
  

• Excess amounts
  
  Paragraph 3(3)(b) of the Tax Rebate Discounting Act requires that if the actual refund of tax, excluding refund interest, you receive for a client exceeds the estimated amount of the refund of tax by $10 or more, the discounter must pay, or make every reasonable effort to pay, the full amount of the excess to the client. If the excess is not paid within 30 days, the discounter must immediately remit the excess, together with a copy of Form RC72 to the Receiver General to credit the client's account.
  
  

• Remission orders
  
  A payment to an individual, under a remission order whose purpose it is to provide relief from tax, is not a refund of tax. It cannot be discounted.
  
  

Change in your mailing address

If your mailing address has changed since last year, or if it changes during the program, you must notify the Represent a Client and Discounter Services Section immediately by telephone at 613-946-1314. You must also complete and send a new Form RC76, Application and Agreement to Obtain a Discounter Code / Discounter Direct Deposit Enrolment, indicating a change at the top of the form. Send this form to the address indicated at the bottom of the form. This will ensure that your notices of assessment continue to be sent to the correct address without delay.

Tax Rebate Discounting Act

The Tax Rebate Discounting Act regulates the practice of tax discounting. Its purpose is to protect the rights and interests of individuals who use discounting services to get their income tax refunds.

Guide for Discounters

This publication is only available on our Web site.

The Guide for Discounters (T4163) provides important information and outlines procedures relating to the Tax Rebate Discounting Act, which regulates tax discounting. We recommend that you read the revised guide before discounting any 2009 returns.

The System for Electronic Notification of Debt (SEND)

SEND, (available through EFILE) lets electronic filers send requests, one at a time, over the Internet and almost instantly receive selected information about a client's account before filing a return.

The information provided in the SEND response is based on our records at the time the request is processed. Balances may arise between the time the SEND request is processed and the time the tax return is assessed. These balances will affect the refund amount.

We are not responsible for errors or omissions in the information, or for providing any additional information about the taxpayer's debt status.

Forms for discounters

You can find most of our forms and publications, including the discounter forms on our Web site. Most forms and publications can also be ordered by calling 1-800-959-2221.

• Form RC71, Statement of Discounting Transaction
• Form RC72, Notice of the Actual Amount of the Refund of Tax
• Form RC76, Application and Agreement to Obtain a Discounter Code / Discounter Direct Deposit Enrolment
• Form T1153, Consent and Request Form

Direct deposit for discounters

We can deposit your discounted refunds directly into your account at any financial institution in Canada. Complete Form RC76, Application and Agreement to Obtain a Discounter Code / Discounter Direct Deposit Enrolment, and return it to us if you want to:

• start participating in the direct deposit program; or
• change your direct deposit information that we have on file.

If you already use direct deposit and your banking information has not changed, you do not need to complete this form.

Convictions

The Canada Revenue Agency (CRA) conducts compliance programs to ensure that consumers are protected under the Tax Rebate Discounting Act (TRDA), and that tax discounters adhere to their responsibilities under the law.

The CRA seeks publicity on convictions in the case of tax discounters who commit an offence under the TRDA. It does this to maintain confidence in the integrity of the discounting system, and to increase compliance with the law through the deterrent effect of such publicity.

The CRA advises the media of cases of discounters convicted in the courts for failing to comply with the provisions of the TRDA. The information released to the media is available to the public since it is derived strictly from court records and not from confidential information held by the CRA.

On November 13, 2009, Daniel Paradis, an Edmundston tax preparer, was fined $275,196 and sentenced to a conditional term of two years less a day of house arrest after being convicted of multiple counts of tax evasion. On September 24, 2009, he had pleaded guilty to 86 charges of tax evasion under the Income Tax Act and 46 charges under the Tax Rebate Discounting Act.

If you have information about a suspected violation of the TRDA or any tax law, please contact the CRA enforcement division nearest you.