Information for discounters

For information about electronic filing, please see EFILE. See Hours of Operation  to obtain the dates and times when EFILE is available.


What’s new

  • Effective February 11, 2016, the System for the Electronic Notification of Debt (SEND) and Form T1153, Consent and Request Form were permanently discontinued.
  • You may obtain, almost instantly, information about your client’s account from the Client Data Enquiry (CDE) and the Auto-fill my return services.
    • CDE is a secure service, available year round to authorized representatives that allows view access to various data elements of a client’s current-year account. CDE provides a summary of a client’s account including amounts, where applicable. To access the CDE service, you must log in to the Represent a Client portal. For more information on CDE, go to Client Data Enquiry.
    • Auto-fill my return is a secure service that allows authorized representatives to automatically fill in parts of the client’s current-year income tax and benefit return with information that is available with the CRA. This service will also deliver other available CDE-related information directly to the EFILE software. The Auto-fill my return service is available beginning February 15, 2016. For more information on Auto-fill my return, go to Auto-fill my return.
  • Discounters can now electronically submit their scanned and signed Form RC76, Application and Agreement to Obtain a Discounter Code / Discounter Direct Deposit Enrolment through the Represent a Client portal. For more information, go to Submit Documents Online.
  • If you are selected for an audit of your discounting transactions and we request additional documentation, you can now submit it electronically through the Represent a Client portal or you can send the original copies to the following address, as we do not accept photocopies:

    Discounter Services
    Canada Revenue Agency
    750 Heron Road
    Ottawa ON K1A 0L5

Submit Documents Online

Before submitting online a signed and scanned Form RC76 and a scanned copy of your void cheque, make sure you meet the following requirements:

  • You are registered for the CRA’s secure Represent a Client online service portal.
  • Your files are saved in a format that the CRA can accept.
    • Common allowable file formats are: .pdf, .doc, .docx, .xls, .xlsx, .rtf, .txt, .jpg, .jpeg, .tiff, .tif and .xps.
    • If more than one file is being uploaded, each must have a unique name.

Submitting documents

  • Log in to the Represent a Client portal
  • Select "Submit documents”
  • Select “Non-client specific request” and “Yes” or “No” in the reference number field
  • Select “File a Discounter registration form”

After documents are submitted

When your documents are successfully submitted, you will receive a reference number and a confirmation number. Make sure to take note of these numbers and keep them in a safe place for future reference.

Getting help with submitting documents online

  • If you have technical problems submitting documents online, contact the e-Services Helpdesk for businesses for assistance.
  • If you have questions about the request to submit documents, contact the CRA official who requested the documents.

Client Data Enquiry

Client Data Enquiry (CDE) is a service that allows view access to various data elements of a client's current-year account. It serves as more than a notification and can provide a summary of a client's account, including amounts, where applicable. Authorized representatives will be able to view information about a client's current-year account before preparing their return. It also assists discounters by indicating if outstanding debts exist.

To access the CDE service, you must log in to Represent a Client and have a signed Form T1013, Authorizing or Cancelling a Representative on file with the CRA.

The following information can be accessed using the CDE service:

  • Home Buyers’ Plan
  • Lifelong Learning Plan
  • Social assistance or workers’ compensation benefits
  • Employment insurance and other benefits (T4E)
  • Working income tax benefit advance payments (RC210)
  • Universal child care benefit (RC62)
  • Reassessment information
  • Balance owing
  • Current tax year return
  • Bankruptcy
  • Recent page access
  • Federal tuition, education, and textbook carryforward
  • Provincial tuition, education, and textbook carryforward
  • Disability amount eligibility
  • Unfiled returns
  • Review
  • External refund set-off
  • Internal refund set-off
  • Reassessment in progress
  • Pension, retirement, annuity, and other income (T4A)
  • CPP payments (T4A(P))
  • Outstanding GST/HST returns
  • Working income tax benefit
  • Immigration Date
  • Emigration Date

Note:

The CRA receives tax information from third parties. It will have most tax information slips and other tax-related information for the 2015 tax year available by early March 2016. If the information is not available, it is possible that the CRA has not yet received it. If that is the case, please try the service again later. The information provided in the CDE system is based on our records at the time the request is processed. Balances may change between the time the CDE request is processed and the time the tax return is processed. These balances can affect the refund amount if they are updated.

Getting help with Client Data Enquiry (CDE)

  • Tax preparers who have difficulty logging into or navigating the Represent a Client portal, must contact the e-Services Helpdesk for businesses.
  • Tax preparers who have questions about the data in CDE must contact the Individual income tax and trust enquiries at 1-800-959-8281.

It remains the taxpayer’s responsibility to report their income before a tax return is submitted to the CRA. Taxpayers must ensure that all applicable fields on the return are filled in, including tax information not delivered by Auto-fill my return (like various credits and deductions such as moving expenses, tuition fees, to only name a few), and that the information provided is true and accurate.

Reminders

Mandatory Electronic Filing

Tax preparers who prepare more than 10 returns are required to file them electronically. For more information, go to mandatory electronic filing.

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 and filing a client's income tax and benefit return or any other service directly related to the discounting transaction.

Discounters must pay the full minimum consideration (85% - 95%) by cash or cheque at the time of the discounting transaction.

Administratively, we accept that the amount the discounter pays to the client can be reduced by other unrelated fees. This is permitted provided that the client authorizes the deduction in writing and that they are for one of the two reasons below. No other fees or deductions are permitted.

The only two deductions that the CRA will accept from the minimum consideration payment are:

  • the collection of an amount owed by the client to the discounter because of a shortage from a prior year discounted return. Administratively, we accept that interest may be added to the shortage to allow for the period between the time you notify your client of this shortage and the time the shortage is recovered by you. In such cases, the interest must be calculated using an interest rate not higher than the CRA prescribed interest rates; and
  • a fee for the preparation of a prior year T1 return or adjustment for the client or a family member's current or prior year T1 return that is filed at the same time and that is not discounted.

Note

For Quebec residents, this includes the fee for the preparation of the Quebec income tax return.

A client must authorize this deduction from the minimum consideration. As proof of authorization, we will accept a fully typewritten receipt or a second cheque made out to the client, which the client endorses and returns to the discounter. If a receipt is provided, the reason for the fee and the amount must be clearly shown on a fully typewritten receipt that is signed and dated by the client. If a second cheque is provided, the explanation of the fee must be typewritten on the cheque.

In addition to the proof of authorization, you must have the following documentation in the client's file available for review by the CRA should we request it.

  • If you are deducting an amount for a prior year return shortage, make sure you keep the prior year RC71, Statement of Discounting Transaction, proof of payment of the minimum consideration, and the RC72 Notice of the Actual Amount of the Refund of Tax.
  • If you are deducting a fee for a family member's T1 return, make sure you keep the social insurance number of the family member and details about his or her relationship to the client.

Change of Address

We would like to remind you that, as a discounter, if your mailing address or phone number(s) have changed since last year or if they change during the program, the Company/Corporation owner must notify Discounter Services. There are two options to change your address and phone number. You can call Discounter Services to make this change by answering a few security questions. You can also complete and send a new Form RC76 , Application and Agreement to Obtain a Discounter Code / Discounter Direct Deposit Enrolment, by indicating a change at the top of the form. To send the form, follow the instructions at the bottom of the RC76. It is very important that we have the accurate address on file as it ensures the notices of assessment continue to be sent to the correct address without delay.

Obligations of a discounter

As a discounter, you have to comply with all provisions of the Tax Rebate Discounting Act, the most current version of the Canada Revenue Agency’s (CRA) procedures and policies contained in Guide T4163, Guide for Discounters and the information for discounters webpage. For the latest information, go to this webpage at least on a quarterly basis.

Discounter code

You are required to obtain an EFILE number before applying to obtain a discounter code. Therefore, before you submit Form RC76, Application and Agreement to Obtain a Discounter Code / Discounter Direct Deposit Enrolment, make sure you include your current EFILE number.

You do not need to renew your discounter code each year. A revised application is only required when information you provided on Form RC75, Application and Agreement to Obtain a Discounter Code, Form RC115, Direct Deposit Enrolment Request, or Form RC76, Application and Agreement to Obtain a Discounter Code / Discounter Direct Deposit Enrolment has changed. See Guide T4163, Guide for Discounters, for more information.

Interest added to 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). Documentation on your clients' files must show the amount of the debt, the interest added, to whom it was owed, and the source of this information.

Partial Discounting

Subsection 4(1) of the Act requires that a client be paid the full minimum consideration at or before the time a discounter acquires the right to the client's refund. You cannot acquire a right to a client's refund of tax and only discount part of it. For example, in a situation where you are aware of a tuition, education and textbook carry forward amount, you must account for this amount in the calculation of the estimated refund at the time of the discounting transaction. Make sure that you discount on the total estimated refund.

Notices of assessment

As a discounter, you will receive your clients’ original notice of assessment. As soon as you receive them, you have to send the original notices to all your clients along with Form RC72, Notice of the Actual Amount of the Refund of Tax. Even if your clients give us an email address on their T1 return or register through My Account to receive online mail from us, we will still send the notices of assessment to you.

Note

To support the CRA goals of increasing electronic services and reducing paper burden, the CRA launched, on February 10, 2014, a pilot project to electronically deliver notices of assessment to participating discounters. The notice a client will receive from these discounters may look different from notices of previous years, but it is to be treated as an official CRA document.

Form RC72, Notice of the Actual Amount of the Refund of Tax

You have to inform the client, using Form RC72, of the actual amount of the refund you received from the CRA as soon as you receive a notice of assessment, a refund cheque, or a payment from the CRA. You must send Form RC72 to the clients regardless of whether there is an excess, a loss, or a nil balance. It is an offence under the Act to not send Form RC72 and the notice of assessment to your clients immediately.

Note

Box 10 of the RC72 form should be the date you or your representative signed the form, paid any applicable excess amount to the client, and when it was sent to the client with the original notice of assessment.

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. Please note that an excess cheque is not considered paid until it is cashed. 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 for Canada to credit the client's account. Send this information to the client's tax centre. Refer to the Guide for Discounters for more information.

Note

Another option would be to complete the form T7DR(A) and make the payment to CRA through a financial institution. Ensure you verify the social insurance number, name, and amount.

Electronic and paper versions of Form RC71, Statement of Discounting Transaction

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.

You may have to manually override and lock the RC71 fields in your software before electronically transmitting the form to us to ensure the EFILE version matches the paper version.

Any changes made after it has been printed must be initialed by the client as authorization. Box 14 of the RC71 must be the date the transaction took place. If the client must come back to your office on a different date to complete the transaction before you file the return, you must reprint the RC71 with the correct date and have it signed by your client to reflect the actual date of the transaction.

Credits and benefits that cannot be discounted

The goods and services tax/harmonized sales tax (GST/HST) credit, Canada Child Tax Benefit (CCTB), and similar benefits are credits and benefits that cannot be discounted.

The Ontario Trillium Benefit (OTB) and its components are benefits that cannot be discounted. The OTB is the integration of the payment issuance for three former programs: the Ontario Sales Tax Credit (OSTC); the Ontario Energy and Property Tax Credit (OEPTC); and the Northern Ontario Energy Credit (NOEC).

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 website. The T4163, Guide for Discounters outlines important information and procedures relating to the Tax Rebate Discounting Act, which regulates tax discounting. When you applied for your discounter code, you certified that you will comply with all the provisions of the Tax Rebate Discounting Act, the Canada Revenue Agency procedures and policies contained in the Guide for Discounters, and this webpage. Therefore, you must read this information at least on a quarterly basis.

Forms for discounters

You can find most of our forms and publications, including the discounter forms on our Web site.

  • 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

Direct deposit for discounters

We can deposit your discounted refunds directly into your account at any financial institution in Canada. Send us a completed Form RC76, Application and Agreement to Obtain a Discounter Code / Discounter Direct Deposit Enrolment, and include a "VOID" personalized cheque or deposit slip to either:

  • 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. This is 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. If you suspect a failure to comply with the provisions of the TRDA or any tax law, please go to the CRA compliance webpage.

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