CRA Announces Pre-Ruling Consultation Pilot Project

With the hope that it will assist taxpayers in determining the legality of their transactions before incurring significant costs, the Canada Revenue Agency (CRA) and the Income Tax Rulings Directorate (ITRD) have announced a one-year pre-ruling consultation pilot project. 

Taxpayers or their advisors can contact the ITRD with proposed transactions to determine whether the ITRD will issue a full ruling on the same issue in the future. Hearings will be held via teleconference or exceptionally in person.

The Process

Taxpayers can apply for a pre-ruling consultation using the application available online.

A $2,500 deposit (plus GST/HST) must be submitted with the application along with an undertaking by the applicant to pay such further fees as may be incurred throughout the process. If the deposit is not used to pay for the pre-ruling consultation or any subsequent ruling, it will be refunded.

Pre-ruling consultations attract a fee of $100 (plus GST/HST) an hour for the first 10 hours and $155 (plus GST/HST) an hour for each hour thereafter. These fees will be charged regardless of the outcome of the pre-ruling consultation.

The ITRD will contact the applicant within 3 or 4 days to inform them of whether or not their request is accepted. Teleconferences will be held within 3 weeks of application. The teleconference may not be recorded, but the applicant is permitted to have a “reasonable” number of representatives present.

The applicant will be informed whether the ITRD will consider the issue in an advance income tax ruling. Any comments provided by ITRD representatives will not be binding on the Canada Revenue Agency and any information provided to ITRD may be shared with other branches of the CRA or the Department of Finance, pursuant to section 241 of the Income Tax Act.