The Canada Revenue Agency (CRA) has put into place measures to help businesses that are experiencing financial difficulties due the COVID-19 crisis. For measures regarding OIDMTC processing claims and audits, check out the information below.
- T2 received by the CRA’s taxation centers (TC).
- All T2 returns that include a film or media tax credit claim are referred by the TC to the Toronto Film Services Unit (FSU) when it’s about the OIDMTC.
- If the file is incomplete – main reason is when there are missing Ontario Creates certificates – a notice is sent to the claimant. The Toronto office won’t start any work on it until the file is fully complete.
- Once the file is complete, the Toronto FSU proceeds with risk assessment, and then with an audit if the file is deemed high risk.
Service Standard (applies in 90% of the cases):
- There are no mandated service standards for OIDMTC but the CRA uses the same standards as those mandated for the federal portion of the film & TV tax credits as an internal target to complete its audits.
- For non-audited files: Maximum 60 days (in 90% of the cases) from receiving the complete file to completing the review (note that the notice of assessment is issued by the TC and their time is not included in the measure of service standards).
- For audited files: Maximum 120 days (in 90% of the cases) from receiving the complete file to completing the audit. The time between informing the claimant of the audit and hearing back from the claimant is not included in the calculation of the 120 days depending on whether or not the claimant needs to delay the audit.
- There is a short delay between receiving the notice of assessment and getting the tax refund.
- Files that take more than the 60 days or 120 days (the 10% of files) are usually files that include many certificates (they’ve seen files with 200 certificates).
- The CRA tries to inform claimants that their file will be audited, in a timely manner, because of the 120-day service standard.
The Process Since COVID:
The following measures were put into place by the CRA to help businesses that are experiencing financial difficulties due to the COVID-19 crisis.
- Between mid-March and mid-April, the files were not processed because there wasn’t staff to process the files.
- Mid-April: Tax credit processing at the CRA was deemed a critical service. Processing OIDMTC claims resumed, except for files that had to be audited (unless claimants had the staff to answer questions and wanted to proceed with the audit). That said, the CRA started accepting higher-risk files since mid-April, and deemed many more files than during pre-COVID times as “accepted as filed.” The “accepted as filed” files aren’t usually reopened in the future, unless the claimant amends its file, the CRA receives information denouncing potential fraud, or Ontario Creates tells them that they had to revoke the certificate.
- April: The CRA started accepting Ontario Creates’ certificates based on a list prepared by Ontario Creates and regularly emailed to the CRA (instead of requiring claimants to send the certificates with their T2s).
- Mid-June: Audits resumed. Auditors are told to be flexible, e.g. give more time to claimants to respond to inquiries, put the audit on hold until claimants can deal with it etc.
- The CRA continues to make its best efforts to meet its service standards despite the fact that they lost about 30 days at the beginning of the pandemic.
- In cases where the claim has been selected for an audit due to the high level of assessed risk and the audit is expected to go beyond 120 days (net of all delays caused or requested by the claimant), the CRA may consider issuing a pre-assessment refund of 60% of the tax credit amount claimed under certain conditions. In fact, they can go below or over the 60% depending on the assessed risk. Claimants must ask for it in writing and must have paid all of their obligations to govt (e.g. employee remittances).