Law in Quebec

The ombudsman also criticized the provincial tax department for failing to provide adequate information to taxpayers in support of its assessing positions, refusing to admit and correct its own mistakes, and employing “inadequate, and even abusive” auditing methods. Shortly after the publication of the report, Revenue Quebec president Gilles Paquin resigned and was eventually replaced by deputy minister Éric Ducharme in mid-February, two weeks after the release of the action plan.

Revenue Quebec’s comprehensive action plan aims to improve customer service, ensure and strengthen its respect for the principles of administrative justice, make it easier to settle disputes without recourse to the courts, and calls for the implementation of a new business assistance program to ensure voluntary compliance.

“It’s a step in the right direction,” remarked Norma Kozhaya, vice-president of research and chief economist at the Quebec Employers’ Council, an influential business lobby group. “There were many irritants in the way things were being done. We can only hope that the action plan will lead to concrete results, reduce the burden for enterprises, and lead to less problematic relationships with Revenue Quebec.”

Following in the footsteps of  the Canada Revenue Agency (CRA) and other European nations such as France and Germany, the Quebec tax department intends to introduce this month a taxpayer’s charter of rights. Besides ensuring that the “principles of administrative justice are respected,” the charter of rights is expected to outline Revenue Quebec’s commitment and obligations to taxpayers, including assurances that it will provide excellent service with integrity, equity and respect. The provincial tax administration has also made a commitment to train employees by year end over the principles and obligations resulting from the implementation of the taxpayer’s charter.

But questions remain over the legal effect – if any – the charter will have. A Montreal tax lawyer asserts that the CRA taxpayer bill of rights, introduced in 2007, has not helped taxpayers. “Every time you bring it up with CRA officials, it does no good,” said the seasoned lawyer. “The taxpayer charter of rights has not from my personal experience been helpful and has not helped to solve issues around assessment.” An example that Revenue Quebec should look at is France, where the taxpayers’ charter has the force of law, according to Michel Mongrain, the president of the Montreal-based Fiscal and Financial Planning Association (APFF). “It’s going to be interesting to see if the taxpayer’s charter proposed by Revenue Quebec will have legal weight or whether it will be merely wishful thinking,” said Mongrain, who’s also a lawyer.

The provincial tax department however has already taken steps to eliminate a source of longstanding grief for Quebec business. Up until this past February, Revenue Quebec required the payment of the amount in dispute over the Quebec Sales Tax (QST) regardless if an objection was filed. Now, under certain circumstances, Revenue Quebec has suspended the collection procedure for assessments pertaining to the QST when objections are filed. “That is a concrete gesture that will be appreciated by business,” noted Mongrain.

Auditors will also be under the spotlight following the implementation of the action plan. Auditors will be expected to provide taxpayers with “exact and complete” information” and use “simple and clear language” to explain laws and policies applicable to the taxpayer’s situation. As of July 2016, Revenue Quebec will evaluate the quality of service provided by auditors after the completion of each audit.

The tax department is now also examining legislative amendments that will lead to the creation of an independent body that will review decisions made by its objections department. The so-called Revision Bureau would try to resolve issues that arise from misunderstandings of a taxpayer’s situation without having to go to the courts. The person who would oversee the Revision Bureau would be named by the provincial government, and would be operating at arm’s length from the tax department – a development that has been well received by the business world.

So too is Revenue Quebec’s intention to examine legislative amendments that would allow small business to challenge decisions issued by its objections department to small claims court instead of filing appeals before the Court of Quebec. This would however apply to assessments less than $4,000. Still, the Montreal tax lawyer said that the move is auspicious because it would streamline the process while allowing taxpayers to defend themselves without incurring the expense of hiring an accountant or a lawyer. “We may be talking about small amounts but it’s definitely a positive development that will be welcome by small business,” he said.

By the end of the year Revenue Quebec also hopes to emulate CRA’s liaison officer initiative and introduce a new assistance program designed to help small and medium-sized businesses meet their tax obligations. A team of newly trained specialists will visit the premises of a business to provide taxpayers with education and support. Such visits do not constitute an audit, and should not result in any changes to past filings.

Martine Hébert, senior vice-president at the Canadian Federation of Independent Business applauds the initiative but believes that the provincial tax administration will discover that it will have its work cut out because taxpayers are so mistrustful of Revenue Quebec. A CFIB survey conducted last year revealed that seven of 10 respondent entrepreneurs believe Revenue Quebec abuses its powers, and 81 per cent believe that it seeks above all to fill the government coffers instead of helping taxpayers to meet their obligations.

“Revenue Quebec will have to take important tangible actions, particularly its tax collection department, to build the confidence of entrepreneurs before the new assistance program will become popular,” said Hébert, who was hoping that the action plan was going to introduce a tax mediation or dispute settlement program. “It’s obvious that if enterprises do business with the assistance program and tax officials discover anomalies that will lead to changes in past filings, the program won’t work.”

The Canadian Tax Foundation too believes that the action plan is a step forward but much remains to be done. “They have to bring some important changes before its image will change,” said Jane Meagher, the Quebec regional director of the Canadian Tax Foundation. “A lot of Revenue Quebec’s issues deal with the perception that they are only after collecting money, and not collecting the right amount of tax. They have to change the culture all the way from the top to the bottom, and that takes time.”