There’s no denying that the Canadian tax system is complex, even for individuals with relatively straightforward tax and financial circumstances. As well, significant costs can follow if a taxpayer gets it wrong when filing the annual tax return. Sometimes those costs are measured in the amount of time needed to straighten out the consequences of mistakes made on the annual return; in a worst-case scenario, they can involve financial costs in the form of interest charges or even penalties levied for a failure to remit taxes payable on time or in the right amount. Whatever the reason, fewer and fewer individuals are willing to brave the annual trip through the 8 pages (as of 2019) of the federal tax return (plus a seemingly innumerable related federal schedules and provincial tax forms), and that means that the percentage of Canadians who have their return prepared by someone who has, presumably, more expertise, has continued to rise.

Whether that someone else is a willing family member or friend, or a professional tax preparer and/or tax filing service, or an accountant, having someone else prepare the return means, in most cases, that the taxpayer will be dealing with the Canada Revenue Agency (CRA) through a representative and must provide authorization for that representative.

It sometimes comes as a surprise to taxpayers that the CRA will not – and, in fact, cannot – provide a taxpayer’s personal tax information to anyone other than that taxpayer, unless written authorization has been provided in advance, or the taxpayer him or herself is there to provide verbal authorization. While it may seem reasonable for a spouse who does the tax returns for the entire family or for an adult child completing a return for an elderly parent to be given access to information needed to complete that return, the restrictions on the release of such information are, in fact, very much in the best interests of the taxpayer. Most such requests for another individual’s personal tax information are genuine and well-intentioned, but that’s not, unfortunately, always the case.

The forum used to name and authorize a representative is the T1013 – Authorizing or Cancelling a Representative, and that form is available on the CRA website at http://www.cra-arc.gc.ca/E/pbg/tf/t1013/README.html).

The first decision which must be made by a taxpayer who is authorizing a representative is the level of authority he or she wants to grant to a representative and that, in turn, will depend on what he or she wants the representative to be able to do The T1013 form provides for two levels of authorization by a representative. Broadly speaking the first, Level 1 access provides the representative with the right to receive information while the higher Level 2 access enables the representative to make changes to the taxpayer’s account. Where a taxpayer does not specify a level of access when authorizing a representative, the CRA will automatically assign the lower Level 1 access to that representative. The specific rights granted to a representative at each level are as follows.

Where a representative has been provided by the taxpayer with Level 1 access, the CRA can disclose the following information to that representative:

• information given on the taxpayer’s income tax return;
• adjustments to the taxpayer’s income tax return;
• information about the taxpayer’s RRSP, Home Buyers’ Plan, TFSA, and Lifelong Learning Plan;
• the taxpayer’s accounting information, including balances, payment on filing, and instalments or transfers;
• information about the taxpayer’s benefits and credits (Canada child tax benefit, universal child care benefit, GST/HST credit, working income tax benefit); and
• the taxpayer’s marital status (but not information related to his or her spouse or common-law partner).

A Level 1 representative is not allowed to request changes (adjustments and transfers) to the taxpayer’s account.

A representative who has been provided by the taxpayer with Level 2 access has all the powers of a Level 1 representative, as well as the right to ask for adjustments to the taxpayer’s income, deductions, non-refundable tax credits; and accounting transfers. A Level 2 representative is also able to submit a request for taxpayer relief, to file a notice of objection or an appeal on the taxpayer’s behalf and to request remittance vouchers on behalf of the taxpayer.

There are some actions which cannot be taken by either a Level 1 or a Level 2 representative. A representative authorized by the filing of a T1013, regardless of level of authorization, will not be allowed to change the taxpayer’s address, marital status,  direct deposit information, or any pre-authorized debit agreement.

A taxpayer naming a representative through a T1013 must also decide whether he or she wants the representative to have online access to the taxpayer’s account, or to be able to deal with the CRA on his or her behalf only by telephone or in writing. Where the authorization provides only for the latter (no online access), the taxpayer can specify the tax years for which access is being authorized, and the level of authorization granted for each such year. Where online access is authorized, however, that access must be for all tax years, although the taxpayer can still specify the level (Level 1 or Level 2) of access to be allowed. It’s also important to note that where a taxpayer names a firm or business as the representative, he or she can also specify, by name, the individual within that firm or business to authorization is being granted. Finally, the taxpayer can also specify a date on which the authorization will expire, if he or she wishes to do so.

The CRA will be making changes to the procedures by which an individual taxpayer can authorize a representative, and current information provided on the CRA website indicates that, as of February 10, 2020, the following changes will be made.

The current T1013 form used to authorize or cancel a representative will be available until February 10, at which time it will be replaced by a new form – AUT-01, Authorize a Representative for Access by Phone and Mail.

Under the new system, there will be two different processes – one to allow a representative access by mail or phone and a second to provide a representative with online access. The new form to be used to authorize mail or phone access will be the AUT-01 Authorize a Representative for Access by Phone or Mail. Taxpayers who wish to provide a representative with online access must use an e-authorization process, which is not yet available on the CRA website. More information on the new processes can, however, be found at https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2020/changing-how-representatives-authorized.html.

It seems that T1013s already filed by taxpayers will continue to be in effect and that there will be no need for taxpayers who have filed the T1013 to file another or different form after February 10, 2020.

It is readily apparent that naming someone as your representative with the CRA, by whatever method, and even at the lowest level for a limited period of time, gives that person access to an enormous amount of personal tax and financial information. Taxpayers should be aware, when providing an authorization, exactly what they have agreed to and for what length of time. Where a taxpayer engages the services of a tax return preparation service, for instance, that service will frequently ask the taxpayer to sign an authorization enabling them to act as the taxpayer’s representative with the CRA. It’s a reasonable request, given that the tax return preparer may need to contact the CRA to obtain information – for example, from prior year returns – which is needed to prepare the tax return for the current year. Taxpayers who authorize a representative in such circumstances should, however, be careful to ensure that the authorization is limited, usually to the specific time during which the return will be prepared. Not infrequently, taxpayers have been asked to sign an authorization which does not specify any time frame and are surprised to find that such an authorization is still in effect, giving the representative the right to obtain information about that taxpayer, even years later, long after the taxpayer had finished his or her dealings with the tax return preparation service.

The need to designate a representative to deal on one’s behalf with the CRA is fairly commonplace. However, giving another person access to your personal tax information, even for a limited purpose or a limited time, is a significant step which should not be taken without some thought. Where it is determined that providing such access is necessary, careful consideration should be given to the level of access needed, the tax years for which access is required and, possibly most important, providing a date on which that authorization will expire.