The Canada Revenue Agency’s audit and enforcement powers are set to expand significantly. On May 6, 2026, the federal government tabled Bill C-31, proposing amendments to the Income Tax Act that would strengthen the CRA’s ability to gather information and enforce compliance during audits. For business owners, the takeaway is straightforward: the CRA may soon have greater authority to request information, impose penalties, and extend reassessment timelines while compliance issues remain unresolved.
Here’s What You Need to Know
Key Proposed Changes
A new Notice of Non-Compliance (NoNC) could be issued when a taxpayer fails to comply with an information request, with no minimum threshold required. The CRA would also gain expanded authority to obtain information, including foreign-based information tied to international tax agreements.
New Penalties for Non-Compliance
- A daily penalty of $50 (up to a maximum of $25,000) applies for each day a NoNC remains outstanding.
- A penalty of 10% of the aggregate tax payable for a taxation year applies when the CRA successfully obtains a compliance order, provided the tax owing exceeds $50,000 for that year.
- No penalty applies where non-compliance is based on a reasonable belief that solicitor-client privilege protects the information.
Extended Reassessment Periods
Currently, the reassessment period is suspended only when a taxpayer seeks judicial review of certain requirements or a compliance order proceeding has begun. Bill C-31 expands these triggers to also include periods while a NoNC is outstanding, and this suspension applies to the taxpayer and to non-arm’s length persons alike. As a result, the CRA’s window to reassess can remain open considerably longer while a dispute is unresolved.
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