North

N.W.T. MP vows to keep an eye on Northern tax reviews

N.W.T. MP Michael McLeod says he'll keep an eye on the Canada Revenue Agency after a CBC report revealed Northerners' taxes are reassessed at about three times the national rate.

'I'm totally expecting that we're going to fix this problem,' says Michael McLeod

N.W.T. MP Michael McLeod says N.W.T. residents have raised the issue of tax reassessments with him since he was elected in 2015. (Adrian Wyld/Canadian Press)

The Northwest Territories MP says he's going to keep watch on the Canada Revenue Agency to make sure Northerners aren't getting overly reassessed on their taxes.

"I see the minister on a regular basis," said Michael McLeod. "We will stay in touch and ask for regular updates."

McLeod's comments come after Minister of National Revenue Diane Lebouthillier committed to examining the rate at which Northerners' taxes are reassessed. A CBC report revealed last month that the reassessment rate across the territories is around three times the national average. 

McLeod addressed the matter at a federal finance committee meeting last Friday. He asked Lebouthillier and the CRA's deputy assistant commissioner of compliance, Ted Gallivan, to talk about how the agency will deal with the issue. 

National Revenue Minister Diane Lebouthillier, pictured in Yellowknife in October 2017, has committed to examining the rate at which Northerners' taxes are reassessed (Randall Mackenzie/CBC)

"We need to be leading with education, with rules clarification," Gallivan said. "And then follow up with a lighter touch on substantiation."

Gallivan said it isn't an issue of aggressive tax-planning, but rather that Northerners are "trying to access the benefits they're entitled to."

"What the minister has asked us to do as a philosophy is review our compliance actions and choose the right intervention for the right behaviour," said Gallivan.

Expecting to fix the problem

McLeod said N.W.T. residents have brought up the issue of tax reassessments to him since he was elected about two-and-a-half years ago. 

"I'm happy that the CRA has recognized that there is a concern and I'm happy that the minister has committed to taking a closer look at the issue," he said.

McLeod is waiting on statistics from Lebouthillier on how widespread the problem may be.

People are complaining that they shouldn't have to do it on a continuous basis every year.- N.W.T. MP Michael McLeod

"I'm totally expecting that we're going to fix this problem," he said.

McLeod also said he's spoken with the MPs for Nunavut and Yukon, and that both told him they've heard the same complaints from their residents.

"People are complaining that they shouldn't have to do it on a continuous basis every year," said McLeod.

Many Northerners have shared their stories with CBC of continuous reassessment from the CRA.

Lebouthillier declined an interview, but Press Secretary Jeremy Ghio said in an email that "the Minister is committed to improving services to Canadians, including those living in remote areas."

Ghio also said Lebothillier asked the CRA to "work on establishing how processes can be improved for northern residents."

Hard to comply with tax law

Andy Wong, who has worked as a tax accountant in Yellowknife for over 30 years, said the CRA always reviews two claims: the Northern residents travel deduction and the moving expense.

Longtime Yellowknife tax accountant Andy Wong says he's never seen someone doing their own taxes claim the Northern residents travel deduction properly. (Sean Kilpatrick/The Canadian Press)

He said these are typically larger claims that the CRA flags, which can be a problem for residents.

"I have never seen a taxpayer, who does their own taxes, claim the travel deduction correctly. Never," he said. "It is virtually impossible to comply with the tax law regarding travel deduction."

Wong said residents need to be careful when applying for these claims, and to make sure they have receipts as proof—because it's more than likely that they will be reviewed.

But he doesn't think anything will change in the near future, and the problem is "something we are going to have to live with."

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