Regulating Tax Rebate Discounting Businesses

Act: Tax Rebate Discounting Act, R.S.C. 1985, c. T-3
Regulation: Tax Rebate Discounting Regulations, SOR/86-108, as amended

To Whom Does This Apply?

All firms, organizations, and financial institutions that want to provide discounting services to members of the public or to their own clientele.

Summary

The Tax Rebate Discounting Act regulates the practice of tax discounting. Its purpose is to protect the rights and interests of individuals who use discounting services to get their income tax refunds.

The Tax Rebate Discounting Act requires that you, as a discounter, pay the client (at the time the discounting transaction took place) at least:

• 85% of the estimated refund, if it is $300 or less; or
• $255 plus 95% of the amount over $300, if the estimated refund is more than $300.

The discount includes any fees that you, or another person or company acting for you, may charge for preparing the client's return or for any other service related to the discounting transaction.

Discounters who pay their clients less than the above-mentioned amounts are guilty of an offence.

Who is responsible for administering the Tax Rebate Discounting Act?

The Tax Rebate Discounting Act is a federal act that the Canada Revenue Agency administers. Manitoba administers corresponding provincial laws governing discounting. In Quebec, it is illegal to discount refunds of Quebec provincial income tax.

DISCLAIMER
Information contained in this section is of a general nature only and is not intended to constitute advice for any specific fact situation. For particular questions, the users are invited to contact their lawyer. For additional information, see contact(s) listed below.

New Brunswick Contact(s):
See National Contact.

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National Contact(s):
Tax Filer Services Section
Tax Rebate Discounting Act
Canada Revenue Agency
5th floor, Tower C, Place Vanier
25 McArthur Avenue
Ottawa, Ontario  K1A 0L8
Telephone: (613) 941-8864
Fax: (613) 941-8868
Web site: http://www.cra-arc.gc.ca/eservices/tax/business/discounters/menu-e.html