Information for discounters

On this page

• Overview
• How do you become a discounter?
• Forms and documents
• General guidelines
• Tools and Information

Overview

If you offer a tax discounting service to your clients, this guide provides you with information about how the Canada Revenue Agency (CRA) administers the Tax Rebate Discounting Act, which regulates the practice of tax discounting.

In Quebec, it is illegal to discount refunds of Quebec provincial income tax.

What is a discounter?

A discounter is a registered EFILER that prepares tax returns and provides their clients with an immediate discounted tax refund before filing the returns.

Discounters keep part of the expected refund as a fee and pay the rest immediately to their clients. Fees charged are limited by the Tax Rebate Discounting Act.

What is the Tax Rebate Discounting Act?

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.

Subsection 2(1) defines the term "client" to mean a person from whom a discounter acquires a right to a refund of tax to which that person is entitled. The term "client" used in this page and on the forms relating to discounters also has the same meaning.

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

• If the estimated refund is $300 or less: Option 1

  • 85% of the estimated refund

• If the estimated refund is more than $300: Option 2

  • $255
  • plus95% of the amount over $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.

A payment to an individual, under a remission order whose purpose it is to provide relief from tax, is not a refund of tax. It cannot be discounted.

How do you become a discounter?

Who can apply?

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

All applications are subject to a review process to ensure the reliability of tax discounters.

The CRA does not issue or reissue a code to a discounter who does not co-operate with us to ensure that the Tax Rebate Discounting Act, its Regulations, and the administrative procedures are followed. The CRA will suspend or cancel a code because of a discounter's continuous non-compliance, refusal to co-operate or failure to meet the EFILE screening criteria published on the CRA website. For more information, go to EFILE for electronic filers.

How do you apply?

To get a discounter code, you have to fill out Form RC76, Application and Agreement to Obtain a Discounter Code / Discounter Direct Deposit Enrolment and send it to the CRA. This is a one-time application. To determine when a new application or a revised application is required, see When is a new Form RC76 necessary? or When is a revised RC76 necessary?.

If your firm, organization, or financial institution has more than one location, each location has to file a separate form. For example, if you have one head office and four branch offices, you have to fill out and file five applications. The permanent mailing address for all locations is the same (head office address), but each location has a different operating address.

The CRA will issue you a discounter code only if your application is complete and you have passed EFILE suitability screening. You must read and understand the Discounter codes – Terms and conditions of this page, and then sign and date the agreement at the bottom of Form RC76. An application may take up to 30 days to process. Once we process and accept your application, the CRA will give you an eight-digit discounter code.

Form RC76, Application and Agreement to Obtain a Discounter Code / Discounter Direct Deposit Enrolment

Each of the following parts corresponds to a section on Form RC76. It is important to fill out all sections of this form. Submit a separate page if you need more space to give information or an explanation.

After filling out the form, you must submit it electronically through the Represent a Client portal. For more information, go to Submit documents online.

Discounter codes – Terms and conditions

A discounter code is not transferrable to any other person, firm, organization, financial institution or company.

As a discounter, it is your obligation to comply with all provisions of the Tax Rebate Discounting Act, the most current version of the CRA procedures and policies contained in this page, and the Information for discounters webpage on the CRA website.

To keep informed of the latest information, go to the CRA's webpage on a quarterly basis.

The CRA issues discounter codes if all of the following conditions are met:

• the discounter has a valid EFILE number and meets the EFILE applicant and suitability screening criteria. For more information, go to EFILE for electronic filers
• the discounter acknowledges having read, understood, and has agreed to be bound by the requirements and obligations set out in this page and the Information for discounters webpage on the CRA website by signing the certification and agreement on the front of Form RC76
• the discounter gives us all telephone numbers and an email address where the discounter can be reached year-round during regular business hours
• the discounter agrees to notify us if any of the information on Form RC76 changes within 15 days of the change(s)
• the discounter agrees to use authorized forms for each discounting transaction
• the discounter gets a code for each location at which the discounter operates
• the discounter fills in part G of the Form RC76 application with the names and social insurance numbers of all proprietors, branch managers, partners, directors, officers, controlling shareholders and any persons having management and control of any of the applicants (if more space is required, attach a separate sheet of paper)
• the discounter pays any fines and restitution to victims and fulfills any probation terms a court orders for any previous convictions under the Tax Rebate Discounting Act before the discounter can receive a discounter code
• the discounter complies with any discounter registration requirements of a province or territory in Canada

The CRA suspends or cancels discounter codes under the following conditions:

• the discounter does not meet or continue to meet the electronic filers definition of an applicant and the suitability screening criteria
• we have reasonable grounds to believe that a discounter has not complied with the provisions of the Tax Rebate Discounting Act, with any term or condition outlined in this section or the procedures and policies contained in this page, and the Information for discounters webpage on the CRA website
• the discounter does not reply within a reasonable time to our requests for information about discounting activities
• a court judgment against a discounter forbids the discounter from operating for a specified period
• for outstanding matters relating to any codes assigned to the discounter, franchise, or company agent are not resolved to our satisfaction
• the discounter has not paid fines and restitution to victims, and has not fulfilled the probation terms a court ordered for a previous conviction under the Tax Rebate Discounting Act
• the discounter has used discounter codes for any purpose other than discounting
• the discounter has not complied with any law of a province or territory of Canada that relates to discounting
• we have reasonable grounds to believe that the discounter has committed an offence under subsection 239(2.21) of the Income Tax Act

If the CRA suspends or cancels the code, they will notify the discounter and the headquarters of any franchise or agent office associated with the discounter by registered mail. The CRA will suspend, without notice, any code that was not used during the last two tax years. Contact Discounter Services to re-activate the code.

Discounter Direct Deposit Enrolment Request

You are required to have your discounted refunds deposited directly to your account at any financial institution in Canada.

To start using direct deposit or to change the direct deposit banking information we already have on file for your discounter code, you have to complete parts A to D and parts J to M of Form RC76. You must file a separate form for each of your discounter codes.

If you are requesting a change to direct deposit banking information we already have on file for your discounter code, do not close your old account before we start depositing payments into your new account.

When is a new Form RC76 necessary?

You must submit a new application and identify it as a first request if any of the following situations apply:

• a change of ownership has occurred
• a business was sold (the new owner will send a new Form RC76 to us, and the seller will send a letter to us requesting their discounter code be cancelled)
• a business's organizational structure, partnership composition, or controlling interest changed
• a branch site or managing office was added

When is a revised Form RC76 necessary?

You must submit a revised application to inform us of the change if any of the following situations apply:

• a new name should be added or an existing name should be removed from Part G
• the discounter’s name or legal name of the company changes, but there is no change of ownership
• the name of proprietorship, partnership, or corporation changes, but there is no change of ownership
• your banking information is changing

Forms and documents

For each discounting transaction, you must complete the following forms:

• Form RC71, Statement of Discounting Transaction
• Form RC72, Notice of the Actual Amount of the Refund of Tax

To avoid delays and prevent refund cheques from being sent to the clients, make sure you use the proper forms and that they are complete, signed, and legible. Original forms are required. A faxed copy is not considered an original form. You must keep a copy of these forms for three years.

Since the CRA revises its forms and publications periodically, make sure you use the latest versions.

To get the CRA's forms and publications, go to Forms and publications.

If you use a software package to prepare and transmit returns by EFILE, the software package may produce the discounting forms required. Make sure that the electronic forms include all of the information shown on the front and back of the CRA forms.

Form RC71, Statement of Discounting Transaction

Form RC71 provides details of each discounting transaction. Prepare three copies of the form. Original signatures of the client and the discounter are required on the three copies.

The copies are to be distributed as follows:

1. One copy is for the CRA. Attach that copy to the client’s return if you file the return on paper. If you file your client’s return with EFILE, keep the copy in case we ask to see it.
2. Give a copy to the client.
3. You may want to keep a copy for your files. If the CRA asks to see a copy, you are responsible for making another copy you want to keep, before you send them their copy.

Electronic filing (EFILE) of discounted returns

Tax preparers who prepare more than 10 returns are required to file them electronically.

Mandatory electronic filing applies to the filing of the Income Tax and Benefit Return and T2 Corporation Income Tax Return for the 2012 and later tax years. For more information, go to Mandatory electronic filing for tax preparers.

When using EFILE to file discounted returns, ensure that the electronic version of the Form RC71 transmitted to the CRA is an exact copy of the paper version which has been signed and dated by the discounter and the client.

Some discrepancies may occur between the two versions. The following situations are the most likely to occur:

• Situation 1: Option 1

  • The estimated refund is reduced by a debt to be collected by the CRA. Some tax preparation software packages automatically transcribe the calculated refund, from line 48400 of the client’s tax return, to box A of Form RC71. If the client has a debt to be collected by the CRA, the refund shown on line 48400 should be reduced by that amount. You must enter the actual amount to be discounted in box A of the electronic version of Form RC71.

• Situation 2: Option 2

  • The date in box 14 is different from the date on the electronic version of Form RC71. This can happen when you prepare the EFILE return on a date that is different from the date you print Form RC71. Make sure that the date on the electronic version is the same as the date on the paper version of Form RC71.

You may have to manually override and lock these fields in your software before electronically transmitting the form to us to ensure the EFILE version matches the paper version.

How to fill out Form RC71

When completing Form RC71, make sure that all copies, including your file copy, are legible and that you enter the correct figures in the appropriate boxes. Each of the boxes in the discounter identification section below corresponds to a section of Form RC71.

The discounter and the client must sign and date the copy of Form RC71 provided to the client, the copy filed with the paper return, and the copy you keep on the client's file. You must give the client a copy of the front and the back of the form.

Enter the tax year of the return being discounted in the top right corner of the form.

Discounter identification

Client identification

Client certification

What if the client provides new information before their tax return is filed?

If the client provides new information that changes their return before it is filed, you will have to prepare another Form RC71 to discount this additional information and pay the client. The amount in box A must reflect only the additional refund amount. However, you have to consider the initial discounted refund when you calculate the discount on the additional refund, since they are both for the same tax year. If the initial discounted refund was $300 or more, you must pay the client 95% of the additional refund. When electronically filing Form RC71, ensure that you send the total of the two RC71 forms and keep them on file for your records.

Form RC72, Notice of the Actual Amount of the Refund of Tax

You have to inform the client of the actual amount of the refund you received from the CRA using Form RC72 as soon as you receive the notice of assessment. If the actual refund, minus any refund interest, is greater than the estimated refund by $10 or more, you have to pay this amount to the client within 30 days. If paid by cheque, this amount is considered paid when cashed or deposited by the client.

If 30 days have passed since the notice of assessment date, and if you have made all reasonable efforts, but cannot locate and pay the refund to the client, or the client has not cashed your cheque, you must return the excess amount to the tax centre. Make your cheque payable to the Receiver General. Include copy 1 of Form RC72 and write the client's name on the back of the cheque. Do not write the client's social insurance number on the cheque. If the client's copy of Form RC72 and the notice of assessment are returned to you by the post office, keep them and the return envelope in your files in case the client asks for them at a later date and as proof of your attempt to provide the form to your client.

You are required to keep all documentation related to a discounting transaction for the 3 years following the operation. 

If, after returning an excess amount to us, you locate the client or the client contacts you, tell the client to call our individual income tax enquiries at 1-800-959-8281.

Purpose of Form RC72

Form RC72 is used to notify the client of the actual amount of the refund and to help the CRA process excess amounts. Fill out this form as soon as you receive a notice of assessment or notice of reassessment, refund cheque, or payment. You have to fill out this form for every return you discounted, regardless of the amount of the refund or the difference between the actual and estimated refund. You are required to send Form RC72 to all your clients regardless if there is an excess, a loss or a nil balance.

If you use software to prepare Form RC72, you may keep an electronic copy instead of a paper copy. All information on the electronic copy, including the date in box 10, must be identical to the copy that you give to the client.

Prepare three copies of the form to be distributed as follows:

1. Send a copy to the CRA when you cannot pay the client any excess amount and you are sending the CRA a cheque made payable to the Receiver General for Canada. If you are not sending an excess to the CRA, keep a copy in case we ask to see it.
2. Send a copy to the client to notify them of the amount of the refund you received and any excess.
3. You have the option of keeping a copy in your files.

Excess payments held in trust

Any excess refund owing to the client is considered to be held in trust for the client by you until you pay the client or return it to us. You should inform your financial institution that you will be holding funds in trust from time to time. The institution may have specific requirements for handling trust funds.

How to fill out Form RC72

When completing Form RC72, make sure that all copies, including your file copy, are legible. Each of the following steps corresponds to a section on Form RC72.

What if you receive an additional refund?

After you have received the first refund and sent the required Form RC72 to the client, you may receive an additional refund amount or a notice of reassessment.

In such cases, you have to file a new Form RC72.

If the additional refund amount is the result of having filed additional information, fill out Form RC72 in the usual way.

Enter the amount of the additional refund in box A. Enter, in box B, the additional estimated refund from box A of Form RC71 that was filed with the reassessment request.

Notice of assessment or notice of reassessment

You have to give the original notice of assessment or notice of reassessment to the client as soon as you receive it.

The notice of assessment and any information related to the assessment of discounted returns is provided to you for the sole purpose of administering the Tax Rebate Discounting Act. Any discounter who uses a client's notice of assessment or any related information for any other purposes is guilty of an offence and may be charged under subsection 239(2.21) of the Income Tax Act.

Express Notice of Assessment (NOA)

Express NOA is a secure service that allows authorized representatives to view, from EFILE-certified software, your client’s notice of assessment indicating the amount of your client’s refund as assessed by the Canada Revenue Agency (CRA).

As a discounter, in order to participate using the Express NOA service, you must:

• be a registered electronic filer
• be a registered in Represent a Client and have a RepID, GroupID or business number
• be authorized for online access with the CRA, by completing an E-authorization web submission for Authorization or Cancelling a Representative (in the Represent a Client portal or in the EFILE-certified software), with level 1 (or higher) authorization
• complete Part F of Form T183, Information Return for Electronic Filing of an Individual's Income Tax and Benefit Return, and select the Express NOA option
• use an EFILE-certified software

To prepare a discounted tax return when using a software offering Express NOA, follow these steps:

1. prepare and sign Form RC71, Statement of Discounter Transaction and any other documents needed to process the transaction
2. have the RC71 signed by the client
3. pay the client
4. EFILE the tax return
5. obtain the amount of the refund assessed by the CRA
6. if the refund assessed is less than the RC71 box A amount, you may decide to recover the payment that you just gave to the client
   • if you paid by cheque, have the client sign and date the back of the cheque and give it back to you
   •  if any other method of payment was used, have the client give it back to you
   • using your software, prepare a second RC71 by entering in box A the refund assessed by the CRA and have your client sign it
   • pay your client the new, lesser amount
   • you may wish to detail this on a receipt to account for the difference
   • retain both RC71’s in your file — the one prepared for transmitting the return and the second one with the assessed refund amount
   • when preparing the Form RC72, Notice of the Actual Amount of the Refund of Tax, use the information from the second RC71
7. if the assessed amount indicates a refund of $0, you may wish to recover the payment that you just gave to the client
   • follow the same steps as above
   • the second RC71 that you will prepare will show $0 in box A
   • no payment to the client is required
8. if the assessed amount indicates a debt of any amount, you may wish to recover the payment that you just gave to the client
   • follow the same steps as above
   • the second RC71 that you will prepare will show the debt in box A (for example -200.00)
   • no payment to the client is required
9. if the refund assessment amount indicates a higher refund than the refund amount on the RC71 box A, you can not discount the difference after the assessment. The full excess amount is deemed to be held in trust for the client by the discounter until such time as it is paid to the client or to the Receiver General. See Excess Amounts above for more details.

Confidentiality of taxpayer information

You must ensure the protection and confidentiality of taxpayer information at all times including without limitation during transmission, transportation, access, storage, processing, handling, use and destruction.

Taxpayer information which you obtained from the CRA for discounting purposes may be used by you for the sole purpose of administering the Tax Rebate Discounting Act. Any other use of taxpayer information obtained from the CRA is prohibited.

Any loss, suspected loss, or unauthorized disclosure of, or access to taxpayer information which was obtained from the CRA for discounting purposes must be immediately reported by you to the CRA by contacting Discounter Services. 

Auditing discounters records

We may ask you to provide documents or proofs of payment to make sure that you are following all the requirements of the Tax Rebate Discounting Act. We may make this request in writing, by telephone, or by visiting your place of business. We may also contact your clients to make sure they are receiving the payments and information to which they are entitled.

You have to send Form RC71, Statement of Discounting Transaction, Form RC72, Notice of the Actual Amount of the Refund of Tax, proof of payment, and any other documents requested, to Discounter Services within the time frame we indicate. Do not send the forms to the provincial administrator, a tax services office, or a tax centre. You are responsible for the cost of sending the documents to us. If you have more than one discounter code, sort the forms in alphabetical order, by discounter code number, before sending them to us.

Proof of payment

If you pay your clients in cash, ask them to sign and date a receipt for the amount received. All information provided on the receipt must be typed. The receipt must indicate the amount and purpose of the payment and it must be signed and dated by the client. Such a receipt is your proof of payment.

If you pay your clients by cheque, the cancelled cheques they endorse are your proof of payment. We will also accept cheque images (front and back), if legible, provided by financial institutions. We will not accept banking statements as proof of payment. If you know a cancelled cheque will not be returned by the bank, as in the case of a certified cheque, your clients must show that they received the money owed to them by signing and dating standard business receipts. The receipts must be fully typewritten, including the dollar amounts. There must be space for your clients to sign and date the receipts to certify that the information on the receipts is correct.

If you plan to use money orders, debit cards, prepaid cards, direct deposit, or any other form of electronic money transfer to pay your clients, provide us with the details of the arrangement before using these forms of payment. In addition provide us with all written documents that will be provided to your clients as they relate to these forms of payment.

Record-keeping requirements and destruction of records

You must keep records of all discounting transactions for three years after they took place. You are responsible for disposing of all documents properly to protect your clients' confidentiality.

General guidelines

Acquiring the right to a refund

You must pay the client the amount payable in box E of Form RC71 before you ask them to sign this form or any other form that would give you the right to get a refund.

You must follow all provincial and territorial regulations regarding contracts.

The CRA will make individual direct deposits in the client’s name if you ticked ‘No’ in Part L of Form RC76. If you ticked ‘Yes’ we will consolidate the payments into one payment. The CRA will show your client’s name and your address on the notice of assessment or notice of reassessment that we will send to you.

Contact your financial institution to find out what documents they need to allow you to cash your clients' payments.

What if the actual refund is less than the estimated refund?

If the actual refund of tax is less than the estimated refund, any repayment you request from the client cannot result in the client receiving less than the minimum payment. Also, when determining the amount you can collect from the client, you have to include any refund interest we paid in the amount of the actual refund.

Calculate the amount you can collect from the client as shown in the following example:

This calculation does not apply in situations where the actual refund is less than the estimated refund because we used part of the refund to pay the client’s debt to the Crown (such as student loans, overpayments of employment insurance benefits, or garnishments under the Family Orders and Agreements Enforcement Assistance Act). In this situation, you can collect from the client the amount of the refund that we used to pay his or her debt.

Client debts

Although a client may be entitled to a refund, the CRA may keep some or all of it to:

• apply against any amount the client owes the CRA or is about to owe the CRA
• satisfy a garnishment order under the Family Orders and Agreements Enforcement Assistance Act
• apply against certain other outstanding federal, provincial, or territorial government debts, such as student loans, employment insurance and social assistance benefit overpayments, immigration loans, and training allowance overpayments

If you are aware of such a debt when you acquire the right to the client's refund, you have two options for the amount you enter in box A, "Estimated refund amount," on Form RC71. Use this amount when calculating the minimum amount to pay the client and the discount.

Option 1: The amount from line 48400 of the client's Income Tax and Benefit Return minus the debt

Administratively, the CRA accepts that interest may be calculated by the discounter and added to the interest-bearing amount that the client owes the CRA, or is about to owe the CRA. This calculation allows for the period between the time the outstanding balance amount is provided to the discounter, and the time the tax return is assessed. In such cases, the interest must be calculated using an interest rate that is not higher than the CRA prescribed interest rates for a period no longer than our published EFILE processing standard of two weeks. If you are filing paper returns, the interest period must not exceed the standard processing time. For more information about our rates and standards, visit Canada Revenue Agency.

Documentation on your clients' files must show the amount of the debt, the interest charged, to whom it was owed, and the source of this information.

Option 2: The amount from line 48400

If you choose this option, you must pay the debt before you discount the client's refund. When your payment has been processed you then calculate the minimum amount to pay to the client on the estimated refund ($1,200 in the above example).

Completing a client's return

The CRA will send the client's notice of assessment to your permanent mailing address as shown on Form RC76, Application and Agreement to Obtain a Discounter Code / Discounter Direct Deposit Enrolment .

When you use EFILE for electronic filers to file your client's return, make sure that you enter your client's current address when transmitting the return to the CRA for processing. Do not enter your own address in the identification area when transmitting the return.

When you file a paper return for your client, enter the client's current address in the space given on page 1 of the return. Do not enter your own address in the identification area of your client's return.

The CRA will send all refunds from discounted returns to you. However, there may be instances when the CRA sends a discounted refund to a client in error. If this happens, it becomes a matter between you and your client, as stated in subsection 2(3) of the Tax Rebate Discounting Act:

"A right to a refund of tax acquired by a discounter from a client is enforceable only between the client and the discounter and nothing in this Act shall be construed as creating any liability between the discounter and Her Majesty."

Partial Discounting

Subsection 4(1) of the Act requires that a client be paid the full minimum consideration at or before the time a discounter acquires the right to the client's refund. You cannot acquire a right to a client's refund of tax and only discount part of it. For example, in a situation where you are aware of a tuition, education and textbook carry forward amount, you must account for this amount in the calculation of the estimated refund at the time of the discounting transaction. Make sure that you discount on the total estimated refund.

Requesting adjustments

What if the client provides new information after their tax return is filed?

If the client provides new information that changes their return, an adjustment is required to the return. Use Form T1 ADJ, T1 Adjustment Request to request the adjustment. If you discount an additional refund resulting from the adjustment to the return, fill out a new Form RC71 and attach it to the adjustment request. Write “Additional information” in the blank box at the top of the form.

The amount in box A of Form RC71 must reflect only the amount of the additional refund. However, you have to consider the initial discounted refund when you calculate the discount on the additional refund, since they are both for the same tax year. If the initial discounted refund was $300 or more, you must pay the client 95% of the additional refund.

You cannot pay the client 85% on the first $300 of the additional refund, since you already paid 85% on the first $300 of the initial refund for the same tax year.

What if you receive a refund that is less than the estimated refund?

If you receive a refund that is less than the estimated refund, you can submit information to reinstate the estimated refund in whole or in part. Include a photocopy of the original Form RC71 with your request for adjustment.

WThe CRA will send the notice of reassessment or any resulting refund to the client if Form RC71 is not included with your request for adjustment.

Do not delay providing Form RC72 and the notice of assessment to the client while waiting for the reassessment.

Discounter code on a client's return

When you use EFILE for electronic filers to file your client's return, enter your discounter code before transmitting the return to us for processing.

If you are filing a paper return for your client, enter and highlight "Disc. code no." and your discounter code to the right of the pre-printed word "Identification" at the top left corner of page 1 of the client's tax return.

If you do not enter your discounter code on the return, we may send the notice of assessment or the refund to the client.

Fraudulent discounted returns

To protect your interests and the integrity of our tax system, take proper care to verify the identity of your client. Ensure your client has documents such as information slips and receipts to support all income, deductions, and credits reported or claimed on the return. Verify the authenticity of these information slips before conducting financial transactions.

For more information about reporting a suspected violation of any tax law, please contact the CRA "Leads Program" at Report a lead on suspected tax or benefit cheating in Canada.

Charging fees

Any discounter who charges fees in addition to the allowed discount fee (15% - 5%) violates subsection 3(1) of the Tax Rebate Discounting Act. Extra fees cannot be charged for the service of preparing and filing a client's income tax and benefit return or any other service directly related to the discounting transaction.

Discounters must pay the full minimum consideration (85% - 95%) by cash or cheque at the time of the discounting transaction.

Administratively, we accept that the amount the discounter pays to the client can be reduced by other unrelated fees. This is permitted provided that the client authorizes the deduction in writing and that they are for one of the two reasons below. No other fees or deductions are permitted.

A deduction is permitted for the recovery of an amount owed by the client to the discounter due to a shortage from a prior year discounted return. Administratively, we accept that interest may be added to the shortage to allow for the period between the time you notify your client of this shortage and the time the shortage is recovered by you. In such cases, the interest must be calculated using an interest rate not higher than the CRA prescribed interest rates.

A fee is permitted for the preparation of a prior year T1 return or adjustment for the client or a family member's current or prior year T1 return that is filed at the same time and that is not discounted.

A client must authorize this deduction from the minimum consideration. As proof of authorization, we will accept a fully typewritten receipt or a second cheque made out to the client, which the client endorses and returns to the discounter. If a receipt is provided, the reason for the fee and the amount must be clearly shown on a fully typewritten receipt that is signed and dated by the client. If a second cheque is provided, the explanation of the fee must be typewritten on the cheque.

In addition to the proof of authorization, you must have the following documentation in the client's file available for review by the CRA should we request it.

• If you are deducting an amount for a prior year return shortage, make sure you keep the prior year Form RC71, Statement of Discounter Transaction, proof of payment of the minimum consideration, and the Form RC72, Notice of the Actual Amount of the Refund of Tax.
• If you are deducting a fee for a family member's T1 return, make sure you keep the social insurance number of the family member and details about his or her relationship to the client.

Change of Address

We would like to remind you that, as a discounter, if your mailing address or phone number(s) have changed since last year or if they change during the program, the Company/Corporation owner must notify Discounter Services. There are two options to change your address and phone number. You can email Discounter Services at DISCOUNTERG@cra-arc.gc.ca to make this change. You can also complete and send a new Form RC76, Application and Agreement to Obtain a Discounter Code / Discounter Direct Deposit Enrolment, by indicating a change at the top of the form. To send the form, follow the instructions at the bottom of the RC76. It is very important that we have the accurate address on file as it ensures the notices of assessment continue to be sent to the correct address without delay.

Obligations of a discounter

As a discounter, you have to comply with all provisions of the Tax Rebate Discounting Act, the most current version of the Canada Revenue Agency’s (CRA) procedures and policies contained on this webpage. For the latest information, go to this webpage at least on a quarterly basis.

Authorization to represent your client

The CRA will only release confidential client information if the client has given you written authorization to represent them in matters related to the Income Tax Act. For more information, call our individual income tax enquiries service at 1-800-959-8281.

Tools and Information

EFILE service

EFILE is an automated service that allows tax preparation service providers to electronically file their clients' income tax and benefit return(s) to the Canada Revenue Agency (CRA) for the current year and the first three prior years.

EFILE web service allows you to transmit your client's returns directly from your tax preparation software. You get an acknowledgement of the individual return instantly. Your software has the capability to simulate the batch filing process by transmitting multiple returns at once, and providing an instant acknowledgement of each return that you have transmitted.

For more information, visit EFILE for electronic filers.

Client Data Enquiry service

The Client Data Enquiry (CDE) service allows view access to authorized representatives to view a client’s account before preparing their return. It serves as a notification and provides a detailed summary of a client’s account, including any amounts they owe. Authorized discounters can check if a client has any outstanding debts, as well as determine whether the client’s return will be discounted and the amount of the discounted refund.

To access the CDE service, you must log in to Represent a Client and have a completed E-authorization web submission for Authorization or Cancelling a Representative.

The following information can be accessed using the CDE service:

Getting help with Client Data Enquiry (CDE)

If you have difficulty logging into or navigating the Represent a Client portal, or you have questions about the data in CDE, contact the Individual tax enquiries at 1-800-959-8281.

It remains the taxpayer’s responsibility to report their income before a tax return is submitted to the CRA. Taxpayers must ensure that all applicable fields on the return are filled in, including tax information not delivered by Auto-fill my return (like various credits and deductions such as moving expenses, tuition fees, to only name a few), and that the information provided is true and accurate.

Auto‑fill my return service

Auto‑fill my return is a secure Canada Revenue Agency (CRA) service. It allows authorized representatives to automatically fill in parts of their client’s income tax and benefit return with information that is available with the CRA.

Many authorized representatives are already accessing the CRA’s online services to gather information to help them prepare tax returns on behalf of their clients. The service simplifies the tax preparation process.

To use this service representatives must:

• be a registered electronic filer
• be registered in Represent a Client (RAC) and have a RepID, GroupID, or business number (BN)
• have a valid authorization with Level 1 (or higher) for online access on file with the CRA
• use EFILE-certified software that supports the Auto‑fill my return service

For more information, go to Auto-fill my return.

For more information about Authorizing or cancelling a representative, go to Representative authorization.

Credits and benefits that cannot be discounted

The Canada Emergency Response Benefit (CERB), the goods and services tax/harmonized sales tax (GST/HST) credit, Canada child benefit (CCB), and similar benefits are credits and benefits that cannot be discounted.

The Ontario Trillium Benefit (OTB) and its components are benefits that cannot be discounted. The OTB is the integration of the payment issuance for three former programs: the Ontario Sales Tax Credit (OSTC); the Ontario Energy and Property Tax Credit (OEPTC); and the Northern Ontario Energy Credit (NOEC).

Refund Set-Off program

Under the Refund Set-Off (RSO) program, an individual’s tax refunds and eligible credits can be applied against debts they owe to the Crown, instead of being sent to the individual. Refund set-offs can be used to recover a variety of debts owed to federal, provincial or territorial departments, agencies or crown corporations.

Individuals may be identified as owing an amount under this program at any time.

The following amounts can be applied to these debts only if the individual’s net family income is above the low-income threshold established by Statistics Canada:

• individual tax refunds
• goods and services tax/harmonized sales tax credit (GSTC), which may be combined with the following provincial and territorial credits:
  • Saskatchewan low income tax credit (SLIC)
  • British Columbia low income climate action tax credit (BCTC)
  • Nova Scotia affordable living tax credit (NSAL)
  • Prince Edward Island sales tax credit (PEIS)
  • New Brunswick harmonized sales tax credit (NBST)
• Ontario trillium benefit (OTB), which combines:
  • Ontario sales tax credit (OSTC)
  • Ontario energy and property tax credit (OEPC)
  • Northern Ontario energy credit (NOEC)
• Alberta climate leadership adjustment rebate (ACLR)
• Northwest Territories cost of living offset (NTCL)
• Yukon Government carbon price rebate individuals (YCPR)
• non-resident source deductions (NRSD) (this credit is available for set-off debts owed to federal departments only)

Family Orders and Agreements Enforcement Assistance program

If an individual has outstanding family support payments, the CRA can send their tax refunds and credits to the Department of Justice Canada to be applied against the support amount they owe. This is allowed under the Family Orders and Agreements Enforcement Assistance (FOAEA) Act.

The Department of Justice Canada determines who should be included in this program, and advises the CRA accordingly. Individuals may be identified at any time.

All of the credits listed under the Refund Set-Off program (except for non-resident source deductions) can be garnished for family support payments, regardless of the individual's family income.

For more information

This page explains the most common situations. If you need more information after reading it, email us at DISCOUNTERG@cra-arc.gc.ca.

If you need information about filing an income tax and benefit return, or about a client's refund, read the Federal Income Tax and Benefit Guide or call our individual income tax enquiries service at 1-800-959-8281.

If you have an account specific question about the information provided through the Auto‑fill my return or CDE services, call our individual income tax enquiries service at 1-800-959-8281.

If you notice a mistake on an information slip, contact the employer, payer, or administrator for that slip.