An unexpected measure in the 2012 federal budget legislation (Bill C-38) will require tax preparers engaged to prepare more than 10 income tax returns annually to efile them after 2012. It is surprising that a measure that would affect so many Canadian tax return preparers has been included in the budget bill but not announced or explained more broadly in the budget papers themselves.\nThe proposals contain a new definition of "tax preparer" for this purpose and impose penalties for non-compliance. “Tax preparer” is defined as a person or partnership that accepts consideration to prepare more than 10 "returns of income" of corporations or more than 10 "returns of income" for individuals (other than trusts) in a calendar year. These tax preparers must electronically file "any return of income that they prepare for consideration" (although they can file up to 10 corporate and 10 individual returns by other means).\nThe penalty for non-compliance is $25 for each individual return and $100 for each corporate return that is not e-filed. The bill also amends the graduated penalties for failure to properly file certain prescribed information returns. Partnerships can now object to or appeal any such penalties as a result.\nUnder a series of exceptions to the new rules, tax preparers may not have to efile returns in some cases (see the CRA’s efile site for details). Preparers should continue to bear in mind the CRA’s efiling requirements, which may be more onerous than for paper-filed returns in some cases.\n \nThis document was originally prepared by a legacy CPA organization.