Why use the T2 Pre-Validation Service?

T2
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I notice in the latest release the CRA has rolled out a pre-validation service.

I don’t understand what the benefit of this service is - how does this differ from just attempting to file the T2 using CIF and getting a transmission rejection bounce back with error messages?

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@rick.s
I will have a chance to provide feedback to the CRA in the near future. So, if you try it, let us know what you think about the usefulness.

Some background information on how this service came about.
Each year, the CRA provides us with a list of top filing errors. For example, corporation name on the return does not match the name on the CRA records. In order to reduce such error, the CRA introduced T2 PreValidation service.

Let’s say that you are about to prepare a return for a new client. The corporation name you entered on the return is “TaxCycle Incorporated”. But, on the CRA’s records, the name is “TaxCycle Inc.”. Obviously, if you try to submit this return with “TaxCycle Incorporated”, the return will be rejected because the corporation name does not match. This is where this new service is supposed to help the preparers correct the basic information in the return “earlier” in the preparation stage rather than later (ie. on the day the return is due). But, in this case, you would have to have some reason to think that the corporation name in the return might actually be incorrect for you to even try this service. In this case, the CRA will send a response saying that the name does not match. Back to your point, when you ultimately file your return electronically, you will also receive the same error message.

This service also validates the following (this is not a full list):

  • If a return is electronically submitted, you cannot change the head office or mailing address. If you answer Yes to the questions 020 or 030 in the T2 jacket, and uses this new service to validate the data, the CRA will send an error saying that you cannot make a head office or mailing address change by internet filing.
  • Corporation type is missing
  • Tax year is greater than 378 days
  • TYE is prior to tax year start
  • TYS is missing or invalid
  • TYE is missing or invalid
  • BN submitted is not registered on the BN system

But note that TaxCycle already validates many of these errors via our review messages.

What I would suggest is that if you are in the beginning of the preparation stage and you have at least completed T2 Info form, this service might be useful to help you validate the basic return data.

Steven

3

Thank you for clarifying Steven – I guess we’ll keep this in mind primarily if we’re down to the wire on a filing and there is any uncertainty with regards to the basic info in the file (i.e. a new client, first year filing, etc.).