Don’t Forget The T3’s!

Are you a Canadian resident who also has an obligation to file in the US?  Before you send in your US taxes to meet the April 15th filing deadline, make sure to remember there is still one more tax slip on its way.

If you are set to receive a T3 for a Canadian trust, you have a little more time that your dual-filing counterparts.

T3 slips, otherwise known as the Statement of Trust Allocation and Designations (RL16 for Quebec residents), are being prepared and mailed – copies to the CRA – by the end of March.

A T3 slip reports how much income you received from investment in mutual funds in non-registered accounts, from business income trusts or income from an estate for a given tax year.

If you have not received your T3 tax slip – get in touch with the relevant financial administrator or trustee but make sure to file your income tax return by the deadline anyway to avoid late filing penalties.

You can find more information from the CRA website, here.

Monday, February 29th, 2016: Deadline to Make RRSP Contribution for 2015 Tax Year.

Today, February 29th, 2016 is the deadline for making a contribution to your 2015 Registered Retirement Savings Plan (RRSP). You have until 11:59pm to get it done.

Why is this deadline significant?

A registered retirement savings plan (RRSP) is a retirement savings plan that you establish, that gets registered at the Canada Revenue Agency (CRA), and to which you or your spouse or common-law partner contribute.

RRSP contributions are deductible and can be used to reduce your tax. Generally, any income you earn in the RRSP is exempt from tax as long as the funds remain in the plan.

If you need to take money out of the plan, you usually have to pay tax when you receive payments from the plan.

How much space can you contribute into your RRSP?

You can find your registered retirement savings plan (RRSP) deduction limit by going to:

  • Amount (A) of the RRSP Deduction Limit Statement, on your latest notice of assessment or notice of reassessment from the CRA
  • Form T1028, Your RRSP Information for 2015.

The CRA may send you a Form T1028 if there are any changes to your RRSP deduction limit since your last assessment.

You can also get the information yourself in one of the following manners;

  • My Account
  • MyCRA mobile app
  • Tax information Phone Service (TIPS)

A RRSP contribution can be the difference between owing taxes to the CRA and getting a refund, and it can also be used to reduce amounts owing.

In some situations, borrowing the money to make a RRSP contribution helps to reduce a pending tax burden – increase a refund – and then the refund can be used to pay back or down that borrowed amount.

The Truth about the CRA Voluntary Disclosure Program (VDP) that no one wants you to know

Before you waste time and money paying a tax solution company to walk you through the Canada Revenue Agency’s (CRA) Voluntary Disclosure Program (VDP), you might want to read this post and learn the facts they don’t want you to know.

In order to “qualify” for the Voluntary Disclosure Program, there are some important facts which must be taken into consideration first;

  1. The disclosure must be voluntary, and by voluntary, the CRA means that the business or taxpayer must not be aware of or have knowledge of an audit, investigation or other enforcement action set to be conducted by the CRA, or initiated by the CRA, with respect to the information being disclosed.
  2. The disclosure must be complete, meaning that all information must be disclosed and all the outstanding years must be filed in this application.
  3. The disclosure must involve the application of a penalty, such as, but not limited to, Late Filing Penalties (LFP), Late Remitting Penalties (LRP), and Failure to make installments, Gross Negligence Penalties.
  4. The disclosure must relate to information that is at least one year past due.

 

If you’ve fallen behind in filing, or failed to disclose or declare income – possibly from overseas / offshore investments / tax shelters / income properties, and the CRA has not previously tried to contact you for the returns, then the VDP might be for you.

The VDP allows taxpayers who make a valid disclosure under the Income Tax Act (ITA) to pay taxes owing plus interest, but avoid penalty and / or prosecution.

To make a valid voluntary disclosure, with the CRA means you would pay only the taxes you owe plus interest, and you may avoid penalties and potential prosecution on the information accepted under the program.

You can file a disclosure to correct inaccurate or incomplete information or to provide information you may have omitted in your previous dealings with the CRA.

To submit a disclosure, fill out and sign Form RC199, Voluntary Disclosures Program (VDP) Taxpayer Agreement, or write a letter giving the same information as on the form.

You can submit your Form RC199 or your equivalent letter to the CRA directly, using the Submit documents online service now available through My AccountMy Business Account and Represent a Client.

Once you have logged in to one of these portals, click on “Submit documents” on the left hand navigation menu, select “I do not have a case or reference number,” and then select “Make a voluntary disclosure.” From this point you will be prompted to upload your letter or Form RC199 as well as to provide a short file description.

At the end of the process, you will be given a reference number that you can use if you need to add more documents.

You can also send your disclosure by mail to one of the CRA’s tax centres.

 

The following are circumstances under which VDP relief may be granted:

  • you did not fulfill your obligations under the applicable act;
  • you did not report taxable income you received;
  • you claimed ineligible expenses on your tax return;
  • you did not remit your employees’ source deductions;
  • you did not report an amount of GST/HST (which may include undisclosed liabilities or improperly claimed refunds or rebates or unpaid tax or net tax from a previous reporting period);
  • you did not file information returns; or
  • you did not report foreign-sourced income that is taxable in Canada.

 

Disclosures relating to any of the following are not accepted under the VDP:

  • bankruptcy returns;
  • income tax returns with no taxes owing or with refunds expected;
  • elections;
  • advance pricing arrangements;
  • rollover provisions; and
  • post-assessment requests for penalty and interest relief.

 

You can make an anonymous disclosure, referred to as a “no-name” disclosure.  You will have 90 calendar days – beginning on the date the CRA notifies you that there are 90 days to provide the identity of the taxpayer involved, not 90-days from the date of initial disclosure.

The CRA will close the disclosure file without further contact if the identity is not provided before the 90th day.

Additionally, payments should begin as soon as the disclosure is made in order to reduce the amount of interest which is accruing on the file.

Any “taxpayer” can use the VDP, because the CRA considers a taxpayer to be an individual, an employer, a corporation, a partnership, a trust, a goods and services tax/harmonized sales tax (GST/HST) registrant/claimant, and a registered exporter of softwood lumber products. You can also have an authorized representative make a disclosure for you.

 

Time Limit:

There is no limit on how far back the VDP will request or review information. A disclosure must be complete and provide all the relevant information to allow the VDP officer to appropriately review and decide whether statute-barred years should be opened for reassessment. Income will be assessed in the year it is earned. If you have not filed for several years (that is, you are a non‑filer), you are expected to update all your tax years.

You are expected to keep your affairs up to date after using the VDP. You cannot make a second submission for the same issue for which you originally received the benefits of the program, however the CRA will consider a second disclosure in situations where the circumstances were beyond your control.

If this is the case, you will be required to give the CRA your name and tell them that you previously made a disclosure. If you do not reveal that you previously made a disclosure and this is uncovered by the CRA, your disclosure may be considered invalid and denied.

 

Additional information from the CRA

Form RC199, Voluntary Disclosures Program (VDP) Taxpayer Agreement

Form RC59, Business Consent

Form T1013, Authorizing or Cancelling a Representative

Information Circular IC00-1R4, Voluntary Disclosures Program

Making a Voluntary Disclosure on your Ontario Corporate Tax

 

Beyond the VDP is the opportunity to apply for Taxpayer Relief for full or partial relief of penalties and or interest, if applicable.

Save yourself the hassle of being subjected to someone else’s agenda.  Know your rights, and your options.  Know the truth.

 

For further information or to discuss the VDP and Taxpayer Relief provisions, send an email to us at info@intaxicating.ca

 

Happy New Year (2016) from the Internal Revenue Service (IRS)

CRA Convictions: Former Senior Liberal Adviser Convicted of Failure To Report Income and Benefits

The CRA has reported that Herb Metcalfe, a former senior adviser to Stephane Dion and Liberal lobbyist has received a conditional sentence of two years less a day – including 12 months house arrest – for failing to report $1.4-million in payment and benefits between 2002 and 2006.

Mr. Metcalfe pled guilty to one count of income-tax evasion and was fined $396,259, which represents 100% of the total taxes evaded.

A CRA investigation focused on Mr. Metcalfe’s work as a director and employee of the Capital Hill Group Ottawa Inc., which the agency describes as “a political lobbying business.”  He is no longer a member of this group – having stepped aside from the business.

The agency states that Mr. Metcalfe prepared his tax returns each year by hand and either knew, “or was willfully blind to the fact,” that the income he received was required to be reported on his returns.

“The Canada Revenue Agency pursues tax evaders to maintain public confidence in the integrity of the tax system,” said my former Director of the Toronto North Tax Services Office, Vince Pranjivan, who is now the CRA’s assistant commissioner for the Ontario Region.

The CRA issued a news release dated Nov. 18, 2015, outlining the fine and conviction. However the release did not immediately receive media attention due to public-service rules related to communicating during an election.  Mr. Metcalfe was sentenced on September 30th, 2015 which was during the Federal election campaign, which meant the CRA posted the conviction on November 18th and at that time was able to notify the media.

 

CRA Conviction Notice: Tax Protester Sentenced to 4-Years in Prison.

On November 27th, 2015, the Canada Revenue Agency (CRA) issued notice that Nicolet, Quebec resident and tax protester named Christian Lachapelle was sentenced to four years in prison by a Court in Quebec.  Lachapelle plead guilty October 22nd, 2014 to charges related to tax fraud.

A Canada Revenue Agency (CRA) investigation revealed that, between June 2007 and November 2010, Mr. Lachapelle advised and enabled 93 individuals to avoid, or try to avoid, paying nearly $2 million in income tax for the 2003 to 2010 tax years.

The scheme used by Mr. Lachapelle consisted of helping or advising individuals to file income tax returns or request a reassessment using the distinction between a “natural” person and a “legal” person.

For some reason, tax protesters continue to attempt this avenue to avoid having to pay taxes and in doing so regularly convince others that this technique can be used when Canadian courts have repeatedly and consistently rejected such arguments.

This is not the first time that Mr. Lachapelle has had issues with the CRA and the law. He was sentenced to 30 days in jail in 2012 for failing to file his income tax returns despite a court order, as well as fines of $7,000 in 2005 and $14,000 in 2011 for the same reasons.

All case-specific information above was obtained from the court records.

The Canada Revenue Agency warns the public to beware of people who assert that Canadians do not have to pay tax on the income they earn. Canadian courts have repeatedly and consistently rejected arguments made in these tax protester schemes. For those involved in such schemes, the CRA will reassess income tax and interest, and charge penalties – usually Gross Negligence Penalties too which can represent at minimum 50% of the tax being evaded.

More information on tax protester schemes can be found on the CRA website, here: www.cra.gc.ca/alert.

If you have ever made a tax mistake or omission, you have the ability to correct this error through the Canada Revenue Agency’s Voluntary Disclosures Program (VDP).

You must make the full and complete disclosure before you become aware that the CRA is taking action against you, and if accepted, you may only have to pay the taxes owing plus interest (not penalties).

More information on the CRA’s VDP can be found on the CRA’s website atwww.cra.gc.ca/voluntarydisclosures.

Additional information on CRA convictions can be found on the Media page of the CRA website at www.cra.gc.ca/convictions.

inTAXicating Tax Services exists to provide clarity and solutions for CRA questions and problems.  If you think you have done something wrong, and the CRA might want to assess / re-assess / audit you or your company, you should check with us first.

http://www.intaxicating.ca

info@intaxicating.ca

Real CRA collections experience.  On your side!