Filed your 2019 Personal Income Tax Return: Now what?

What an absolute crazy year 2020 has been thus far!

The tax filing deadline for individuals to file their 2019 personal income tax returns (T1) in Canada was June 1st, by 11:59pm. For Canadians who have earned self-employment income, their returns are due by June 15th, 2020. Payments for balances owing are due to the CRA by September 1st, 2020, and the CRA is currently not charging interest on exsting balances owing the them, nor interest or penalties for any late payments or filings for the time being.

New and enhanced services

Check CRA processing times – Want to find out quickly how long it will take for the CRA to process your return, or your refund? Use the Check CRA Processing Times tool on canada.ca to get a targeted completion date. The new tool uses published service standards and information you select from drop-down menus to calculate targeted completion times for various programs.

Dedicated telephone service for tax service providers – If you are still working on a tax return(s), the CRA have been offering this service to small and medium income tax service providers across Canada for the 2020 tax filing season. By using this service, income tax service providers can connect with experienced CRA officers who assist with complex tax questions.

Representative authorizations – Thank goodness, the CRA has created a new e-authorization process for online access to individual tax accounts which permits representatives to request access to individual tax accounts using a web form through Represent a Client. As a result, the existing T1013 form will be discontinued for access to individual tax accounts.

The T1013, RC59, and NR95 will be combined into one form called the AUT-01 Authorize a Representative for Access by Phone and Mail. This form will only be used to request offline access to individual and business tax accounts.

Owing Money to CRA

If you have filed, or are about to file and you owe money to the CRA, there are a couple of critically important facts you should keep in mind.

  1. If you have applied for any of the COVID-prompted benefit programs, and have done so through Direct Deposit, you may, unfortunately, be at risk.
  2. The CRA is delaying the payment of balances owing until September 1st, while not charging interest on all accounts except payroll accounts. This shouldn’t mean its okay to forget it until the fall, but rather, with no interest being charged on existing balances, its the best time to figure out ways to catch up, set aside funds, or find / earn funds to pay off the CRA
  3. Before we all know it, it will be September, and a few things will be certainties. Our year-end will be fast approaching for the 2020 tax filing season, any balances owing to the CRA will be due, and the Canadian debt and deficit will be through the roof. The Federal government will need those funds ASAP, and aside from raising taxes, they will likely begin aggressive collections of taxes owing. The quickest way the CRA can recover funds, is by issuing a Notice of Assessment (which has legal warning in it) and then taking those funds from your bank account.
  4. You have options outside of bankruptcy, consumer proposals, high-interest loans, or high-rate mortgages. Preparing in advance for this situation and working with the CRA can prevent unwanted or unexpected surprises.

 

The CRA’s collections staff have already been advised where to locate direct deposit information and how ensure it is accessible when full collections are permitted.

Don’t wait until it’s too late.

inTAXicating can assist with anything CRA-related. With over 10-years experience working in the CRA’s Collections department, we know things the CRA will never tell you.

 

Looking After Canadians Tax Interests During and After COVID-19

The COVID-19 pandemic has changed the way Canadians do business for now, for the immediate future and possibly forever. One thing, however, that has not changed forever, is taxation.

Yes, the government of Canada has pushed off some tax filing deadlines, paused Canada Revenue Agency (CRA) collections actions, and provided “benefit” payments to those in need (and those who don’t really need), but in the midst of this massive outlay of money, there are some key facts to keep in mind to keep you safe and secure.

1. File Your Taxes

Life will go on, businesses will slowly open, and people will get back to work. As of the writing of this post, April is coming to an end, and the June 1st Personal Income Tax (T1) filing deadline is fast approaching! While any funds owing to the CRA on those taxes are not due until after August 31st, if you are going to owe and your account is going to wind up in Collections, it’s best to start making payments as soon as you can.

Don’t wait until you’re back to what resembles a “normal” work day, to realize that you cannot file your taxes because the likely response from Taxpayer Relief is that you had plenty of time while self-isolating. Don’t take that chance. You don’t need to pay interest to the CRA for filing late. File on time!

2. Beware Direct Deposit

If you signed up for any of the federal government’s “benefit” programs, and in doing so, provided the CRA with your Direct Deposit information, then you need to ensure your tax compliance is a priority for you going forward.

By giving the CRA access to your bank account, and with the current deficit of $20 billion dollars set to double due to the benefit payments, the CRA is going to be in a hurry to recoup those funds. If you delay paying, they’ll issue a Requirement to Pay (Garnishment) and take the funds from your account.

3. Do NOT Ignore CRA

Once the pandemic is under some sort of control, and life goes back to “normal”, if you are ever contacted by the CRA’s Collections department there are two things you should not be do. 1) Do not ignore them – if you get a letter or a legitimate phone call – speak to them. 2) Do not Lie. With hundreds of accounts in their collection inventories, you are just a name or number to the CRA unless you lie to them. Then it gets personal… Tell the truth. They probably know it already anyways.

4. Pause Before Bankruptcy / Insolvency

Times are tough for everyone, but if you have debts which are tax-related, or if your inability to pay other creditors is based on a tax debt, then before exchanging your tax debt for bad credit, reach out to someone who knows how the CRA works with Canadians like you, and don’t jump into something just because advertising makes you think that this “government program” is available. There are lots of better “government programs” available which can help you without something negative happening to your credit in return.

5. Explore Resolution to Tax Debts / Compliance Issues

If you are behind on tax filing – personal or corporate – owe money to the CRA, or locked in a dispute with the CRA about amounts owing? Now is the perfect time to get filed up to date, apply for Taxpayer Relief, and get the truth about your tax liability and your chances of success. Take the time to invest in yourself and resolve your tax issues.

6. Questions? 

If you have questions, ask them in the comment section. If we can answer them, we will. If you leave a valid email and the question is specific, you’ll get an email. If the answer to your question requires more information, then you’ll be asked them, and if there is an opportunity to help you further, you’ll get the truth about what benefits you, not us, not the CRA.

The Horse and Pony Protection Association (HAPPA) Sought Voluntary Revocation of Charitable Status From CRA

The voluntary revocation of the registered charitable status of The Horse and Pony Protection Association (HAPPA) as a result of a CBC investigation could leave Canadian Taxpayers who donated to this organization owing back monies to the Canada Revenue Agency (CRA).

Almost one year ago, the CBC Investigates reported on accountability issues at the Newfoundland charity after former members of the Board of Directors raised concerns about the operation of the group, which at the time continued to take donations from the public 18 months after closing its flagship horse sanctuary.

As a result of strict confidentiality guidelines, the Canada Revenue Agency (CRA) are unable to say who made the request to have HAPPA’s charitable status removed, however after the CBC investigation was published, the website was removed, and further investigation turned up a significant breach in reporting requirements on behalf of the charity as it would appear that they filed incorrect information with federal charity regulators, claiming that all board members are “arm’s length” from each other.

According to the CBC, the only current active members of the Horse and Pony Protection Association (HAPPA) board are what appear to be a mother and daughter and what appear to be a long-time couple.

Family members and common-law partners are considered “not at arm’s length” by the Canada Revenue Agency — something that can affect how the agency assesses a charity’s status.

Charities are required to file a form outlining those relationships and the CBC reported that on HAPPA’s website they found their filing for the year ending December 31st, 2011 in which there were 8 directors listed as being “at arm’s length” from each other.

The significance of the revocation of charitable status is that anyone who donated to the charity after that date, will not be allowed to claim the donation as a deduction from their income. If they do so anyway, the CRA will re-assess them plus penalties and interest. The Taxpayer Relief program will not granted penalty and or interest relief to those who donated to this charity, and in situations like these, as there are no categories to apply under.

Once the revoked, the charity should have transferred all of its remaining property — including cash — to an eligible donee, or be subjected to a revocation tax equal to the property’s full value.

If you have donated to this organization and are concerned that the CRA may disallow the charitable receipt, it is best to not submit it with your taxes. You have 4 years to claim charitable deductions.