Changes to the CRA’s RC59 Business Authorization Form

The Canada Revenue Agency has announced to tax preparers and representatives that if they wish to have online access to a business client’s tax information after May 15, 2017 they will have to complete the authorization request in the Represent a Client section on the CRA web site.

In order to do this, tax representatives have to log into Represent a Client and select “Review and update” from the Welcome page.  They then select “Authorization request” at the bottom of the “Manage clients” tab and follow the instructions.

Once the request is complete, tax representatives will need to print the signature page for their client to sign. Once it is signed, a scanned copy of the document may be sent to the CRA using its submit documents feature.

Using this method will allow tax professionals to gain access to their business clients’ information in five days or less instead of the 15 days it currently takes with form RC59.

If, however, you still prefer your current process, you can still use form RC59 to request access to your business clients’ information by telephone or mail.

And if you need to have authorization in less that 5 days, you should reach out to us here at inTAXicating, because with almost 11-years’ experience working in the CRA’s Collections department, we know how to get that authorization in the hands of someone in minutes!

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Proposed Changes to CRA VDP Should Go Further – Union.

The changes proposed by the Canada Revenue Agency (CRA) to the Voluntary Disclosures Program (VDP) have been described as an improvement, but no where close to what is needed to reduce tax evasion, according to The National Union of Public and General Employees (NUPGE) – one of Canada’s largest labour organizations.

VDP, as we all know, gives Canadian taxpayers who made mistakes or hid income on their taxes the opportunity to voluntarily come forward to the CRA and declare or correct the mistakes without fear of prosecution, and gross negligence penalties.

Some, however, feel the VDP has been overly generous in cases such as the deal offered to clients of the KPMG Isle of Man tax scheme.  The same people also believe that the CRA’s VDP has failed to differentiate between those who simply made errors in their tax return and “wealthy individuals” who wilfully evaded taxes using offshore tax havens.

While it can be very difficult to distinguish between someone who willfully evades taxes from someone who tried to but got caught, it is quite clear regarding the use of tax havens because either you report your offshore income (legal) or you don’t (illegal).

The union strongly believes that those caught “using a tax haven should be treated more severely than innocent mistakes.”

The Minister suggested that releasing the names of the participants and their advisors should be required although the CRA has always kept track of both scenarios once the disclosure has been approved.  Where a taxpayer received assistance from an advisor in respect of a VDP application, the name of that advisor should generally be included in the application.

The union expressed concern that the proposed changes fail to restrict access to voluntary disclosure in cases where leaks about tax havens are likely to provide the government with lists of Canadian account holders.  They feel that at that point, “it should be too late for wealthy individuals to take advantage of the VDP if they are already likely to be exposed.”

While I do agree the government should look at how they treat those who have not filed differently than those who store money offshore in hopes of evading the paying of taxes, I do not agree that in each and every case it is the “rich” or “wealthy” who are doing it.

In fact, I have encountered many Canadians of all races, religions and levels of income who have stuffed away money overseas and they range from being super-wealthy, to single parents on OAS or pension income who can barely make their rent.  It’s not just a “wealthy” issue.

Sure, it doesn’t read as well if its not an attack on the “rich” and yes, there are some who have complained that nowadays it is the unionized worker who is the “rich” in Canada, which is why I prefer to not paint everyone with the same brush, and group by filers and non-filers.

Under the program, any use of a tax haven scheme should mean less relief than for other forms of non-compliance, which makes a lot of sense.

For the union, they believe that; “the majority of Canadians feel that there are two tax systems, one for the rich and one for the rest of us.  It is very important for the government to get this right.”

NUPGE: Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good.

Link to original article:

https://www.nupge.ca/content/proposed-changes-canada-revenue-agency%E2%80%99s-voluntary-disclosures-program-should-go-further

 

 

Tax Freedom Day, 2017. Working For Ourselves Now… Theoretically.

June 9, 2017 is Tax Freedom Day!

What is Tax Freedom Day?

Does it really exist?

What might it mean to me?

In their annual report, the Fraser Institute, a Vancouver-based think-tank added up all forms of taxation — from income and sales taxes, to more hidden costs such as gasoline taxes, carbon taxes, tobacco and alcohol taxes, municipal property taxes, payroll taxes and even CPP and EI premiums — to come up with a figure for the overall tax burden for Canadian families, and this year, they have determined that the average Canadian family with two or more people will earn $108,674 and pay 43.4% in taxes.

Based on the Fraser Institute math, 100% of income earned thus far in 2017 has been gobbled up by government in taxes, and only now are you working for yourself until the end of the year.

Last year, in 2016, it came a day earlier, on June 8th and because of variances in all types of taxes in different provinces, Tax Freedom Day differs across the country, ranging from May 21st in Alberta to June 25th in Newfoundland and Labrador.

One of the reasons for the extra day is to account for the fact that Canadians’ tax bill has risen, on average, by $1,126 this year, according to the Fraser Institute. Of that increase, $542, came from higher income taxes, but sales taxes (up $311) and other energy-related taxes (up $204) also took a bigger bite while liquor, tobacco, amusement, and other excise taxes, payroll and health taxes, and import duties all decreased.

The Ottawa-based Broadbent Institute, however, disputes the math behind the annual Fraser Institute report, because the Fraser Institutes uses “average” tax rates instead of median tax rates.

To come up with its “average” tax rates, the Fraser Institute simply adds up the amount of cash income earned by a taxpayer, and then divides that by the number of people. It then takes “outliers” and excludes those extremes from the calculations.

The Broadbent Institute said that skews the numbers in a certain way, and a better way than the average would be to use the median — the exact mid-point between the top and bottom and the rationale behind this surrounds the fact that the average income of Canada will always be higher than the median because of the small number of very high-income earners in Canada, which skews the average income amount higher.

Adding up only federal and provincial income taxes, the “average” Canadian in prime working years (between 25 – 54 years of age) earned $62,600 last year, and paid $12,000 in taxes, or around 19%, according to tax filings. Using the Broadbent method of calculation, the median for that group earned $50,500 last year and paid $7,000, or 14%, in income taxes.

Another main difference is that the figures used by Fraser Institute report doesn’t just include income taxes. It tabulates all sorts of fees that taxpayers don’t directly pay, such as payroll taxes and resource royalties that companies pay when they extract things like oil, minerals and timber.

It also only considers what it calls “cash income” on the other side of the ledger. That excludes employee benefits, investment income from pension plans and other forms of cash income.

The Fraser report also takes into consideration indirect costs like payroll taxes and other taxes which businesses pay in their calculations because even though businesses pay these taxes directly, the cost of business taxation is passed on to Canadians.

So now that we’re working for ourselves, let’s push all levels of government to treat our tax dollars more wisely, and let’s earn as much as possible (while continuing to pay our taxes on time!)

Insolvent or in Tax Trouble? Don’t Let the CRA Decide. You Decide!

Are you Insolvent or do you just have Tax Troubles?

Don’t let the CRA decide this for you… They want you to do what is easiest for them!  You need to do what is best for you!

In my experiences which included almost 11-years working in the Canada Revenue Agency (CRA), you should never allow the CRA to decide whether you can fix your tax problems or whether you should go bankrupt.

From the stand-point of a CRA Collections officer, going bankrupt is great because it removes the account from their inventory of accounts to collect / resolve.

Your file disappears from their inventory and re-appears in the CRA’s Insolvency Unit inventory.

From the perspective of the Collections Department, it’s case closed!

 

There are 3 ways a CRA Collections Office resolves one of their accounts;

1) Collect it / fix the compliance issue(s)

2) Write it off because they cannot collect it

3) Move the account to the Insolvency unit

 

Go Bankrupt!

The CRA’s Collections Officers are not allowed to tell you to go bankrupt. In fact, they are taught in their training that they are not allowed to do that, and that sentiment is reinforced at all future training they attend.  As someone who trained CRA Collections staff for 5-years, I can confirm this fact.

Collections staff are not allowed to even suggest that you go bankrupt.  They might confirm it, but that’s all they can do.

What CRA Collections can do, however, when they feel you are insolvent, is to force you into bankruptcy via their collection actions, which include but are not limited to;

  1. Bank garnishment
  2. Wage garnishment
  3. Lien on a property
  4. Enhanced garnishment to accounts receivables (in the case of a business)

All the while, why applying these garnishments, the CRA refuses to release the hold on the accounts.

They freeze every source of income that you might have and you are faced with the decision to come up with the funds to pay them, or file for a proposal or an assignment in bankruptcy.

In some cases, a bankruptcy is unavoidable and the right solution, but not in every case, which is why I strongly recommend speaking to someone who is looking after your interests first and foremost.

There are tax-related companies who are fronts for insolvency firms, so they might appear  to want to help you, but they want you to file for bankruptcy, and there are other tax-service firms which gather your information and they unable or unwilling to help you, pass you along to a trustee.

You don’t want or need either of those.

You need a tax firm which has the experience in CRA’s collections, and who have the relationships with not only Insolvency firms, but mortgage brokers, reputable accountants and investment professionals so that you’re options are laid out for you to decide the best option.

Not the CRA.

In order to resolve your tax issues you need to disclose the details so your options can be determined, and you need your tax help to do the same.

Ask your tax-help the following questions;

  1. Are you committed to finding me a tax-solution first.
  2. If that solution is not going to be accepted by the CRA, what other options do you feel would work.

Don’t be weary if a firm wants to charge you a small fee to diagnose and plan out your solution.

You should be weary if they want to charge you a significant amount of money to diagnose it  and not give you a plan.  If they want to keep the plan a secret, and not educate you along the way, it’s because there is no plan.

Likely their solution it to drag you along the process knowing that the CRA will come along and lower the boom and then suggest to you that your only option is to conveniently have them file bankruptcy for you.

Don’t ask the CRA if you should go bankrupt.  You might not like the answer.

If you owe money to the CRA and you’re not sure if the debt is a tax matter which can be resolved, or if bankruptcy or a proposal are better options, just ask!  Send an email to info@intaxicating.ca and let’s talk!  We’re here for you.

Insolvent or Tax Troubles?  Don’t Let the CRA Decide!

In my experiences which includes almost 11-years working in the Canada Revenue Agency (CRA), you should never allow the CRA to decide whether you can fix your tax problems or whether you should go bankrupt.

From the stand-point of a CRA Collections officer, going bankrupt is great because it removes the account from their inventory of accounts to collect / resolve.

Your file disappears from their inventory and re-appears in the CRA’s Insolvency Unit inventory.

From the perspective of the Collections Department, it’s case closed!

There are 3 ways a CRA Collections Office resolves one of their accounts;

1) Collect it / fix the compliance issue(s)

2) Write it off because they cannot collect it

3) Move the account to the Insolvency unit

Go Bankrupt!

The CRA’s Collections Officers are not allowed to tell you to go bankrupt. In fact, they…

View original post 530 more words

Get Ready to File your Personal Income Tax Return (T1). Make Sure You Have All Your Slips Accounted For!

Are you getting ready to file your Personal Tax (T1) Return here in Canada to the Canada Revenue Agency (CRA)?

Are you chomping at the bit to get your refund?

Before you push forward and get that return in, make sure to check that you have received all the tax slips you should be getting?

Then check again.

If you forget a tax slip – T3, T5, T4, T4A, etc – the CRA does not accept the argument that you just “forgot it”, but rather they believe that you have willingly omitted the slip in order to reduce the amount of income that you are reporting, so you end up paying less taxes.

The penalty for missing slips can be quite steep.

Forget to include slips year over year and the penalty increases.

At inTAXicating, we encourage our clients to keep track of slips expected and slips received through a spreadsheet based on the slips received in the previous year, and any transactions in the current year which will result in the generating of a tax slip.

In the inTAXicating Personal Tax Spreadsheet, we go further by identifying which member of the family the slip belongs to, when it was received the previous year and which institution produced the slip.

Remember that slips produced by institutions are also sent to the Canada Revenue Agency (CRA) so they know what you should be filing before you do unless you keep track.

Then take this list, and staple it to a box or file folder which is kept in the house / place of business for all potential tax-related materials for the year.  At tax time, it’s an easy checklist to make sure all is in order and that when filing, everything is included.

If, however, you have forgotten to include a slip, the Canada Revenue Agency (CRA) will eventually use their copy of the slip notify and re-assess you if you have not had the time to amend your return.

If you don’t get to the CRA first, the next thing you know, you likely will have a balance owing and along with the penalty for missing the slip, the debt is accruing interest.  It can easily escalate from there!

A little organization will reduce the amount of penalties and interest paid to the CRA.  As the Tax Manager for Computershare Trust Company of Canada / Computershare Investor Services, I was responsible for the preparation, filing and submission of tax slips to the millions of investors Computershare kept track of, so I understand more than anyone the importance of getting slips out to the holders on time, and accurately, and then to the government on time and without penalty.

So here is a copy of my list of slips, their mailing date from the provider.

RRSP – If you were one of the many who used the March 1st deadline to make your contribution for the previous year, then you would be receiving that slips beginning March 15th.  All other RRSP contributions which were made prior to the 60-day extended period saw their tax slips mailed beginning at the turn of the calendar.  They are T4RSP slips and RL2’s for residents of Quebec.

T5 / RL3 and NR4’s begin to get mailed around January 15th.

T4RIF / RL2 withdrawals from a RRIF, are mailed the 3rd week of February.

T5/RL3 for investment interest income coming from a mutual fund are mailed the 3rd week of February.

T3 / RL16 reporting dividend income from mutual funds are mailed by the 3rd week of February.

Receipt of contribution from an estate rolling over funds to a spouse produce a T4RSP / T4RIF / RL2 – issued for receipt of contributions from an estate rolling over funds to a spouse – sent  out the first week in February

T4A / RL1 are issued for RESP withdrawals and are produced and mailed the first week in February.

NR4’s showing income for non-residents of Canada are mailed the 3rd week in February.

If during the year you received Employment Insurance (EI), Old Age Security (OAS) or Canada Pension Plan (CPP) payments, you can follow this 3-step process from the government website to make sure everything is in order and get your tax slips online directly from Service Canada.

Happy filing.

inTAXicating Tax Services for all your tax needs and specializing in providing solutions to your tax problems.

info@intaxicating.ca

 

Is the Canada Revenue Agency (CRA) looking after your best interests?

The Canada Revenue Agency (CRA) does an adequate job at what they are mandated to do, and that is to collect tax revenue and tax information from taxpayers while using their debt management (collections) division to collect from the unwilling or pre-occupied.

From the inside the CRA trains the collectors to understand that those who do not file or pay are “debtors” and that actions should be taken to bring these debtors into compliance right away.

They are also trained that if you can collect from – or force into bankruptcy – these individuals and corporations, that you are doing them a service but forcing them to make decisions that they are unwilling or unable to make on their own.  You’re doing them a favour by putting them out of business.  You stop the “bleeding”.

Those of us who have worked in the “real world” understand that behind the account numbers and names there are real people who are trying to run real businesses and who find taxation either complicated or overbearing and cannot comply with the rules and regulations.

Since failure to comply with some tax laws can result in criminal actions, I believe that the tax rules are complicated and with little forgiveness on the party of the government, one small mistake can shut a business down, or result in significant monetary penalties.

The most frustrating part, I find, is trying to explain to the CRA that their actions – while justified internally – have serious implications on more than a business or a person.

Take for example one of my clients;

I spent the last week in serious discussions with just about everyone at the Winnipeg Tax Services Office, trying to convince then that if they keep a garnishment on a corporate bank account that they will shut down this corporation.

The corporation’s issue, which the collector, team leader, technical advisor, section manager and director felt justified these actions?

They were in collections for 2-years. They had a trust exam and fell behind.

GASP.

I mentioned the accounts I am resolving for them right now involving people and corporations in collections for 15-20 years. 2-years is a drop in the bucket.

I also let them know of the tragic circumstances surrounding this corporation involving a death, an illness and a mass exodus of employees which left one director now trying to keep his corporation alive. That was until the CRA placed the garnishment and wanted to shut down the corporation.

So the collector – new – and the technical advisor – new – find words to justify their actions and the director did not return my calls or letters (yet, apparently) did not feel compelled enough to get back to me and intervene.

The CRA’s solution instead of putting 3 employees out of jobs, and a family man without income to support his young family was to drag out the process and ask for a payment arrangement on a corporation with no income… From their actions.

So whose interests are the CRA looking after?

Theirs?

No.

By not allowing the corporation to operate and earn income they are going to lose out on revenue to pay their liability.

Or when the CRA finally “allows” the business to continue operations and removes the Requirement to Pay from the business bank account, the CRA fails to take into consideration that the business will now need to back back rent, phone bills, internet bills, and likely replenish inventory before they have any funds abailable to pat themselves or the CRA anything.

Is the CRA then looking after the best intentions of the corporations?

Heck no!

By not being able to operate and by stringing along the director, this corporation is bleeding a slow death. Customers are losing faith, employees are quitting or being laid off, and with no money, the corporation cannot afford to fight any more.

It becomes very clear at this point that the CRA is looking after no one’s interests.

The CRA takes actions which are told to them from people who have no concept of reality.  Their actions are destructive and cause more damage than good, most of the time.  They don’t understand that sometimes, no action is the very best action.

Frustrating?

Absolutely it is.

In our specific case, after one whole week of trying to talk sense into the CRA, the collector agreed to lift the garnishment today.  Instead of receiving a payment, however, the CRA will get a plan on how this corporation plans to recover from a poorly executed collection action which got the CRA one payment and now nothing for at least a month.

At the end of the day, because of our involvement, everybody is going to win, but my job would be so much easier if the CRA understood that they need to listen to the experts and let the account resolve itself.

We all would be so much further ahead – the corporations director might have actually slept in the past month – if the CRA had slowly taken actions to remedy the situation rather than freezing the business bank account and not telling the business owner why they were trying to shut him down.

I’m looking out for the corporation’s best interests.  I’m also looking after the best interest of the CRA because we all need them on our side, and not against us.

Someone has to!

TTC fares to increase! Don’t forget the CRA’s Public Transit Deduction.

The Toronto streetcar system is an extensive t...
Public Transit (Photo credit: Wikipedia)

Whether you like it or hate it, it is almost a certainty that TTC fares will be increasing in the City of Toronto at some point later this year or early in 2014.  The City of Toronto requires additional funding in order to FINALLY start building subways in the city and the TTC needs extra funds to improve it’s crumbling infrastructure.

Either way, if you are a user of public transit, you need to be aware that you may be eligible for the Canada Revenue Agency’s Public transit deduction.

Eligibility:

These passes must permit unlimited travel within Canada on:

  • local buses;
  • streetcars;
  • subways;
  • commuter trains or buses; and
  • local ferries.

You can also claim the cost of:

Shorter duration passes if:

  • each pass entitles you to unlimited travel for an uninterrupted period of at least 5 days; and
  • you purchase enough of these passes so that you are entitled to unlimited travel for at least 20 days in any 28-day period

Electronic payment cards if:

  • the card is used to make at least 32 one-way trips during an uninterrupted period not exceeding 31 days; and
  • the card is issued by a public transit authority that records and provides a receipt for the cost and usage of the card.

Who can claim these deductions?

Only you or your spouse or common-law partner can claim the cost of transit passes (to the extent that these amounts have not already been claimed) for:

  • yourself;
  • your spouse or common-law partner; and
  • your or your spouse’s or common-law partner’s children who were under 19 years of age on December 31, 2012.

But I do my own tax return.  Where does this go?

It goes on line 364 of Schedule 1, Federal Tax, enter your total public transit amount.

Amount shown on a T4 slip – Enter the amount from box 84 on line 364 of Schedule 1.

Note: If your employer paid your public transit pass, it is a taxable benefit included in your employment income.

Reimbursement of an eligible expense – You can only claim the part of the amount for which you have not been or will not be reimbursed. However, you can claim the full amount if the reimbursement is included in your income, such as a benefit shown on a T4 slip, and you did not deduct the reimbursement anywhere else on your return.

Always remember that if you are going to claim this amount you must keep your Supporting Documentation – receipts and transit passes – In case the CRA asks to see them at a later date.

The CRA will need the following in order to support your claim;

Your transit pass must display all of the following information to support your claim:

  • an indication that it is a monthly (or longer duration) pass;
  • the date or period for which the pass is valid;
  • the name of the transit authority or organization issuing the pass;
  • the amount paid for the pass; and
  • the identity of the rider, either by name or unique identifier.

If the pass does not have all of this information, you will also need to keep receipts, cancelled cheques or credit card statements, along with your pass(es), to support your claim.

The CRA will accept receipts (letters) generated by employers or Employer Pass Program Coordinators for employer transit pass programs.  The receipt should note the purpose, exact amount received, date of payment, and name of the payee.

Generally, the CRA will NOT consider a bank statement to substitute for a valid receipt, however, if your bank statement clearly indicates the purpose of the debit (for example, Employee FareCard), they will accept it as support for your claim.

If your current accountant does not ask you whether you take public transit, then you need to think about what else they are ignoring, and what other deductions you may be missing.

#Intaxicating

Passionate about Tax.  Passionate about helping people.

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A link to the CRA website to verify this information is below.

Line 364 – Public transit amount