Multi-person, multi-year adjustments for related family members

In the past I would write a cover letter, and submit up to ten years of adjustments with an explanation of why the taxpayers adjustments should be filed together.

Usually it was because there was an allocation of credits or expenses that varied from what was originally filed. In order to successfully process the adjustment, I expected that the mail room would send the cover letter on with the adjustments to one person to process.

THAT IS NOT THE CASE. The protocol in the mail room is to tear apart the adjustments and send them off to process willy nilly. The cover letter will be attached to the top adjustment, but the other 10 years, for maybe 2 or 3 taxpayers will not be accorded an explanation.

At a spring CRA/CGA meeting I asked why this isn't possible and how I feel that professionals are not respected when the cover letters are ignored. This raised quite a furor and after the meeting the head of Surrey TO came over to ask me to work with them to find a solution.

During tax time I received a call from a senior representative who informed me that they have come up with a solution, but it requires the participation of professionals to make sure it works. The solution? Make sure that all of your information for each of the adjustments that you would normally put on the cover letter is included with the adjustment in the explanation box. In addition, ensure that you have recorded the SIN # of other adjustments that are to be processed simultaneously to take advantage of credit or expense apportionment. The second part of this is that they will now pull those adjustments to work on them together.

CRA also informed me that there was no inventory of adjustments in progress thru the office, and as a result locating other adjustments in progress was almost impossible. They have instituted an inventory of adjustments, similar to that implemented in 2006 for DTC applications, which prior to that weren't inventoried either. They started with the Surrey TO and plan to roll out the adjustment inventory across the country over the next while.

My recommendations. If you write a cover letter, copy the content to every adjustment, and include the SIN # for all related parties to the adjustment attempt.

I believe that if they actually implement the inventory of adjustments and they follow thru on their promise to read the T1ADJ, that they will maybe get it right the first time. Over the past five years I've had to resubmit many an adjustment in order for the order of operations to be handled correctly and so that all of the adjustment was actually processed.

Explaining to clients that their returns were only partially adjusted because the adjustments relied on other taxpayers adjustments to be processed first, and at times even finding that the adjustment of both taxpayers was rather circular in nature, so neither would get adjusted without the other, made the adjustment process particularly obnoxious. Hopefully this new processing will facilitate the ability to simultaneously adjust multiple related taxpayers returns without incident.

Here's to CRA.  Thanks for listening and taking action!