taxdetective-Sandusky-Register

Why would you send back the documents to the client before the return is even completed its re-assessment process instead of forwarding them to the next section for review?

I'm not amused.

CRA has a form, T1ADJ, for adjusting, line by line your requests for any changes to your tax return.  This form can be generated in the tax software we use, by creating an original return, taking a Snapshot, and then populating the form.  The software generates a form that ensures that every line that changed is recorded for easy cross checking with the re-assessment notice.

Heaven help you if you want to adjust two taxpayers whose adjustments rely on each other's adjustments to be processed at the same time.

You want to adjust someone's return, or let's say you want to adjust more than one person's return...and what happens on the one return affects what's eligible to be claimed on the other person's return.  Let's use an example, where because one spouse has been admitted into a care facility, you are asking for the pension split to be reversed.  This reversal results in a spousal transfer of unused credits from one spouse to the other, which is new.  So, you submit not only a cover letter with the two adjustment forms for the two taxpayers, but you also submit a Schedule 2 for spousal transfers.  And you wait. 

What happens at CRA's processing centre is that the two returns are separated and go off to two different places to be processed, not at the same time.  Let's say that the spouse who is supposed to get the credits that result from this adjustment, doesn't qualify for those credits yet, because the first spouse hasn't had their return adjusted.  The processing staff pumps out a re-assessment, ignoring the request for the spousal transfer, not checking to see if the other spouse's return has been processed yet, and your taxpayer gets an invoice to pay way more than what you said would be owing.  The clients pay, mostly because they spend all day at the care home and have no time to deal with paperwork, and don't even check to see if what you said they would owe is what was assessed.

It's only a fluke that they happen to give you back the NOA's and you check them against what you submitted, and find, to your horror that none of the spousal transfers occurred, and that the client has overpaid $2,000.

There does not appear to be a quality control assurance process at CRA to ensure that what you request to be amended is actually amended.

Moral of the story, check every re-assessment, as it seems there is no guarantees that what you requested is what was amended.

If you are self-employed, these links are useful. Last year I presented a workshop on completion of T2125 and haven't had time to go back to visit that materials.

If you are looking for a speaker for your business group, this presentation might be just what you're looking for.

If it is, contact me to book a workshop in the spring.

I recently attended an www.ipbc.ca online workshop on tax for truckers. The presenter, Robert Scheper, THR Consulting Group Ltd., explained the disparity in expense claims between self-employed truckers, and truckers who work as employees, whether for their own company or someone else. It was very interesting.  He's written a book "Making your Miles Count: taxes, taxes, taxes.

There is another challenge Robert did not mention in the workshop, and it's one that's become interesting for contractors in the IT industry who contract themselves out under their own corporation, much like truckers do as owner/operators.  They may not meet the criteria to claim the small business deduction, and they may not be able to claim other business expenses, because they are considered a personal services business if they don't have at least five full time employees, plus other criteria, which you'll find in my Personal Services Business webpage.

I found an hour tonight to research and create a list of links from the CRA website to explain the differences.  Basically, an employee is able to claim a flat rate reimbursement for certain expenses, whether or not they spent the money.  As an incorporated employee, you would deduct those expenses prior to issuing a T4 for net earnings. How much less you'd pay tax on, would depend on how frugal you are.If you live on peanut butter and jelly sandwiches, it sounds like there could be a distinct advantage to incorporating. I'm not recommending anything here, just saying do the math, and be wary of other rules, like the Personal Services Business rules. 

If your corporation is just a wall between you and the company you work for, the personal services business rules may apply. If that's the case, your company can't deduct anything you wouldn't deduct if you were an employee who had a contract directly, and everything else the company paid for would end up on your T4 as a benefit, plus anything you left in the company as retained earnings would end up being taxed at the highest corporate tax rate. On the Canadian Tax Foundation LinkedIn Group we've been having a discussion about PSB's and their impact.  You won't find anything on the CRA website unless you know what to look under, as PSB's don't get a direct mention.  I've put a link to my other webpage on that topic on this trucking page.

Other considerations: WCB may deem that it is the company that hires your company that has to pay the premiums for WCB. Plus, as a corporate employee, you don't qualify for EI, and the new self-employed EI rules allow for self-employed persons to pay in and claim EI benefits.

If you like to read about tax, or you're concerned you won't meet your non-verifiable hours of PD by the end of the year, you'll find lots more links pages like this one under my TaxLinks Portal subscription, which has an annual expiry date of September 30, and sells for $30 plus tax.   

Click here to buy a subscription now to start reading more about tax!

Did you attend more than 2 conventions this year?  Here's the link to the rules.

The ground just shifted under your feet... Check out the transitional rules in the e-Alert from McCarthy Tetrault

And... for more on NPO's, visit my NPO website page found under my Complimentary Links at www.taxdetective.ca.  This page includes a report from the panel discussion I hosted for my CGA Chapter (right at the top). The discussion was about NPO compliance with various laws, not just payroll, and sales tax, but Income Tax too.  Just because you're an NPO, doesn't mean you don't have to report and in some cases, on more than one form.

Did you know that NPO's may be required to file a T2 to prove they aren't profitable and that they may be required to prove they aren't profitable by filing a T2 every year?  That's in addition to their other reporting.

If you are self-employed,

you'll be paying $178.20 more for CPP contributions

...of course, that's only if you're earning contributing the maximum because you earn $50,100 in 2012.

Good luck with that.