 |
|
|
|
|
|
|
|
|
||||
 |
||||||||||||
 |
 |
 |
 |
 |
||||||||
 |
 |
 |
||||||||||
|
|
|||||||||||
|
TAXFlash News from IncomeTaxCanada.net
:: Tax return errors are frequently errors of omission
:: Maroney on Money for May 18, 2002 Nobody’s perfect. Makes a person wish he or she was nobody doesn’t it? Some people may think they’re infallible but I’ve yet to meet a person incapable of making a mistake. Despite our best intentions, sometimes our cart falls off the rails and we have to direct our attention to getting it back on track. But when the cart is your tax return what’s a poor taxpayer to do? Tax return errors are frequently errors of omission. For example, in their haste to get their refund, taxpayers may file their tax return early in the tax season only to find another T-slip arrive in the mail later on. Or perhaps the taxpayer “forgot” to include some self-employed income received during the year from their home-based business or interest income they received on a personal loan. On a better note, the omission could be in the taxpayer’s favour such as an RRSP slip for a monthly contribution made on March 1, 2002, interest expense to earn investment income, an expense the taxpayer neglected to include in the calculation of self-employed earnings or possibly a tax credit that should have been claimed. Having discovered the error the question then becomes what to do to correct the problem? You could try the do nothing approach. Many taxpayers mistakenly believe that, because CCRA has already assessed their return, CCRA is unaware of a missing T-slip and the omission can simply be ignored. Not so. Despite having issued a Notice of Assessment based on your original filing, CCRA will eventually get around to cross-referencing the T-slips you reported with the slips included in their database and issue a Notice of Reassessment to pick up the additional tax that should have been paid with some arrears interest tacked on for good measure. So not only will the laissez-faire approach cost you money, it will typically only work where you’re faced with a missing T-slip or the like. It will not address a failure to report income from other sources or a claim for expenses.
Correcting an omission with the CCRA is best through the InternetHow about picking up the phone and, after a few hundred keystrokes, talking to a real live human being at CCRA? Forget it. Using the phone take an interminably long time and you’ll settle nothing in the process. Few tax problems can be resolved over the phone. Furthermore, the absence of a paper trail will make tracing your correction very difficult – not a good situation if problems arise later on. Writing a good, old-fashioned letter works, provided you remember how to prepare such a thing. If you choose this approach, skip the long dissertation about your hapless spouse or your hungry pet and cut to the quick. A short, simple explanation and a request to make the necessary change to your tax return is all that’s needed. This approach will do the trick, however, like snail-mail, it’s slow and written requests have been known to vanish into thin air on occasion. My advice is to avoid this approach if at all possible. You could use CCRA’s form specifically created to request changes to your personal tax return – Form T1ADJ T1 Adjustment Request. Although not a requirement to change a personal tax return, CCRA prefers that taxpayers use this form to expedite the process. As far as tax forms go this one is pretty simple, so you needn’t fear completing some incredibly complex form to request a simple change. Essentially, the form consists of an area where you indicate the line on your tax return that you wish to change, the amount that was originally shown on this line, the amount of the change and the corrected amount. In a subsequent area you are asked to explain the change. Not surprisingly, this area contains only a few blank lines so you’re expected to keep your explanation brief. Attach any supporting documentation you may have, drop the form in the mail or fax it and you’re done. You can obtain a copy of this form by calling the general enquiry line, submitting a request through CCRA’s website or, better yet, simply downloading the form from the same website. You can expect a Notice of Reassessment about eight weeks after filing Form T1ADJ. By far the simplest and fastest approach is to make use of the internet. Drilling down through CCRA’s website you’ll arrive at a page that more or less emulates Form T1ADJ. If you’re looking for the direct route try - ccra-adrc.gc.ca/tax/individuals/requests/menu-e.html.t address. This method is quick and easy and presumably secure. Finally, the issue of correcting errors on personal tax returns isn’t limited to the current year. You’re free to request correction of prior year returns as well. If you neglected to claim an expense or tax credit in a prior year, you can request that the omission be corrected and recover tax you shouldn’t have paid. CCRA states that they will allow such requests for as far back as 1985 so don’t limit yourself to 2001.
Free Tax Advice Article Submitted to Income Tax Canada.net exclusively by Jim Maroney Official details about this and other topics on income taxes can be found in English & Francais at www.ccra-adrc.gc.ca Income tax information offered by www.IncomeTaxCanada.net is done so without endorsement by Canada Revenue Agency (CRA) - l'Agence du Revenu du Canada (ARC) (formerly Canada Customs and Revenue Agency - l'Agence des Douanes et du Revenu du Canada CCRA-ADRC and formerly Revenue Canada – Revenu du Canada) or any Canadian government agency. The free advice is of a general nature for Canadian taxpayers seeking legal ways to reduce their personal and small business income taxes payable to the federal and provincial (or territorial) governments in Alberta, British Columbia, Manitoba, New Brunswick Newfoundland-Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Quebec, Saskatchewan or Yukon. Specific taxation situations vary from taxpayer to taxpayer, province to province, territory to territory. The free tax advice here is only a general guide. Canadians should always seek individual guidance on accounting rules and tax laws from knowledgeable accountants and lawyers. To prepare your income tax return online and NetFile your Canadian income taxes electronically in English or Francais, please visit www.ufile.ca or www.impotexpert.ca websites. Additional information on financial products and services for Canadians can be found at www.CanadianCreditCenter.com. |
||||||||||||
Jim Maroney