Posts Tagged ‘Calgary’

What to expect when the Canada Revenue Agency calls you

It is possible that the Canada Revenue Agency (CRA) will contact you by phone for legitimate tax reasons.

During such phone calls, the CRA officer must validate your identity and therefore will ask for certain personal information, including your date of birth, your address, and in the case of a business some account specific details.

The CRA will not:

The CRA may:

·         ask for information about your passport, health card, or driver’s licence

·                  validate your identity by asking for certain personal information, including your full name, date of birth, your address and, in the case of a business, details about your account

·         request personal information by email

·         notify you by email when new mail is available for you to view in CRA secure portals such as My Account, My Business Account or Represent a Client

·         email you a link requesting you fill in an online form with personal or financial details

·email you a link to a CRA webpage, form, or publication in response to your telephone enquiry

·         send you a link to your refund by email or text message

·send you a notice of assessment or re-assessment by mail or notify you by email when it is available to view in My Account, My Business Account, or Represent a Client

·         setup an in-person meeting in a public place to take a payment

·ask for financial information such as the name of your bank and its location

·         demand immediate payment by prepaid credit card

·request payment for a tax debt through any of the CRA’s payment options

·         threaten with immediate arrest or prison sentence

·take legal action to recover the money you owe if you refuse to pay your debt

 

Before giving money or personal information:

  • verify the caller’s authenticity
    • You can note the caller’s name, phone number, and office location and tell them that you want to first validate their identity.
    • You can then verify that the employee works for the CRA or that the CRA did contact you by calling the CRA at 1-800-959-8281 for individuals or 1-800-959-5525 for business.
  • verify your tax status and make sure your address and email are up to date
    • You can confirm this information with the CRA either online through the CRA secure portals, or by calling the CRA at 1-800-959-8281 for individuals or 1-800-959-5525 for business.

When in doubt, ask yourself

  1. Did I file my tax return on time? Have I received a notice of assessment or re-assessment indicating a tax balance due?
  2. Have I received previous written communication from the CRA by email notification or mail about the subject of the call? Does the CRA have my most recent contact information, like my email and address?
  3. Is the requester asking for information I would not provide in my tax return or that is not related to my debt with the CRA?
  4. Did I recently submit a request to make changes to my business number information?
  5. Why is the caller pressuring me to act immediately? Am I confident the caller is a CRA employee?

CRA phone interactions generally come after written communications, such as an email notification to check your online mail or a letter, and are made under special circumstances. For example:

  • If you have a tax debt, a collections officer may call you to discuss your case and request a payment. In this case, you may need to provide some information about your household financial situation.
  • If you have not filed your income tax and benefit return, a CRA officer may contact you by telephone to ask you for the missing returns.
  • If the CRA has questions about your tax and benefit records, or documents you have submitted, a CRA officer may contact you by phone for further discussion.

To report scams

To report deceptive telemarketing, contact the Canadian Anti-Fraud Centre online at www.antifraudcentre.ca or toll free at 1-888-495-8501. If you believe that you may be the victim of fraud or have given personal or financial information unwittingly, contact your local police service, financial institution, and credit reporting agencies.

 

 

Principle Residence Exemption

Did you sell your house in 2017?

Commencing with sales in the 2016 tax year, you must report basic information, such as the date of acquisition, the proceeds of disposition (the sale), and the address, on your income tax and benefit return when you sell your home to claim the full principal residence exemption.

You do not have to pay any tax on the capital gain when you sell your home provided it was your principal residence for all the years that you owned it and you did not use any part of it to earn income.

A property may qualify as your principal residence for any year that you or certain family members lived in the house, if none of you designated another property as a principal residence for that year.

File a tax return and claim the principal residence exemption for the capital gains.

CRA Project – Third-Party Information Request to disclose Canadian Square sellers

CRA requested Square (service that allows you to accept  payments, using a reader that plugs into your iPod touch, iPhone, or iPad) to disclose information about Canadian Square sellers who processed greater than CAD$20,000 on Square during any of the calendar years 2012, 2013, 2014 or 2015; or during the period of January 1, 2016 to April 30, 2016.

Square will share with the CRA the following information associated with the Square account:

 The name(s) and address(es) associated with the seller’s Square account
The associated financial institution(s) name, transit number and account number
The number of Square Readers and Stands linked to the account
The total monthly aggregate of transactional information between the seller and their customers
The number of employee permissions granted through employee / location management functionality
Square encourages affected sellers to verify their tax statements with the amounts indicated on their Square Dashboard to ensure they have accurately reported their commerce activities.

What are the pensionable earnings for CPP in 2014?

CPP Pensionable Earnings Rise for 2014

The maximum pensionable earnings under the Canada Pension Plan (CPP) for 2014 will increase to $52,500 in 2014, which is an increase from $51,100 in 2013, while the basic exemption remains at the current $3,500 level.

 

While employee contribution rates remain unchanged at 4.95% and the self‑employed contribution rate will remain unchanged at 9.9%, maximum contributions will still rise for everyone.

The maximum employer and employee contributions are $2,425.50 each and the maximum self-employed contribution will be $4,851.00. The maximums in 2013 were $2,356.20 and $4,712.40.

What changes come with the revised T1135?

The Revised T1135 – This Could Get Ugly for Taxpayers, Investment Advisors & Accountants

 

The T1135


To provide some symmetry to my return to blogging, I start off where I left off. You may recall that my last blog discussed the revised T1135 Foreign Income Verification Form (“T1135”). In that post I discussed the new reporting requirements, which now includes the following:

  • The name of the specific foreign bank/financial institution holding funds outside Canada
  • For each foreign property identified on the T1135, the maximum funds/cost amount for the property during the year and cost amount at the end of the year (the old form only required the cost amount at the end of the year if at anytime in the year you exceeded the threshold)
  • For each foreign property identified on the T1135, the income and capital gain/loss generated (the old form asked for total income or gains from all foreign property in one lump sum)
  • Specific country where each foreign property is located (the old form had pre-defined groupings based on each continent for all the property on an aggregate basis) 

 

The T3/T5 Exclusion


I concluded my July 2nd post by saying that “There is one important saving grace to these rules. If the income for a foreign property is reported on a T3 or T5, the details do not have to be reported. This will exempt most U.S. or foreign stocks held with Canadian brokerages; but the details for property held outside Canadian institutions will be burdensome”.

While the above statement is essentially correct, the CRA’s administrative position in regard to this exemption may prove problematic. You see, the CRA is saying that even where you hold a foreign stock or bond in an account with a Canadian brokerage firm that issues a T3 or T5 for that account; if that security does not pay income in the form of a dividend or interest and thus is not reported on the T3 or T5, the specific stock or bond will not be excluded and will have to be reported in detail on the T1135. This position was recently confirmed by a CRA representative to one of my tax managers.

 

In addition, it must be noted you will still be required to file the T1135 if the total cost amount of your foreign holdings exceeds $100,000 at anytime during the year, even if dividends or interest is reported on a T3 or T5. See the example discussed in this article by Jamie Golembek, where the CRA representative states you would still need to file the form and check the reporting exclusion box for the stocks reported on a T-slip.

The Tax to English Version

 

So what does this all mean in English? Say you own 25 foreign stocks held at a Canadian brokerage that have a total cost of $150,000, but five of those stocks do not pay dividends or fail to pay a dividend in that year. As we now understand the CRA’s position, even though the 20 dividend paying stocks do not need to be individually listed, the 5 non-dividend paying stocks must be reported. Thus, you will need to tick the box on the T1135 Form to claim the exclusion for the 20 stocks, but you will also have to determine the highest cost amount of each of the five non-excluded stocks during the year (troublesome if you bought and sold) and the cost amount at the end of the year in addition to providing other information such as country location and capital gain or loss.

In the example above, if all 25 stocks pay dividends that will be reported on a T3 or T5, you will still have to file the T1135 and check the exclusion box; however, you do not need to report all the details of each individual stock. Clear as mud.

For people with only a few foreign holdings, this is not much of an issue. However, I have clients who are in private client programs with the large Canadian financial institutions that own 20-50 shares of multiple foreign stocks or have private managers running their money who have upwards of 50 U.S. and foreign stock/bond holdings. This means that the client, the advisor, or their accountant, or probably a combination of all three must review all these stocks to determine which ones are exempt from reporting because they paid a dividend or interest that was reported on a T3 or T5 from those that did not have any income reported on a T3 or T5.

My tax manager said the CRA representative he spoke with, gave him the impression that the CRA’s position has not gone over very well. Let’s hope the CRA simplifies life for many Canadians and just exempts any foreign security held at any Canadian Institution whether income is reported on a T-slip or not.

 

This article is posted on The Blunt Bean Counter website.  It provides information of a general nature and should not be considered specific advice, as each reader’s personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the article.

What is my risk as a director of a corporation?

Director’s liability

Being a director of a corporation carries a lot of responsibility, as well as a certain level of risk. The harshest penalty available in our society — criminal sanction — can befall a director if he or she acts fraudulently or negligently. This reflects Parliament’s view that, under subsection 227.1(3) of the Income Tax Act, directors must “exercise the degree of care and skill that would be exercised by a reasonably prudent person in comparable circumstances.”

At common law, judges had long held that a director was to be judged according to his or her particular knowledge and experience. But that old common law standard of subjective liability was seen as insufficient protection for the public. To protect the public generally and shareholders specifically, Parliament decided to impose a higher standard, holding directors to the standards imposed on comparable professionals. So, Parliament created objective liability through the insertion of subsection 227.1(3) into the Act.

This had the effect of raising the standards of directors to the level of the reasonable, professional director who shares the characteristics (education, experience etc.) of the one under scrutiny.

To avoid liability, then, a director need only show that he or she acted the way a reasonably prudent individual in similar circumstances would have acted. That means a director is justified in trusting his or her officials to execute their duties according to corporate policies — if a reasonable person in that position would not have grounds for suspicion.

Generally, a director will be personally liable only if he or she assists the corporation in committing an offence or is grossly negligent in his or her dealings for the company. So, the director needs to participate actively in the offence.

Even if the corporation is not prosecuted or convicted for an offence, the director can still be held liable. If the corporation has committed an offence under the Act and the director participated with knowledge in some way in the commission of that offence, then the two elements of culpability are established. A director may be convicted, but only if it is established he or she had the mens rea (that is, the “guilty mind”).

Directors may also be liable for gross negligence, which is a greater departure from the errant behaviour associated with regular negligence. In Venne v The Queen (1989), the court stated: “Gross negligence must involve a high degree of negligence tantamount to intentional acting, an indifference as to whether the law is complied with or not.”

Parliament and the courts have made it clear directors have a lot of responsibility and are subject to immense liability if they act fraudulently or negligently. The goal is to ensure shareholders have adequate protection, but it is also a balancing act — no one wants to dissuade professionals and those with business experience from becoming directors.

Greer Jacks is updating jurisprudence in the EverGreen Explanatory Notes, an online research library of assistance to tax and financial professionals in working with their clients.

Are you aware of the revised T1198 statement?

CRA has just issued a revision to Form T1198 Statement of Qualifying Retroactive Lump-Sum Payments, which is completed by the payer of qualifying amounts.  

 

Taxpayers who are in receipt of a lump sum of $3000 or more that relates to one or more prior years may qualify for this averaging provision, a calculation which CRA does for you when the form is attached to your return. 

Qualifying income amounts include income from office or employment if received as a result of an order or judgment, arbitration, or damages for loss of office or employment received in a lawsuit settlement. 

In addition, lump sum benefits from employment insurance, superannuation or pension plans other than lump-sum withdrawals, lump sums received for spousal or taxable child support payments, or benefits from a wage-loss replacement plan may all qualify. 

Not included, however, are salary reimbursements, top-ups of disability payments, repayments of pension benefits, or negotiated back pay. Tax advisors who are up to date with the latest rules can provide guidance.

This article was written by Evelyn Jacks.  Evelyn Jacks is president of Knowledge Bureau, whose curriculum includes wealth-management and income tax-preparation courses. You can also offer Knowledge Bureau financial education books to your clients or family members. Visit http://www.knowledgebureau.com/ for more information regarding The Knowledge Bureau

Do I need to file a tax return if I am new to Canada?

Are you new to Canada?


Did you know?

If you are a newcomer to Canada for all or part of a tax year, you may need to file an income tax and benefit return if you have to pay tax, want to claim a refund, or receive benefits.You become a resident of Canada for income tax purposes when you establish significant residential ties in Canada, for example, a home in Canada, a spouse or common-law partner and dependants who move to Canada to live with you, personal property, and social ties in Canada. You usually establish these ties on the date you arrive in Canada. For more information, go to Do you have to file a return?.

Important facts

  • If you’re new to Canada, it’s important to understand your tax obligations and the credits and benefits available to you.
  • By filing an income tax and benefit return, you might be able to get credits and payments such as the goods and services tax/harmonized sales tax credit and Canada child tax benefit payments—even if you have no income to report or tax to pay.
  • Everything you need to know as a newcomer is available at www.cra.gc.ca/newcomers. For example, you can find information on getting your social insurance number, filing a tax return, tax treaties, as well as contact information if you need assistance.

Canada Revenue Agency (CRA) online services make filing easier and let you get your refund faster

The CRA’s online services are fast, easy, and secure. You can use them to file your income tax and benefit return, make a payment, track your refund, and more. Sign up for direct deposit too! Your refund and any benefit or credit payments owed to you will be deposited directly into your account, putting your money in your pocket faster. For more information, go to www.cra.gc.ca/getready.

Did you buy a home in 2013?

Did you know?

If you bought a home in 2013, the Canada Revenue Agency (CRA) has a tax credit and a plan that may help you save on this purchase.

First-time home buyers’ tax credit

If you are a first-time home buyer, you may be able to claim a non-refundable tax credit of up to $750 on the purchase of a qualifying home.

To qualify for the home buyer’s tax amount:

  • you or your spouse or common-law partner must have bought a qualifying home; and
  • you can’t have lived in another home owned by you or your spouse or common-law partner that year or in any of the four preceding years.

If you are buying a home and are eligible for the disability tax credit or if you are an individual buying a home for a related person who is eligible for the disability tax credit, you may also qualify for this credit even if you have already owned a home.

A qualifying home must be registered in your name, in your spouse’s or common-law partner’s name, or in both names, according to the applicable land registration system, and must be located in Canada. It includes existing homes such as single-family houses, semi-detached houses, townhouses, mobile homes, condominium units, apartments in duplexes, triplexes, fourplexes, or apartment buildings, and homes under construction.

Home Buyers’ Plan (HBP)

You may also be eligible to participate in the Home Buyers’ Plan, which allows you to withdraw funds from your registered retirement savings plan to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year, and you have up to 15 years to repay the amounts you withdraw.

For more tax information for homeowners, go to www.cra.gc.ca/myhome.

CRA online services make filing easier and let you get your refund faster

The CRA’s online services are fast, easy, and secure. You can use them to file your income tax and benefit return, make a payment, track your refund, and more. Sign up for direct deposit too! Your refund and any benefit or credit payments owed to you will be deposited directly into your account, putting your money in your pocket faster. For more information, go to www.cra.gc.ca/getready.

Does the Bank of Canada email to the public?

Bank of Canada Warns of Ongoing Email Scam

The Bank of Canada (the Bank) has warned Canadians that an unsolicited email scam has falsely claiming to originate from the Bank has been circulating.

 

These scams are misrepresenting the Bank and use the institution’s name, logo, and other identifiers without authorization. The Bank has warned that it has no connection to such emails. In a statement released on its website, stating that: 

“The Bank of Canada is Canada’s central bank and therefore does not accept deposits from or on behalf of individuals, nor does it collect personal or financial information from individuals. The Bank has reported these fraudulent emails to the police. If you receive an unsolicited email, delete it immediately. The Bank of Canada and its employees and officers do not request personal or financial information through email and do not participate in any email or Internet-based communications that request information or payment for services.”

The Bank suggests the following if you receive an email that purports to be from the Bank of Canada, and you have concerns about the contents of that email:

  • Delete the email immediately and contact your local authorities.

  • Access the Bank of Canada website at www.bankofcanada.ca by typing the URL yourself (do not follow links). Look for references to the program identified in the suspect email.

  • Call the Public Information Office at 1.800.303.1282 (toll free in North America), or see the “Contact Us” page on their website.

    Link to the Bank’s warning: http://www.bankofcanada.ca/bank-of-canada-warns-of-email-scams/

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