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Moncton Times & Transcript ~ Tax Help Plus ~ Ensuring Compliance ~ August 22, 2006 - 17 Sep 2006 by TaxHelp
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I’m not really here.
Long time readers of the Times-Transcript may remember me writing a financial column a few years back in this literal real estate. It seemed only natural, as I had been around the block operating a tax business here in the city. And with a nod to Charles Schultz, I sometimes felt like his blockhead Charlie Brown character, with all the stuff going on around me. I’m delighted to again have this opportunity. For the most part these pieces are going to deal with the monetary side of your stuff – parents and children, spouses and siblings and family pets. I’m hoping the stories you read here are humourous as well as practical. And while we may have had to move away and haven’t located back to the city just yet, we can hardly wait to get back and rejoin the vitality that is Greater Moncton!
Speaking of people writing - got mail? Okay, so it doesn’t have the same homespun message as the milk campaign. However, our Moncton Tax Services Office has responsibility for some 150,000 tax returns. And taking Ronald Reagan’s “trust but verify” dictum to heart, every year the good folks at the Canada Revenue Agency (CRA) conduct reviews of tax returns to measure levels of compliance. As most readers know, many of the reporting slips that you receive from the various sources are also sent electronically within the government. That's why forgetting to claim the Employment Insurance benefits you received last January won't fly.
CRA knows the total before you do, and if you don't declare it they automatically add it in. The same goes for other government pay sources like Canada Pension, Old Age Security, Guaranteed Income Supplements, Worker's Compensation and Social Assistance.
Still other income from private sources is reported to you and the government at generally the same time. You get a T3 from a mutual fund company, a T4 from your employer and a T5 from the bank, and copies of these are also remitted to CRA. You file your tax return while leaving out the slip that went to the wrong address and receive your Notice of Assessment for the return that you filed. Sure enough, some time later in the year you get a Notice of Reassessment with a tax bill plus interest (and perhaps a penalty if you're a repeat offender), because the government matches up all the income on file with the tax return you submitted.
In order to maintain confidence in the process, a certain percentage of returns are selected for review, where the source documents are not in the nature of those above. While this year’s post-assessing program began at the St. John’s Taxation Centre on July 12, the bulk of the mailings are just now hitting the streets. An official looking piece of correspondence arrives in the mail. The letter says in part “We regularly conduct review programs as an important part of the self-assessment tax system. We have selected your return for review. To determine if we have assessed your return correctly, we need more information.”
The letter is looking for a response within 30 days. Knowing this is the summer, there are a few days of grace thrown in. For those thinking in a linear fashion, if you haven't taken some action by mid-September, CRA is going to presume that you have taken the deduction or credit in error. They will reassess and send along a bill. At that point, if you furnish the correct documentation, they will again reassess your return and reverse the bill including interest, but you may be into 2007 before your tax file finally gets straightened out.
At the end of the day it is easier to respond now. The letter has your specific file reference number on it. They will tell you the dollar amount they are questioning. Your receipts should add up to this. If not, include a letter explaining why. There are some situations where there may have been some carryforward of deductions unused in the past, and although the government should be aware of this, it might escape the reviewer’s attention, so kindly point this out in your note. If you need a hand, give us a call at the office and we’ll try to help out. In the meantime, if you have a specific item or question you’d like to see dealt with in this space, let me know and I’ll see what I can do.
Roger Haineault is with Help 4 Taxes. His column "Tax Help Plus ..." appears each Tuesday. For questions, comments or column suggestions he can be reached by calling 855-HELP (4357) or by emailing roger@help4taxes.ca |
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