CANADA REVENUE AGENCY SPAM EMAIL FRAUD

As tax season approaches, we are bombarded with the usual spam emails from “Canada Revenue Agency” that mention special credits or refunds that we can only get if we follow the link listed and submit information online.

The Canada Revenue Agency does not use email to communicate with the public! They communicate through phone, fax and mail but that is about it. Any email that you receive from them is a spam. And the reason that these spams continue to flood our inboxes is because they must work, meaning people must be clicking links that will result in computer viruses. Or worse, filling out personal financing information which will allow a scammer to access personal funds.

Below is one email that apparently came from the Canada Revenue Agency  this week. Even if you did not know that the CRA does not use email, there are other clues imbedded in the text. For instance, would the CRA really address you as Holders? Secondly, you will know what your refund was last year because it will be on your copy of the tax return and on your notice of assessment. You probably would have received your refund a few weeks after filing your return too. If you did not receive the amount suggested in the email, that should be another tip off. As well, the Canada Revenue Agency would never write out a dollar amount as 655,55$. The $ will be in front of the amount and a period, not a comma will always separate the dollars and cents. Another clue is that you will probably not remember ever providing your email address to the CRA. And another is that the link itself does not look like it takes you to the Canada Revenue Agency. I don’t think the CRA owns the domain “susancanhelpme.com.”

So take a look below and see the clues yourself. And next time one of these appear in your inbox, DO NOT click the link and DO NOT provide any financial information. If you are unsure if you have received your refund, you can call the CRA and find out.

DEAR HOLDERS,

After the last annual calculations of your fiscal activity, we have determined that you are eligible to received a tax refund of 655,55$. Please submit the tax refund request and allow us 3-5 days in order to process it.

Click here <http://susancanhelpme.com/lndex.html>  to submit your tax refund request

Note : A refund can be delayed a variety of reasons, for example submitting invalid records or applying after deadline.

Copyright Canada Revenue Agency. All rights reserved. www.cra-arc.gc.ca

GST/HST Implications of the Loss of The Penny

Beginning February 4, 2013 the Canadian Mint will stop distributing pennies. Vendors who accept payment in cash will be forced to round transactions to five cent increments in order to allow for exact payment to be made without the use of the penny. While this change will make all of our wallets a little lighter, it will have some interesting implications.

The government has released rounding guidelines that indicate allowable rounding procedures for the Canadian government to perform for transactions with the public. Most likely, businesses will follow this method too.

For transactions that would result in .01 or .02 cents, the total amount will be rounded down to .00. Amounts due ending in .06 or .07 cents will be rounded down to the .05. For amounts ending in .03 or .04, the total will be rounded up to .05. And for transactions resulting in .08 or .09 the balance will be increased to .10.

An example of this would be a payment due for $23.43. The revised total would be $23.45. And for a payment due of $23.41, the total will be reduced to $23.40.

Payments made by cheque, wire or credit card will still allow other cent increments to be included because there is no cash element in the exchange.

It will be interesting to see how this change will play out in businesses that except multiple forms of payment. For instance, if a man makes a purchase at the convenience store that results in $58.77, the vendor will need to find out the method of payment before accepting it because if the customer pays on credit card, it is acceptable, but if the customer pays in cash then the total will be rounded down to $58.75.

This may prove to become a hassle for shoppers when the individual in front of them in line wants to pay cash, then does not have enough and so the cashier must change the total balance owing in order for the client to make the payment by credit card.

It is possible that store owners will alter the pricing of their goods so that the final price including GST/HST will be an amount ending in .00 or .05 for all goods and/or services.

Businesses will need to be proactive and very shortly address how they will adapt their pricing to accommodate this change.

So as we say goodbye to 2012, it is also time to say goodbye to the once-loved penny.

Why You Need To File Your 2002 Personal Tax Return Now!

It is common practice for the Canada Revenue Agency to notionally assess you if you do not file your tax returns. This means that they come up with a balance of what they believe you owe if you had filed. However, in almost every situation the amount the CRA believes you owe is a lot higher than what you actually owe. This means that the penalties and interest calculated by them is also a lot higher.

I most recently had someone come in to my office with a letter from the government saying that he owed over $27,000,000 even though he would not owe anywhere close to it.

If you file your tax returns after the fact, the CRA will override their figures with your figures. But, it will take longer for the assessments to arrive in the mail because your filed returns are now considered reassessments and actually take longer to be processed by CRA. So if you are waiting for a refund, you are going to be waiting even longer.

The real danger of arbitrary assessments is that the government only allows a taxpayer ten years to file their own personal tax return. After that, the arbitrary balance stands.

For example, if you have not filed your 2002 tax return, it must be filed by December 31^st 2012 or else the CRA will no longer accept it. Now let’s say you worked for only part of the year and would not have owed anything. And the CRA arbitrary assesses you for $10,000. Once it is January 1, 2013 that $10,000 balance will remain on your account until you pay it off.

Our government can sometimes be lenient, but not forever. It is your responsibility to make sure you are filed. And if you have let your filings get out of hand, you need to get caught up as soon as possible so that your figures are on file and not the potentially inflated ones created by the Canada Revenue Agency.

Tax Returns Cannot Be Changed After Ten Years!

Taxpayers often think that it is possible to add in additional old receipts that have been uncovered in their basements, or to file personal tax returns going back decades. This is not the case. The Canada Revenue Agency will only accept changes and filings of tax returns within a ten year time frame.

This can be particularly dangerous when it comes to notional assessments. If you do not file a tax return and the CRA issues an arbitrary assessment, essentially filing the return on your behalf, you can only have the amounts adjusted to actual by filing your tax return during the ten year period. Once that period is exceeded, you are out of luck.

For example, the CRA notionally assessed a taxpayer for their 2002 personal tax return in 2012. The 2002 personal tax return will only be accepted until December 31, 2012. If the Canada Revenue Agency arbitrarily assesses you for taxes of $100,000and you do not file your own return within the ten year limit, that $100,000 of taxes owing will remain on your account. There will also be penalties and interest applied on top of the tax. You may need to use the equity in your home to pay it, or even result to a consumer proposal or bankruptcy just to remove this amount from your tax balance, even though you may have actually owed nothing for that year.

  Don’t let time pass you by. It’s time to get around to filing those outstanding tax returns, before it really is too late. 

Over-Payment of CPP and EI Are Only Refunded For Limited Time

If you work two jobs in a year, both of your employers are likely deducting CPP and EI from your pay cheques, which sometimes result in you, the employee, over-contributing to CPP and EI during the year. Typically, your accountant will calculate the overpayment and reduce your personal income tax owing by this amount.

This can be done in prior years BUT only to a maximum of four years for CPP and three years for EI. This means that if you are behind on filing your tax returns more than 3-4 years, it is possible that the Canada Revenue Agency will deny your over-payment and not reduce your taxes payable by this amount.

The amounts of overpayment are usually not large, but keep in mind that penalties and interest are charged on the overdue taxes. This means that the denial of the Canada Pension Plan and Employment Insurance amounts will result in more tax, more penalties and more interest. Over a number of years, the small overpayments that were denied have grown, essentially on a daily basis as the CRA computes compound interest daily.

So do yourself a favour and file those tax returns. Even if you think you have refunds, why take the risk of losing out on potential CPP and EI over-payments.

Feel free to contact our firm to help you get up to date with your tax filings.

Capital Gains on Principal Residence for Large Lots

Generally people seem to know that there is no capital gains tax on the sale of your principal residence. However, one interesting, not commonly known exception relates to properties exceeding .5 hectare (1.25 acres) of land. The CRA only considers land to be your primary residence up to these parameters. Any land exceeding the .5 hectares is not considered to be required for you own personal use and enjoyment of the property. The onus is then on the taxpayer to prove to the CRA that the additional land is necessary.

One factor considered by the CRA is if your property can be subdivided. If you are not legally allowed to sever part of the property, you are more likely for your claim that the entire property is principal residence to be accepted.

Another factor is if your municipality requires minimal lot sizes that would forbid you from reducing your property to remove the excess land beyond the .5 hectares. However, if there are applications that exist for you to be excluded from this, then you are no longer automatically considered 100% principal residence if you did not try to sever the excess land.

The CRA goes as far as explicitly stating that the extra land cannot be considered necessary for needing space for pets to run around or for general ‘country living.’ They clearly state that the excess land must be needed for the house to function as a residence and not simply be an added benefit of owning a larger lot. For example, the extra land is required for access to public roads due to the geography of the property.

As well, any area of your property used to earn income is not considered part of your use and personal enjoyment. Therefore if you rent out a portion of your home, you need to carefully consider how the rules are different for you upon disposition of your property and determine whether or not you are entirely exempt for the capital gains tax.

To determine the amount of the capital gain associated with the excess land, you do not simply calculate what the entire capital gain on the property would be and divide out accordingly. Instead, you need to obtain an appraisal for the excess property to determine the specific capital gain to be attributed to the area.