My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant and a partner with a National Accounting Firm in Toronto. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. The views and opinions expressed in this blog are written solely in my personal capacity and cannot be attributed to the accounting firm with which I am affiliated. My posts are blunt, opinionated and even have a twist of humor/sarcasm. You've been warned. Please note the blog posts are time sensitive and subject to changes in legislation or law.

Friday, March 11, 2011

Confessions of a Tax Accountant - Week Two- T1 Adjustments for Statute Barred Years

As of today, I have received less then 10% (21 returns) of the client income tax returns I will prepare.The returns submitted thus far are typically my less complex returns and have only a few slips such as T4’s, T5’s, RRSPs and maybe some stock trading or a rental property or two. These returns can be filed without waiting for additional slips. As the majority of my returns require T3's and T5013's, I will not be seeing most of my returns for at least a couple weeks.

I do not have much to report income tax issue wise this week, but I did receive a notice of re-assessment for a client that brings up an interesting filing issue if you have missed claiming income tax deductions or credits in prior years.

T1 Adjustments For Statute Barred Years

In years gone by, if a client wanted to adjust their personal income tax return for a missed deduction or credit for multiple years, or more then three years after they had been initially assessed, the Canada Revenue Agency (“CRA”) would typically deny such a request, since the tax returns were statute barred. Such adjustment requests were often made for disability credits not claimed, medical and donation receipts not claimed and interest expense not deducted amongst various other reasons.

However, as a result of the “Fairness” legislation, the CRA is now allowing most requests that cover multiple years. The following is what is typically printed by the CRA on the re-assessment notice for one of these adjustment requests.

“As you requested, we have adjusted your return. In the past, you had to make such a request within three years of the date we mailed you the “Notice of Assessment” for that return. However, the taxpayer relief provisions of the “Income Tax Act” allow us to make adjustments beyond the usual three year period. Since we allowed you an adjustment under these provisions, you cannot file a notice of objection regarding this reassessment.”

Since in almost all cases you are asking for a refund from CRA, the fact you cannot file a notice of objection is typically a moot point and a small concession especially in comparison to the fact the CRA will probably accept your multi-year adjustment request.

If you or anyone you know has missed claiming a deduction or claiming a credit on a return assessed over three years ago, you should consider preparing a T1 Adjustment Request, since in most cases it will now be accepted.

[Bloggers Note: In my Confessions of a Tax Accountant blogs, I will discuss real income tax issues that arise, but embellish or slightly change facts to protect the innocent, as the saying goes.]

NHL- Just Act With Some Common Sense

The hit by Zdeno Chara on Tuesday night against Max Pacioretty was a vicious hit. In my opinion, in real time, it appeared to be what is commonly known as a “hockey play”. However, whether it was or was not a hockey play is irrelevant and the result was horrific.

Since the players obviously will not police themselves or respect their own, the NHL should take two simple steps to clean up the head-shot and icing mess. If I was in charge of the NHL, I would implement two simple rules:

  1. Automatic icing. There are 3 plays out of a 100 where an offensive player actually wins the puck, so why risk the head and "lower & upper body" injuries that often occur on chases to the puck on icing plays.
  2. Automatic suspensions on any hit to the head or any hit that causes an injury to the head, whether it appears intentional or not. Ten games the first time (with leeway to increase it if circumstances dictate such), twenty five the second offence (with upward adjustment leeway) and a years suspension the third time a player goes for the head of an opposition player.
There, nice and simple, no discretion other then to increase suspensions. What’s so hard?

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts 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 blogs.