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. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. My posts are blunt, opinionated and even have a twist of humour/sarcasm. You've been warned. Please note the blog posts are time sensitive and subject to changes in legislation or law.

Monday, March 31, 2014

Confessions of a Tax Accountant -2014 -Week 1

For each income tax season since 2011, I have published a series of posts called Confessions of a Tax Accountant. These posts highlight contentious and/or interesting personal income tax issues that arise in my practice during income tax season. Today, I continue with this tradition.

Every year at this time, I whine about the fact I have received very few income tax returns to date and this year is no exception. Most of my clients with complex tax returns still await their T3’s and T5013’s, meaning I will again have a severe income tax crunch the last three weeks of April. I will save you my annual rant on this topic. Since I have reviewed very few returns and have little material to discuss, today's post deals with changes to various forms and issues of an administrative nature.

New T5013 Partnership Information Form

For those of us who/will receive a T5013 tax slip for either our partnership income or flow-through tax shelters, you will notice the absence of one thing on the form; written descriptions for each box on the form. In prior years, each box had a number associated with each box and a written description. For example: for interest income earned, the box said interest from Canadian sources, for carrying charges it said carrying charges. This year, the form in some cases has like forty boxes with only four of those boxes having a written description. It is like looking at a crossword puzzle gone wild.

You have to either read the summary page to determine what each box is for, or use your tax preparation software to match up the box number to the written description. It is extremely frustrating and my clients have no idea what the numbers mean to them.

Online T-slips

For many of us, working in a paperless or online world is now part of our daily routine. However, in situations where paper still rules (such as with tax slips), dealing with the early online adopters can be problematic.

-Even though I have only processed a few returns, I have already had to ask a couple clients for their T-slips from Ing Direct and TD Waterhouse (although some people seem to get paper T-slips from TD Waterhouse, so I am not sure if those not receiving paper forms have elected to receive online receipts) when I noticed they reported income last year, but have no slip this year.

The issue with online tax forms is clients either a) don’t realize they are online or b) forget to download the slip.

Not reporting the income on these slips can be a costly omission if the CRA catches these missing slips when they undertake their matching program in the fall. The non-reporting of these slips could result in a 20% penalty if this is the second time you have missed reporting a slip in the last four years, or it could start the clock ticking on a 20% penalty.

I am not sure of the solution here, but online issuers need to build in a reminder system to their clients when a form has not been downloaded by March 31st (they may already do this, but I am not aware of it if they do).

T1135 Foreign Verification Form

I have written numerous times about the changes to the T1135 Form. Even with the transitional relief provided for this year, this form is still proving problematic. For example, even though you now only have to report the market value of foreign stocks held with a Canadian Institution on December 31, 2013, some broker reports have listings where Canadian and US stocks are intermingled and so we have to pick out the foreign stocks individually.

The form is also proving very troublesome for U.S. citizens who live in Canada and expatriates from other countries, as they have to report foreign stocks they hold outside Canada (they often still have a U.S. or foreign brokerage account) and U.S. or foreign bank accounts.

The CRA should send a few of its representatives to work in an accounting firm for a week and then have them report back on what they think of the new T1135 reporting requirements. I cannot even imagine the mess that will occur if the original rules are re-instated in 2014, where you must list any stock that does not pay a dividend individually.

My problem with this form is that it overwhelms those people who willingly report information that is readily accessible to the CRA, especially where they hold their investments with Canadian financial institutions. While I get why the CRA wants enhanced reporting for taxpayers with assets outside of Canada, I am somewhat skeptical that people hiding and/or not reporting foreign assets will now become compliant because the T1135 is more detailed.

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.


  1. RE: Online T slips -- The problem with many of the online systems is that they are "pull" not "push." That is to say, instead of the company "pushing" the envelope to my mailbox, or sending the email to me, I instead have to try to remember to go to their website at the correct time to see if there is anything to download. It puts the onus on me. Many websites do the same with their TOS - you agree to check their website every so often to read their entire TOS to see if it has changed. Yeah, right!

    1. Hey Fred

      You nailed it, it really is a pull vs push problem. I should have said that in my post

  2. ...and another thing, the complexity of the tax system does change my behaviour. Nothing illegal, but simply not bothering with certain forms of work or business because it isn't worth the paperwork. Just so glad that income tax was brought in as a "temporary measure."