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, September 24, 2018

CRA Adjustment and Information Requests and Tax Update

Today, I provide an update on what I am seeing between my clients and the Canada Revenue Agency (“CRA”) as far as T1 Adjustment Requests, personal and corporate information requests and administration issues. I also provide a reminder relating to Deferred Security (Stock) Option Benefit balances.

T1 Adjustment Requests

A T1 Adjustment Request is probably the most often filed tax form with the CRA. You or your accountant would use this form to report a late received tax slip, an amended tax slip, information that was inadvertently missed, or anything else that should have been reported or claimed as a deduction and was not on your return.

The CRA is often inundated with these forms and last week I was told there could be up to a 6-7-month turnaround on the reassessment of a T1 adjustment; so keep this in mind if you are waiting for a response on a previously filed T1 Adjustment Request or filing a request.

I was also informed by a CRA representative, that the CRA can only process one T1 adjustment per taxpayer at a time (I was not aware of this) and thus, if you have an adjustment in progress, wait until it is resolved before sending in the second adjustment.

Information Requests

These requests continue to arrive on a frequent basis for my clients:

Personal Tax Requests

For personal tax returns, the information request which is essentially a request to provide back-up documents to substantiate deductions and credits claimed on your 2017 tax return, continue, as in prior years, to be typically for the following deductions and credits:

Medical receipts – I have noted in prior blog posts, make your life easier: ask your pharmacy and medical practitioner to print out one yearly receipt. That way you won’t need to provide 20 or 50 individual receipts when you receive a request.

Donation receipts – Typically for larger donation claims.

Tuition Tax Credit – This request is typically for the children of taxpayers attending University, especially when outside Canada. These claims often indirectly also affect the parents, as their child may have transferred up to $5,000 in tuition credits to their parent.

Corporate Information Tax Requests

These requests seemingly arrive daily for my corporate clients. Surprisingly to me, the majority of these request still relate to professional fees (I noted this in a prior blog post). Clients are still getting requests to support their professional fee claims as far back as 2015.

I can only presume the CRA has had some success in the last two years reviewing such claims. I am not sure exactly what they are finding, but I would guess personal type expenses such as professional fees for matrimonial or family law advice, will preparation and/or corporate organizations (that often need to be amortized rather than deducted on a current basis) are the type of expenses they are looking at. But that is just my own conjecture.

If you receive a brown CRA envelope in the mail, there is probably a  good chance you will be asked to provide back-up documentation for one of the above type requests.

Deferred Security (Stock) Option Benefits

I have noticed over the last couple years that some new clients have reminders on their Notice of Assessment that they have deferred stock option balances (from where they deferred reporting the stock option benefit on stocks they owned between 2000-2010). I don't want to get into the details of this, since the history is fairly complex. I just want to remind you that if you previously elected to defer stock option benefits, ensure you keep track of the benefits deferred (you should be filing a Form T1212) and what stock they relate; since if you sell the stock, the benefits need to be reported.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation. Please note the blog post is time sensitive and subject to changes in legislation or law.

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