Stay on top of your game at tax time

"A word to the wise: be on top of your tax game all year round."

A word to the wise: be on top of your tax game all year round.

Remember, the taxman works 12 months a year and I would like to say that 2012 proved to be an active year for Canada Revenue Agency (CRA).  New labour language with CRA staff now allows for workload to be shifted throughout Canada so if one regional office is quiet, it will pick up the slack from other regions.

Both pre-reviews and reviews of tax returns increased for the 2011 tax year.

A ”pre-review” is a return CRA doesn’t initially accept as officially filed until additional information is investigated which may or may not require contact with the taxpayer and the presentation of that information, while a “review” is a return accepted  and assessed  but then flagged by CRA for investigation and additional information is requested of the taxpayer.

The pre-review, as disconcerting as any review may be, is the better type of review since any change that may be forthcoming is done prior to CRA assessment and, if applicable, before the issuance of a refund cheque, or more importantly, before the spending of that refund by the taxpayer.

Which begs the question, what can happen after a “review”?

Remembering that at the review stage CRA has already completed its initial assessment so, if upon review of the supplementary information CRA chooses to conduct a reassessment, there is a possibility the taxpayer will have to pay back some or all of a refund if it had been given, or worse, pay tax.

Since most people don’t have disposable income kicking around to pay CRA, and CRA is not quick on offering payment plans, this situation is not a good one.

So what’s a taxpayer to do to avoid this situation?

From the get-go, when it comes to your taxes keep accurate records throughout the year.

There are three components to this statement.  The first is “keep” the records.  Keep, as in don’t throw away or lose the original documents, receipts, slips, and the like.

Secondly, gather these pieces of information 12 months a year.  Use a shoe box if you have to!

The third is “accurate” and fortunately by default, keeping the documents is your best assurance of accurate information.  However, recording specific details on those docs may also prove valuable (item, reason, date, etc).

Having said this, following these tips doesn’t necessarily ensure accurate reporting to CRA.

A humble suggestion – have someone who knows what they are doing prepare your taxes if you are not comfortable doing it.  It is amazing how many people actually had the information needed but it was missed or misreported.

And if you choose to use a professional preparer, it is a fair question to ask their protocol for handling any review of your return – are they your first line of support, or are they in the background?  Do they charge or is it part of the service?

For what it’s worth, it appears the major CRA hot items of interest for last year’s tax season were medical, moving and donation receipts – the perennial favorites.

There was also a keen interest in custody arrangements, likely because of the various lucrative dependant claims available.  In addition, tuition and education amounts and interest on student loans had the eye of CRA.  Finally, as all governments scramble for every tax dollar, taxpayers earning income from sources abroad were asked by CRA to prove payment of taxes to that foreign country on that foreign income.

As a footnote, if you receive a CRA request for information, don’t ignore it.

Deal with it in a timely manner.  Remember, the effective date for the application of interest and penalties is retroactive to April 30.

Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services.  Email him or see all previous columns at ron.clarke@JBSbiz.ca

Just Posted

Forty sled dogs were seized by the BC SPCA from a Salmo kennel in February. A recent ruling has decided the dogs won’t be returned. Photo: Gounsil/Flickr
BC Farm Industry Review Board rules against Salmo kennel after 40 sled dogs seized

Spirit of the North Kennels was also ordered to pay BC SPCA $64,000

Residents line up outside the Vernon Recreation Complex for their COVID-19 vaccine Saturday, June 5. (Jennifer Smith - Morning Star)
No appointments necessary for first dose COVID-19 vaccine: Interior Health

People can just show up at clinics, register on the spot and get the shot

SD20 now has an electric bus. Photo: Submitted
Kootenay-Columbia School District 20 adds electric bus to fleet

Bus will be incorporated into Castlegar route for next school year

Painting by Dave Davies from Shaver’s Bench facing Teck Trail.
Happy 120th Birthday to the City of Trail!

The town of Trail Creek- or Trail Creek Landing - was incorporated as a city on June 14, 1901.

Cropped photo: Silver Screen Drive-in will be in the upper parking lot of Waneta Plaza.
Summer drive-in returns to Trail unveiling blockbuster movies

PHOTOS: Scroll to bottom for a trip down memory lane to the Auto Vue Drive-In

At an outdoor drive-in convocation ceremony, Mount Royal University bestows an honorary Doctor of Laws on Blackfoot Elder and residential school survivor Clarence Wolfleg in Calgary on Tuesday, June 8, 2021. THE CANADIAN PRESS/Jeff McIntosh
‘You didn’t get the best of me’: Residential school survivor gets honorary doctorate

Clarence Wolfleg receives honorary doctorate from Mount Royal University, the highest honour the school gives out

A million-dollar ticket was sold to an individual in Vernon from the Lotto Max draw Friday, June 11, 2021. (Photo courtesy of BCLC)
Lottery ticket worth $1 million sold in Vernon

One lucky individual holds one of 20 tickets worth $1 million from Friday’s Lotto Max draw

“65 years, I’ve carried the stories in my mind and live it every day,” says Jack Kruger. (Athena Bonneau)
‘Maybe this time they will listen’: Survivor shares stories from B.C. residential school

Jack Kruger, living in Syilx territory, wasn’t surprised by news of 215 children’s remains found on the grounds of the former Kamloops Indian Residential School

A logging truck carries its load down the Elaho Valley near in Squamish, B.C. in this file photo. THE CANADIAN PRESS/Chuck Stoody
Squamish Nation calls for old-growth logging moratorium in its territory

The nation says 44% of old-growth forests in its 6,900-square kilometre territory are protected while the rest remain at risk

Flowers and cards are left at a makeshift memorial at a monument outside the former Kamloops Indian Residential School to honour the 215 children whose remains are believed to have been discovered buried near the city in Kamloops, B.C., on Monday, May 31, 2021. THE CANADIAN PRESS/Darryl Dyck
‘Pick a Sunday:’ Indigenous leaders ask Catholics to stay home, push for apology

Indigenous leaders are calling on Catholics to stand in solidarity with residential school survivors by not attending church services

“They will never be forgotten, every child matters,” says Sioux Valley Chief Jennifer Bone in a video statement June 1. (Screen grab)
104 ‘potential graves’ detected at site of former residential school in Manitoba

Sioux Valley Dakota Nation working to identify, repatriate students buried near former Brandon residential school

The Queen Victoria statue at the B.C. legislature was splattered with what looks like red paint on Friday. (Nicole Crescenzi/News Staff)
Queen Victoria statue at B.C. legislature vandalized Friday

Statue splattered with red paint by old growth forest proponents

Police cars are seen parked outside Vancouver Police Department headquarters on Saturday, January 9, 2021. THE CANADIAN PRESS/Darryl Dyck
Vancouver police officer charged with assault during an arrest in 2019

The service has released no other details about the allegations

Denmark’s Christian Eriksen receives medical attention after collapsing during the Euro 2020 soccer championship group B match between Denmark and Finland at Parken stadium in Copenhagen, Saturday, June 12, 2021. (AP Photo/Martin Meissner, Pool)
Christian Eriksen in stable condition, Euro 2020 match resumes

Eriksen was given chest compressions after collapsing on the field during a European Championship

Most Read