Tax Tips and Pits: Common reviews as tax time approaches

Tips to avoid some of the more common claim errors CRA finds.

As you begin to think about tax preparation, here’s some insight to prevent your tax season from continuing beyond April 30.

These are the more common claims reviewed by Canada Revenue Agency (CRA) and the typical taxpayer errors associated with them … and tips to avoid them.

Medical expenses because this claim can add up to big bucks, especially since it’s grouped as a family and can include dependants outside of the home.

Make sure slips identify specifics and receipts are dated and marked paid. If partially paid by a benefits program, the portion you paid must be clear.

Medicaments – vitamins, supplements, and the like – are not deductible even if prescribed by a medical professional.

Moving expenses because some things aren’t deductible which seem logical to deduct. Ineligible expenses claimed in error include mail forwarding, repairs to the old or new home, and job and house hunting trips.

Any employer reimbursement reduces the claim by that amount, so report it.

The claim cannot exceed the income earned that year at the new location. Carry forward the amount in excess of the income.

Donations because so many worthy organizations issue slips to donors but not all can be claimed. CRA checks for official tax receipt status, even on the smallest of gift value.

Tuition and education because these slips have to be official tax receipts or the expense cannot be claimed.  Back in 2012, CRA became more inclusive as to what qualifies with almost all of these claims now reported on a T2202a.  If not on this form, then the slip must state official tax receipt.

This claim is transferable and two common errors occur.  It can’t be claimed by a parent if the student has not filed a return.  The student must sign the T2202a permitting the transfer.  An unsigned form leads to a denied claim by CRA.

RRSP contributions because people don’t realize they have to report investments made in the first 60 days of the current calendar year on the tax return currently due.  So, a February 2015 RRSP investment has to be reported on the 2014 return and if not used, carried forward to next year’s tax prep.

There’s no trick to avoid these reviews, after all they’re random, right?

The best defense is to accurately do your T1 return.  The second defense is to set-up for a quick, clean and painless review if it does happen. Deal with the review in a very timely manner. CRA gives 30 days and seldom will extend this.  Fail to answer in 30 days, a re-assessment is automatic and a T1 adjustment is required to reinstate.

Finally, if engaging a professional preparer to do your taxes, it’s fair to ask if they are your first line of support in the case of a review, or are you on your own?  If they do help, is it free or do they charge?

Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services. Email him at ron.clarke@JBSbiz.ca. To read previous Tax Tips & Pits columns visit www.JBSbiz.net.

 

Just Posted

B.C. Interior free from measles

Vancouver measles outbreak hasn’t spread to the B.C. Interior

Parity prevails at BC Senior Curling championship

Teams go toe-to-toe in second Draw at the BC Senior Curling Championship

Trail RCMP seeking info on van near Fruitvale school

Vehicle in question offered young girl a ride to school

Man injured in police shooting near Nelson has died

The death follows an incident in Bonnington on Feb. 13

Trail gears up to tackle teardown

Demolition of the Union Hotel in downtown Trail and property remediation will be ongoing this year

Students give two thumbs up to no more B.C. student loan interest

Eliminating the loan interest charges could save the average graduate $2,300 over 10 years

Ontario man accused of killing 11-year-old daughter dies in hospital, police say

Roopesh Rajkumar had been hospitalized with what police described as a self-inflicted gunshot wound

Manitoba ‘pauses’ link with ex-B.C. premier Gordon Campbell after allegations

Campbell had been hired to review two major hydro projects

Heritage minute features Japanese-Canadian baseball team, internment

The Vancouver Asahi baseball team won various championships across the Pacific Northwest

UPDATE: Woman, off-duty cop in critical condition after stabbing outside B.C. elementary school

The officer was interceding in an alleged assault when he and the woman were stabbed

$10-a-day child care not in 2019 budget, but advocate not irked

Sharon Gregson with the Coalition of Child Care Advocates of B.C. says NDP on track to deliver promise

B.C. Seniors Advocate questions labour shortage in care homes

Are there really no workers, or are care aide wages too low?

B.C. business groups worry about looming economic decline in wake of NDP budget

The party’s second government budget focused on plenty of spending, business advocates say

Missing Surrey snowshoer caught in avalanche found dead on Vancouver mountain

North Shore Rescue resumed its search today after efforts were temporarily halted Tuesday due to snowstorm

Most Read