Tax Tip Thursday

Just before I get started, a little tidbit on how taxes work in Ireland and England! I was just there, and it’s interesting.

In England they pay a 20% VAT tax on all goods and services! That’s in comparison to our 13% HST in Ontario.

In Ireland, they don’t appear to pay any additional sales tax, but it is included in the price already.

Things are also just a little more expensive over there. Even though the Euro is more valuable than the Canadian Dollar, we are finding things cost about the same, just with Euro after instead of dollars. For example, we were paying $1.80/L for gas in Canada, and €1.80/L over there.

For income tax, they have a similar approach to ours with a tiered system. I didn’t work out all the numbers, but they pay a little more tax under $100,000 of income and then it’s about the same after that.

Back to Canada, now!

Did You Claim CERB Properly?

If you thought the CRA wouldn’t follow up on improperly claimed CERB and other benefits, think again! They are not letting people off the hook. We’ll see exactly how it goes, but here is the gist of it:

This week, the CRA began sending out Notices of Redetermination, advising some Canadians who may have received COVID benefit payments for which they may not have qualified, that there is now a debt established on their CRA account. This follows the Notices of Debt that Employment and Social Development Canada (ESDC) began sending out in November 2021 to various benefit recipients who received an advance payment of $2,000 from the Canada Emergency Response Benefit (CERB) in 2020.

You’ll recall that as part of its response to the pandemic, the government used an attestation-based process to provide income support to millions of Canadians. Basically, you had to be honest about your situation or possibly face having to pay it all back. Many thought it was better to take the money now and ask for forgiveness later.

Unfortunately for these people, the government is, indeed, following up.

What to Do If You Received a Letter

If you still believe that you were eligible for the payments, you should contact the CRA to provide any additional information required to validate your claim. If it’s found to have been valid, then the debt will be cleared.

If it’s not found valid or you were not eligible in the first place, you will need to pay them back. The CRA and ESDC have stated that their agents will work with individuals on case-by-case bases to find solutions to their situations, including making flexible payment arrangements. There will be no interest or penalties applied to any repayments.

There has not been guidance yet, but if you have to pay them back, there should be an associated deduction as the original amounts would have been included in income in the year that you received the benefits.

They have had some funny cases of people claiming that they received income (to cover the $5,000 minimum income requirement), but the people didn’t deposit it in their bank account and didn’t claim it on their return. Some have claimed they were looking after their families, but it turns out their families didn’t live with them.

Do You Owe Money and Need Help?

We can help you work with the CRA & ESDC to set up repayments that you can afford, and we can help make sure that nothing like this happens to you again. The Mad Accountant team is ready to get you back on track; book an appointment as soon as possible.

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.