Tax Tip Thursday

I want to talk about those nasty brown envelopes. We usually talk about this in the summer (I call it audit season), as that is when the requests start coming in from the CRA. This year, they seem to still be pouring in. My theory is that they are trying to recover taxes to help fund all the money that went out for Covid, combined with the significant decrease in tax revenues the last couple of years.

Read Your Mail!

So, your tax tip of the week is, to make sure you open AND READ all your mail (ESPECIALLY FROM CRA) and make sure you take action based on what the mail is asking of you.

I have heard horror stories around investments, life insurance, car insurance, car, etc…. where people aren’t opening their mail and causing themselves a ton of grief! So please open your mail – ALL MAIL.

We talked about burying your head in the sand last week and this is just a follow-up on that.

For the last few years, the focus has been on home office expenses and automobile expenses. I don’t think that is going to go away, but I am seeing a lot of pre-assessment reviews for sole proprietors and partnership returns, specifically for the HST rebate.

We have also been seeing a lot of reviews on disability tax credits and support payments, so make sure you have your documentation lined up!

What should I do?

If you get CRA mail, please open it. If it is a request for information, in almost all circumstances, you have 30 days to respond. BUT, the vast majority of the documents sent by the CRA are assessments, notices indicating filing dates, changes to your account, access codes, changes to filing dates (in the case of the last year), reminders to pay installments, acknowledgment of payments and of course Reviews and Audits. While the audit is a very understood word, they rarely happen. Reviews are much more common than most people are faced with.

Please keep in mind a review is usually not that intrusive and is primarily a request for additional information supporting what was filed on your income tax return.

For the latest onslaught of reviews, there are a few schedules that need to be provided and that is about it. Most of the information is available in your tax return.

So, if you get a letter, please deal with it. if you don’t think you can deal with it, call me and we can deal with it. It will cost you a few dollars, but I can promise you, it will cost you a lot less than if you do nothing. If you do not respond within the 30 days, they will disallow the deductions or rebates in question, and you will out of pocket hundreds or thousands of dollars that you are legitimately entitled to.

Take Action Now!

Did you get a brown envelope? Whether you waited to open it or not, we are the right people to call to help you get it figured out. Call us today!

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.