Posts Tagged Income

Elimination of tax packages for individuals using the services of a tax professional

PLEASE NOTE: YOU ARE NOT GOING CRAZY! THAT ENVELOPE DIDN’T ARRIVE YET!

I just received an email from Canada Revenue Agency to advise my clients of the following:

For 2006 and subsequent tax years, taxpayers who had their return prepared by a tax professional in the preceding tax year, and had a resulting nil or debit balance, will no longer receive a tax package from the Canada Revenue Agency (CRA).

This basically means that if you had a no balance owing or received a refund and someone like me EFILED your 2005 tax return .. you will not get that envelope from Revenue Canada that had your name on the sticker with that T7DR(A) .. the non-personalized remittance form used by taxpayers to make their payment on filing either through a bank or to the CRA directly.

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Guidance Provided on “Normal Growth” for Income Trusts and Other Flow-Through Entities

The following News Release or Speech has just been posted on the Finance Canada Site.

Ottawa, December 15, 2006
2006-082

Following the close of financial markets today, the Department of Finance provided further guidance on “normal growth” in respect of the tax measures announced on October 31, 2006 regarding income trusts and other flow-through entities.

On October 31, 2006, the Minister of Finance, the Honourable Jim Flaherty, announced a Tax Fairness Plan. The Plan includes a Distribution Tax on certain amounts distributed by a “specified investment flow-through” (SIFT) trust or SIFT partnership. This new tax applies as of 2007 to new entities, but is deferred until 2011 for SIFTs that were publicly traded as of October 31, 2006.

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Practice for 2006 - Reporting 100% of all your eBay and Paypal Transactions to your Accountant and Income Tax Preparer - Try this with your 2005 transactions

ALTERNATE WORKING TITLE: How to not get dropped like a Hot Potato by your Accountant and Income Tax Preparer

I shudder to think how many people are making money online selling items on Ebay and collecting payments using Paypal .. and are not reporting the income on their tax return.

It’s OKAY to sell some junk and personal items that you own on Ebay to help recoup the costs of other purchases that you may have .. and you probably don’t have to report the transaction. However, if you are buying and selling products on Ebay for profit .. you are a small business and must report your net earnings on your tax return.

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Everybody Must Pay Taxes - But Why Pay Penalties?

Listen .. trust your HART …

If you don’t have the money to pay your income taxes, you should still make an effort to file your income tax return ON TIME. This way, it’s only a “collection issue” and you will only be subject to interest on the arrears balances owing. If you file late or after the due date (April 30th for most individuals and June 15th for self-employed individuals), you will have to pay a flat percentage penalty of the balance you owe plus a flat percentage penalty of the balance owing is added for every month you are late. If you’re not only late, but there was a request from Canada Revenue Agency to file your tax return .. generally these penalty rates are doubled!

Some guy once said “The difference between tax avoidance and tax evasion is the thickness of a prison wall.”. There are legal ways to minimize your income tax bill with planning and advice of your professional accountant or income tax preparer .. but keep in mind that there are also laws in place to prevent the avoidance of income taxes. Now, evasion - is much worse than being a deadbeat, because in addition to the penalties and interest that you will be charged (if caught) .. it’s also a criminal offense.

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Notice of Assessments 2005

I have been in touch with 8 clients so far, that have asked me to find out why their notice of assessment shows arrears interest charged when their payment has cleared their bank prior to the end of April 2006.

I have contacted Canada Revenue Agency and apparently this is not uncommon .. and in 6 of the eight instances - the arrears interest had already been reversed. For the remaining 2 instances, whether or not it would have been reversed automatically (and I’m almost sure it would have been reversed in due time) .. it was “fixed” over the phone at my request.

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Time’s Up! Stop!

Well .. Monday, May 1, 2006 was the deadline here in Canada for most individuals to file their income return, and myself well - my last E-File was sent at 11:56pm.

Here’s how my TO-DO list now stands ..

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It’s 2006 Now .. Do you know what your loan balance is?

It’s 10:00 am Monday Morning, January 2, 2006 …

TIP: For Individuals with Loan Balances who want to claim interest on their Personal Income Tax Return

FACT: You need to know what your balances are first!

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