Introducing the new Canada Child Benefit
The Government of Canada is introducing a new Canada Child Benefit to replace the current system of child benefits.
There is no need to apply if you already get child benefits, but you and your spouse or common law partner have to file a 2015 tax return. If you are eligible, you will automatically start receiving the new Canada Child Benefit as of July 2016.
The new Canada Child Benefit is:
- simpler — most families will receive a single payment every month
- tax-free — families won’t have to pay taxes on payments received when they file their tax returns
- better-targeted to those who need it most — low and middle-income families get higher payments, and those with the highest incomes (generally over $150,000) receive less than under the previous system
- much more generous — families benefiting will see an average increase of almost $2,300 in the 2016-17 benefit year
Government of Canada offers tax relief to Canadians affected by wildfires in north-east Alberta
National Revenue Minister Diane Lebouthillier announced today that tax relief will be offered to Canadians affected by the devastating wildfires currently affecting Fort McMurray and areas of north-east Alberta. When natural disasters occur, the Canada Revenue Agency (CRA) immediately evaluates the measures that can be taken to help Canadians.
The Government understands that at this time, the safety and well-being of loved ones is the primary concern for those affected by the devastation of these wildfires. These individuals, businesses, and first responders may find themselves unable to file or pay taxes on time. If so, the Minister encourages them to make a request to the CRA for taxpayer relief.
The Minister’s offer of tax relief is part of the Government of Canada’s efforts to help families and communities struggling with the impacts of the largest fire evacuation in Alberta’s history, where wildfires have forced almost 90,000 people from their homes. In addition to taking requests for taxpayer relief over the phone, by mail, or online, the CRA has taken the following steps to help ease the burden for those affected, including:
- Effective immediately, ceasing all collections, audit related activities and administrative correspondence.
- Cancelling all penalties/ interests for impacted individuals who are unable to file their tax return or pay amounts owing.
- Designated telephone agents will be available to provide assistance to callers affected by the wildfires. Agents are able to request taxpayer relief on their behalf, and can provide advice relating to lost, destroyed, or damaged records. Individuals can contact the CRA at 1-800-959-8281 and business callers can call 1-800-959-5525.
- Working with Canada Post to ensure that taxpayers expecting a tax refund or benefit payment have secure access to their mail following the suspension of delivery to Fort McMurray.
The Prime Minister has also announced that the Government will match individual charitable donations made to the Canadian Red Cross, a registered charity, in support of disaster relief efforts in Fort McMurray, Alberta.
Canadians wishing to assist those affected by the disaster can also donate to other registered charities. Consult the CRA Charities Listings to find eligible organizations.
What’s new for 2014 tax-filing season?
Children’s fitness amount – Under proposed changes, the maximum amount of eligible fees for each child has increased to $1,000.
Family Tax Cut – A proposed non-refundable tax credit of up to $2,000 is available to eligible couples with children under the age of 18, and is effective starting with the 2014 tax year.
Universal Child Care Benefit (UCCB) – Under proposed changes, this benefit is being increased for children under age six. Effective January 1, 2015, parents will be eligible for a benefit of $160 per month for each eligible child under the age of six – up from $100 per month. Under proposed changes to expand the UCCB, parents may also receive a benefit of $60 per month for eligible children ages six through 17. Payments of the additional amount and expanded amount will start in July of 2015.
GST/HST credit – You no longer have to apply for the goods and services tax/harmonized sales tax (GST/HST) credit. When you file your return, the Canada Revenue Agency (CRA) will determine your eligibility and will advise those who are eligible to receive the credit. If you have a spouse or common-law partner, only one of you can receive the credit. The credit will be paid to the person whose return is assessed first. The amount will be the same, regardless of who (in the couple) receives it.
Taxpayer relief deadline is December 31, 2014 for requests related to 2004
November 27, 2014 Ottawa, Ontario Canada Revenue Agency
The Canada Revenue Agency (CRA) reminds taxpayers and registrants (for both GST/HST and non-GST/HST purposes) that they have until December 31, 2014 to make a taxpayer relief request related to 2004.
The deadline applies to taxpayer relief requests for:
- the 2004 tax year;
- any reporting period that ended during the 2004 calendar year; and
- any interest and certain penalties that accrued during the 2004 calendar year for any tax year or reporting period.
The various laws that the CRA administers allow for the cancellation or waiver of penalties and interest when taxpayers and registrants are unable to meet their tax obligations due to circumstances beyond their control. The CRA may also accept certain late-filed, amended, or revoked income tax elections, and issue income tax refunds or reduce income tax payable beyond the normal three-year period.
- Taxpayer relief is limited to a 10-year period. This means that the CRA may grant relief related to any tax year or reporting period that ended within 10 calendar years of the year the taxpayer relief request is made.
- The CRA may also cancel or waive interest and certain penalties that accrued within 10 calendar years of the year the taxpayer relief request is made, regardless of the tax year or reporting period in which the debt originated.
- If you are involved in a tax process with the CRA, including an audit, objection, or appeal for the 2004 tax year, or are subject to a reporting period that ended in 2004, and are not sure if you need to make a taxpayer relief request, you should be safe and make a request before the noted deadline of December 31, 2014.
Warning: be cautious if you are thinking of participating in a gifting tax shelter scheme
Although the Canada Revenue Agency (CRA) regularly issues warnings and has reassessed thousands of participants, some taxpayers are still participating in gifting tax shelter schemes.
Here’s what you need to know about such schemes:
The CRA will hold the 2014 assessments of participants in tax shelter arrangements
To protect the integrity of the tax system, the CRA will not assess a tax return on which a donation tax credit is claimed under a gifting tax shelter arrangement until after the tax shelter has been audited. However, taxpayers can have their tax return assessed before the tax shelter has been audited if they agree to remove the claim from their return. These procedures were also in place for the 2012 and 2013 tax years, as outlined in a CRA news release of January 10, 2014.
The CRA is auditing gifting tax shelters
The CRA continues to warn taxpayers that if they receive a charitable donation receipt for an amount higher than the value of property donated, the receipt is not valid and can’t be used to claim a tax credit. The CRA is auditing all gifting tax shelters that offer such receipts and, to date, has not found any that comply with Canadian tax law.
Taxpayers who have participated in gifting tax shelters but have decided not to remove their donation claim from their return should know that an audit can take up to two years to finish. Once the audit is done, taxpayers receive their notice of assessment, which includes any changes to their donation claims based on the audit results. Taxpayers who do not agree with a change made to their returns can file an objection.
Taxpayers should also be aware that, starting with the 2013 tax year, if an amount they have donated to a gifting tax shelter is in dispute, they are still required by law to pay 50% of the taxes they may owe.
If you are thinking of participating in a gifting tax shelter scheme, remember the following:
- If it seems too good to be true, it probably is.
- Be informed—do your research and read all documents and information available about the tax shelter.
- The tax shelter identification number does not in any way confirm that you, as an investor, can claim any tax benefits associated with the tax shelter.
- Ask to see any income tax rulings and legal opinions the promoter has for the gifting tax arrangement he or she wants you to invest in.
- Get independent, professional advice before signing any documents. For the advice to be independent, the tax professional should not be linked in any way to the tax shelter or to the promoter of the tax shelter.
- You are the only person responsible for all the information on your tax return.
Since 2006, the CRA has seen a significant decrease in the number of participants in gifting tax shelter schemes, as well as a decrease in the amount of disallowed donations. More and more Canadians are understanding the significant financial risks associated with these schemes.
Canada Revenue Agency supports business innovation with new SR&ED tools and services
February 6, 2014 – Ottawa, Ontario – Canada Revenue Agency
The Canada Revenue Agency (CRA) is enhancing the Scientific Research and Experimental Development (SR&ED) Program with the launch of the Self-Assessment Learning Tool (SALT) and the First-Time Claimant Advisory Service (FTCAS).
As part of Red Tape Reduction Commission (RTRC) consultations, stakeholders have asked the CRA to improve SR&ED services. Economic Action Plans 2012 and 2013 announced several measures to enhance the predictability of claimants receiving the SR&ED tax incentives and the fiscal integrity of the program. As part of these measures, the CRA is pleased to announce the official launch of SALT and FTCAS.
SALT is an online tool that helps businesses conducting research and development to find out if they may be eligible to receive SR&ED tax incentives. Through specific questions, answers, and examples, SALT helps business owners understand the SR&ED program’s eligibility requirements and offers information and tips to help them prepare their SR&ED claims.
FTCAS is a free, in-person service for first-time SR&ED claimants. Local CRA staff with extensive knowledge of the SR&ED program will meet with first-time claimants, at their place of business, to help them get a better understanding of the SR&ED program, and provide them with tailored information for their business on work that may be eligible, as well as expenditures and documentation requirements.
The goal of these new initiatives is to help SR&ED claimants more easily access the SR&ED program and benefit from the incentives it offers. Well-informed claimants will be better equipped to avoid future complications when making a claim, thereby reducing the administrative burden and processing delays while increasing the chances of a successful claim if requirements are met. Through these initiatives, the CRA continues to reduce the administrative burden for small and medium sized businesses in Canada, leaving them more time to create jobs and grow Canada’s economy.
Canada Revenue Agency continues its administrative procedures for gifting tax shelter schemes
January 10, 2014 – Ottawa, Ontario – Canada Revenue Agency
For the 2013 tax year, the Canada Revenue Agency (CRA) will not assess taxes owed or provide a refund to taxpayers who claim a tax credit under a gifting tax shelter scheme until the CRA has audited the tax shelter. However, if a taxpayer makes a claim under a gifting tax shelter scheme, the taxpayer can have his or her tax return assessed before the related tax shelter has been audited if they agree to remove the claim from their return. This procedure remains unchanged from the 2012 tax year.
The CRA continues to alert taxpayers that if they receive a charitable donation receipt for an amount higher than the value of property donated, the receipt is not valid and can’t be used to claim a tax credit. The CRA is auditing all such gifting tax shelter schemes, and to date, none has been found to comply with Canadian tax law.
The new legislation, introduced in Economic Action Plan 2013, affects taxpayers who have been denied, in whole or in part, a tax credit for donations made under a gifting tax shelter and who have filed an objection to this decision with the CRA or appealed it to the Tax Court of Canada. The new legislation allows the CRA to collect 50% of the amount in dispute or to withhold 50% of the refund of an amount in dispute, when these amounts are related to a gifting tax shelter.
The CRA strongly encourages taxpayers to get advice from an independent tax professional before engaging in a tax shelter. To make sure the advice is independent, a tax professional should not be linked in any way to the tax shelter or the promoter of the tax shelter.
- The CRA has denied more than $5.9 billion in donation claims and reassessed over 182,000 taxpayers who participated in these gifting tax shelters.
- The CRA has revoked the charitable status of 47 charitable organizations that participated in gifting tax shelters.
- The CRA has assessed $137 million in third-party penalties against the promoters and tax preparers involved.
- The CRA will also be administering new legislation for the 2013 tax year, which affects taxes in dispute related to gifting tax shelters.
The Canada Revenue Agency Reminds Canadians: BEWARE OF PHISHING SCHEMES
Ottawa, Ontario, December 10 2013… The Canada Revenue Agency (CRA) warns all Canadians to beware of telephone calls, mail, or email that claim to be from the CRA but are not. These are phishing scams that could result in identity thefts. Email scams may also contain embedded malware, or malicious software, that can harm your computer and put your personal information at risk. The CRA does not email Canadians to request personal information.
Canadians should especially beware of phishing scams asking for their personal information, such as social insurance, credit card, bank account, and passport numbers. Some of these scams ask for this personal information directly, and others refer the taxpayer to a Web site resembling the CRA’s where the person is asked to verify their identity by entering personal information.
Examples of recent email scams that have been circulating include notifications to taxpayers that they are entitled to a refund of a specific amount such as $521.51 or $671.08; or informing taxpayers that their tax assessment has been verified and they are eligible to receive a tax refund. These emails are not from the CRA.
To better equip taxpayers to identify possible scams, the following guidelines should be used:
The CRA does not do the following:
- The CRA never requests, by email, personal information of any kind from a taxpayer.
- The CRA will never request information from a taxpayer pertaining to a passport, health card, or driver’s license.
- The CRA will not divulge taxpayer information to another person unless formal authorization is provided by the taxpayer.
- The CRA will not leave any personal information on an answering machine.
When in doubt, ask yourself the following:
- Am I expecting additional money from the CRA?
- Does this sound too good to be true?
- Is the requester asking for information I would not include with my tax return?
- Is the requester asking for information I know the CRA already has on file for me?
- How did the requester get my email address?
- Am I confident I know who is asking for the information?
The CRA has well-established practices to protect the confidentiality of taxpayer information. The confidence and trust that individuals and businesses have in the CRA is a cornerstone of Canada’s tax system. For more information about security of taxpayer information and other examples of fraudulent communications, go to www.cra.gc.ca/security.
Anyone who receives a suspicious communication should immediately report it to firstname.lastname@example.org or to the institution that the communication appears to be from.
For information on scams, to report deceptive telemarketing, and if personal or financial information has been unwittingly provided, go to the Royal Canadian Mounted Police Web page at:
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Bank of Canada cuts economic outlook, drops rate hike signal
(Oct 23, 2013)
Tax Debt in Canada
The spring 2013 Auditor General’s (AG) report provides the results of a follow-up review to determine the Canada Revenue Agency’s (CRA) progress against action plan commitments made in response to a 2006 audit of its tax collection program. Overall, the AG concluded that the CRA has made satisfactory progress against its commitments, and makes four additional recommendations to further strengthen the administration of the program. The CRA accepts all recommendations and has already taken action to respond to them.
The following provides information on the tax debt in Canada, and what the CRA is doing to address it.
What is the tax debt?
If an individual or business fails to pay their taxes on time, those amounts become a tax debt owed to the Government. The CRA works to collect all debts through the collections process. The outstanding tax debt is an inventory of amounts owed that are known and actively managed by the CRA. New amounts are continually added, while others are collected or addressed through other measures.
Why is the tax debt increasing?
A number of factors influence the amount of the tax debt at any given time. In recent years, the reasons for the increase in tax debt include:
- An increase in overall revenue due to higher population and more businesses as well as the harmonization of federal and provincial taxes;
- More effective targeting of measures to combat aggressive tax planning and transfer pricing, leading to additional amounts to be collected; and
- Interest charges on outstanding debts which are themselves added to the debt.
How does the CRA collect the tax debt?
The majority of Canadian taxpayers pay amounts owing on time. Over the last five years, over 90% of individuals and corporations paid their taxes on time and without any intervention.
Taxes owing that are not paid are resolved through different means, depending on complexity, the taxpayer’s previous compliance history, and ability to pay. Low complexity accounts are resolved through reminder phone calls or letters to taxpayers.
How successful is the CRA at collecting tax debt?
The CRA has focused on continuously improving its tax collection program through the introduction of better strategies to prevent the debt from occurring, or resolving it before legal action is required. That has resulted in increased productivity through earlier intervention at a lower cost. As a result, the amount recovered has grown by 87% between 2005-2006 and 2011-2012. In the 2011-12 fiscal year alone, the CRA recovered $40 billion in tax debts.
An international tax benchmarking study in 2011 highlighted Canada’s strength in collecting tax debt and ranked Canada in the top 2 among 10 countries reviewed in the study, for:
- The lowest cost of collecting a dollar of debt; and
- Collecting the most debt as a percentage of total tax revenues.
Canada also has one of the lowest levels of new debt per taxpayer – an indication that the CRA’s approach is effective at ensuring that a higher proportion of taxes owed is paid in full and on time.
How is the CRA managing the tax debt?
The total amount of the tax debt, currently $29 billion, represents numerous types of debt, and most amounts owing are secured or under active collection. The CRA is working to recover all debts, either through automated strategies led by the Debt Management Call Centre, payment arrangements, or active collections by the CRA’s Tax Service Offices.
1 in 5 Canadians exposed to tax scam.
With tax season well underway, tax experts are reminding Canadians to be on high alert when it comes to potential scams.
One in five Canadians has been exposed to a tax season scam including phishing, identity theft, false charities and tax preparer fraud, according to a recent survey by the Certified General Accountants Association of Canada.
Canadians victimized have either lost, or know someone who has lost, more than $1,200 to a tax season scam.
Men and younger people are more susceptible, according to the survey, while phishing e-mails and telephone remain the most popular tax season scams. More than half of the 2,009 people surveyed online between Feb. 6-12 by Ipsos Reid say they don’t know where to report fraud.
“Tax season is a prime time for con artists to take advantage of Canadians, particularly younger adults who may have less experience with tax matters,” Anthony Ariganello, president and chief executive of CGA-Canada, said in a statement.
“It is important that Canadians know how to spot the red flags and where to go to report fraud.”
Paul Lynch, national tax partner with KPMG, said if you do encounter any suspicious tax-related issue to call Canada Revenue Agency, Public Safety Canada, as well as Canada’s Anti-Fraud Centre.
Lynch said e-mails remain one of the more popular methods of potential tax scams. Here are a few tips to keep in mind during this tax season.
Set up e-mail filters
If an email address looks suspicious, don’t open it. Instead, flag it as spam in your e-email account and remember to enlist your e-mail provider’s built-in security controls.
“The first thing is to set up your filters to get these things blocked off because if it’s from a peculiar address your filter should block it off and isolate it. So you can then look at those things. You should be a little skeptical right away if your e-mail filter has segregated one of these things because that should be a an indicator that it’s not a normal e-mail address or it’s a bulk mail of some sort,” says Lynch.
Pay attention to the details
“Once you get them, you’ve got to look at them closely,” says Lynch. He added it’s fairly safe to assume it’s a possible scam if it’s from a bank of the Canada Revenue Agency or some tax authority of some sort as they don’t use e-mail for that purpose.
“That’s just an awareness thing … When you get those e-mails look at them carefully. When you read them and the language is wrong or the explanations are wrong or there are typographical errors that should be a sign that things are a little out of sorts.”
Don’t give out information
Keep your personal information private, especially when dealing with unsolicited e-mails or phone calls.
“Anyone asking you to verify information, don’t reply, don’t click on those links. Anyone credible you can verify by another means. Don’t provide any details such as your social insurance number,” Lynch says.
Be sure to press for credentials or verify information on your own, separately from any suspicious correspondence.
Know your finances and tax situation
It’s crucial to stay on top of your finances and if you are expecting a tax return to know exactly how much you’re getting. “Usually they’ll have a number in the e-mail so if you know what you’re expecting and it’s different from that, that should be a sign,” says Lynch.