Common Tax Areas When Canadian Tax Payers Get Confused
Many couples have joint accounts. At the end of the year the interest collected on these has to be declared. A lot of people think that the name appearing on the tax slip or the social insurance number that is there, is the person who has to declare the interest. It can be a little more complicated than that. Actually the person who was responsible for earning the capital for the account is supposed to be the individual claiming the interest. If it happens that more than one individual named on the joint account contributed capital, then the interest has to be allocated and claimed accordingly.
Another area of confusion is that many people figure that once you get back your notice of assessment then that’s it. Your taxes are done for the year. The CRA has accepted all of your information filed in your tax return as correct, and you don’t need to worry about any follow up on behalf of the CRA. Unfortunately it is not that easy. Actually the Notice of Assessment is just a quick recap of your filing and will have focused on any mathematical errors that may have been present in your filing. It definitely does not mean that the tax department has done a complete review of your filings, and they have the full option of doing a re-assessment if and when they see fit. Often this can take up to three years before you can breathe easy that you are not likely to be reassessed for that tax year.
Another unclear area is when you receive gifts from your employer. Some bosses will give a token of appreciation on a yearly basis, or perhaps recognize an employee’s birthday. They may give a small cash gift. Usually if this is only a once a year occurrence, and the money value is under $500. Then it is over looked by the CRA. Employers are also allowed to give an employee a gift (non –cash) once every five years, and at a value of no more than $500. as appreciation for long term service, with no tax consequences.
These are some of the most common areas of confusion for tax payers, and there are many many more. Unfortunately not understanding your tax responsibilities and all of the rules and regulations that pertain to your tax situation can get you into trouble with the tax department.
The best way to do your taxes without having to worry about whether you are doing them right is to rely on a professional tax accountant. This individual makes it his business to ensure that all of the tax obligations are being complied with as they pertain to your specific tax requirements. It means spending a few dollars to use these services, but it is money well spent when you think of it being able to allow you to ward off some potential hassles with the CRA.