Tag Archives: crossborder income tax

Small discrepancies

Last week I got a message from the Canada Revenue Agency about my own 2015 income tax. I did not read the main part. I went to the bottom line and saw that they wanted me to pay them 14 dollars. I know that I could possibly fight this assessment but it would take a lot of time and energy. In addition to that they might decide to question other items on my return. I sent them the 14 dollars.

For a long time I have told tax clients not to worry about small items like this. If there is a large difference of course I will look into it. If the amount was a couple hundred dollars I would spend a couple of hours going through their assessment notice to see if I could find out exactly what they were objecting to. Then I could decide what to do about it.

Last week Revenue Canada sent a letter to one of my tax clients. They specifically asked him for one information slip. It was for a withdrawal from an RRSP (the Canadian equivalent of an IRA but with a much higher contribution limit.) This was amazing because there were only 2 items on the information slip, the withdrawal and the tax withheld.

They did not ask about the withdrawal, only the tax withheld. The brokerage firm that held the RRSP send in their copies of information slips to the tax authorities electronically.  I had to conclude that there had been a glitch in transmission so that the tax withheld did not appear to be 25% of the withdrawal.

This is not supposed to be possible. The only time I have seen such glitches was when I wrote a C program and discovered that the villains in Redmond had filled their new operating systems with read errors. I could write a file whenever I wanted to and then read it when they wanted to let me read it.

I can’t help mentioning that one of my buddies came to see me the first season that I worked on income tax. He had received a letter asking about 3 specific points on his return from the previous year. He was badly rattled and seemed to be very frightened. I went through it with him and showed him that in each of the 3 cases there were some points in his favor. He seemed relieved. When he came to see me the next time he did not remember anything that I had told him, except that now he knew that there were some points in his favor on each one. We went through it all again and this time he paid more attention.