CRA and me: Assessment Excitement

This past summer, the CRA sent me a letter of assessment for my son’s school fees. These kind of assessments happen often. While I am slightly freaked out by them, it is still not a big deal. The letter asked for all associated documentation supporting my medical claim for my son’s school fees.

I dutifully collected all the receipts for the School and for my son’s Occupational Therapist. I wrote a cover letter outlining what I was sending and I sent it via registered mail to the CRA.

In that previous paragraph I made two mistakes (one small and one critical error):

  1. I could have easily scanned all the receipts and submitted them to the CRA on line. Much faster, and less expensive. Hopefully I will remember that for the next time.
  2. The letter asked for all associated documentation, and I misinterpreted that to mean receipts, and that caused a big problem.

 For those unaware, if your child is disabled you can claim their schooling or training as a medical expense. You must have a DTC first, and then ask permission of the CRA to be able to make that claim on your taxes. This is where my blunder took place.

My son had changed schools a while back, and I had never done a new letter outlining how his new school would help him with his disability (Autism Spectrum). Without this letter, and supporting documentation from his Doctor and other medical professionals, the CRA had every right to deny this claim on my taxes. As I did not include any supporting documentation with my assessment, the CRA denied my claim, and sent me a bill for what I owed.

The CRA was in the right to do this, and I was in the wrong for not sending it. I want to be clear on this point, I am not casting any shade on the CRA, they have actually been very helpful in this case.

It took a while, but I finally received my Assessment response via email, and I was shocked and upset to see the results(an over $4000 tax bill). After reading the email a few times, my wife read it and pointed out my mistake. She realized that I had not sent a new package outlining how the new school helped my son. I believe I sputtered and swore, but then came to the epiphany that my wife was right.

The past few weeks I have spent collecting the needed data and letters to support my claim for my son’s school expenses, and submitted them (electronically) to the CRA.

As the date of when I was supposed to pay my new tax bill came closer, I realized my reassessment was not going to be completed in time. Again, this was due to my procrastination, not the CRA inaction. I decided to call the CRA, and they directed me to their collections group.

When I spoke to the collections person, he brought up my file, I explained that I had submitted the needed documentation, and they decided to give me a 90-day extension on my due payment. This means I won’t have to fork out $4000 at Christmas time.

There is no guarantee that the CRA will accept my claim and documentation. Given the amount of supporting documentation I am hopeful that this is sufficient, but at least I won’t have to pay out a large sum of money now (that might be refunded later).

Conclusion

As I have said previously, if you don’t ask the answer is always no. I asked the CRA for clarification on what they needed, they provided that to me. The CRA also granted me an extension on payment, because I asked, and had a good set of reasons.

Sometimes the CRA screws up, but in this case, they are actually the heroes in this story (so far).

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Notice of Determination on Disability Tax Credit

About three weeks ago we mailed in (via certified mail, so we got a tracking ID for the envelope we sent to the CRA) our re-application for the disability tax credit certificate (DTC) for my son. We were not really sure how long it was going to take to receive the notice of determination. Yesterday we received the response about our son’s eligibility for the DTC.

We sent enough, and the correct information, as the CRA completed their review and now my son is eligible for another 8 years (until he turns 18), and his DTCC was extended (i.e. a positive response in the notice of determination), which is a relief to us. This means we can continue to receive the child tax benefits, and also continue to contribute to his Registered Disability Savings Plan (RDSP) as well.

Can the disability tax credit be backdated? For us, backdating was granted, as Autism is viewed as a brain stem injury, and thus from birth. We asked for this in our application letter.

The notice of determination for the DTC from the CRA is very clear but it has two very interesting paragraphs:

You will have to file a new, full completed Form T2201, Disability Tax Credit Certificate, for the 2024 tax year or earlier if we ask for one, so we can review your son’s eligibility for DTC.

In the meantime, if your dependant’s medical condition improves to the point that the impairment would not longer meet the eligibility criteria for disability tax credit, you must let us know.

Interesting how the CRA can still ask for an updated T2201 at any time, if they wish to review my son’s eligibility, and that I must tell them if he is no longer impaired ? Autism Spectrum isn’t cured, but I guess this is the CRA being thorough ?

Final Bits to Notice

Another interesting stanza in the notice of determination states:

Please note that you are responsible for any fees charged by a medical practitioner to complete Form 2201, Disability Tax Credit Certificate, or to provide us with additional information. These fees are medical expenses. See line 330 of the General Income Tax and Benefit Guide

In our case we did have to pay for the Speech Pathologist Report, which was included in the documentation sent to the CRA, so that is now a medical expense (remember other things can be a medical expense as well).

A final helpful section stated:

If you need more information about the Registered Disability Savings Plan (RDSP), please see the additional RDSP information sheet.

Yes, there was a helpful sheet about RDSPs included with the letter. It suggested checking out the Employment and Social Development Canada (ESDC) web site, which is helpful as well. It also pointed out that the Government may deposit up to $90,000 into the RDSP over the lifetime of the beneficiary (another good reason to have one). ESDC is on Twitter too.

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Direct Deposit Enrolment for Government Benefits

Government Cheques will be going away ( very soon), and you can easily sign up for direct deposit, if you can remember your on-line banking.

Life of a Government Cheque

Journey of a Government Cheque

How hard is it? Let’s just walk through it for you.

First question to answer is, do you receive Government Cheques for any reason? You sure? Check this web page which has a list of all the different folks that can send you cheques, which include:

You sure you don’t receive any of these?

How To Do It

Next, congratulations! You have figured out you need to set up direct deposit (the first step to solving any problem is admitting you have a problem). How can you fix this? Click on any of those links above and you will be told how, however, let’s try a different way of doing things, let’s go to the CRA and check out how your Tax Refund might be done.

  1. Go to your CRA MyAccount page  (link on that page). What the hell is a MyAccount? Don’t worry, you don’t need to create one, you can simply log in with your On-Line Banking credentials (if you don’t have on-line banking I would strongly suggest going to a Services Canada Office to set things up).
  2. Log into CRA My Account with your on-line banking credentials
  3. If you have done things right you will then be at a home page that will have many different and wonderful things you can do with the CRA. Select the Accounts and Payment tab
  4. Voila here is where you set up your direct deposit, or alter it so that it goes to a different account, or stop it from being deposited (although why you would do that I do not know).

It is just that simple people, so why haven’t you set it up yet? Get off your duff and do it!

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The CRA Does Not Like Change

Here is a Tuesday Quickie for you, I have pointed this one out a few times, but my Theory has been proven:

Whenever you have a major change in your life that causes a change in  your tax status, the CRA will ask for you to send receipts to verify it (i.e. a Review not an audit).

A simple theory, but it has been proven countless times for me:

  • Each time one of my kids started at University, either I or my child was asked to supply T2202A forms from the school.
  • When they moved from residence to a rental off campus, receipts for the rental
  • When I claimed my son’s school fees as a medical expense.
  • My middle daughter has just started a Chiropractic College, and the tuition fees are MUCH higher, thus the CRA wants receipts.


It’s not a big thing, and fairly easy to remedy, just keep this in mind, and keep those receipts.

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What is My Tax Bracket ?

Do You Know Your Tax Bracket? Saw that question (What is my tax bracket?) in Money Magazine as a frequently asked question, so let me help you out (for those in Canada), with a few helpful links and a few more helpful tables and such helping you figure out What is Your Tax Bracket. As a precursor to these hints, you should always check with the CRA or a licensed Tax Accountant if you have questions about your Tax Bracket and such.

Where do you find out about the current Federal Income Tax Brackets (for you as an Individual, not you as a corporation) ? Go to this page for individuals. That page will tell you the following (for 2015):

Federal tax rates for 20158

  • 15% on the first $46,605 of taxable income, +
  • 20.5% on the next $46,603 of taxable income (on the portion of taxable income over 46,605 up to $93,208), +
  • 26% on the next $51,281 of taxable income (on the portion of taxable income over $93,208 up to $144,489), +
  • 29% on the next $61,353 of taxable income (on the portion of taxable income over 144,489 up to $205,842), +
  • 33% of taxable income over $205,842.

Tax Bracket

The Infamous Bad Pun

Remember that is Taxable Income, so this is what is left after you have taken your deductions, and credits and such. Remember also that if you earn less than the Basic Personal Amount (line 300) you don’t have to pay taxes (for kids with summer jobs and such).

However, that is not all, remember that you have Provincial Income Tax as well, and here are the 2018 numbers to keep in mind too:

Provincial and territorial tax rates (combined chart)
Provinces and territories Rates
Newfoundland and Labrador 8.7% on the first $36,926 of taxable income, +
14.5% on the next $36,926, +
15.8% on the next $57,998, +
17.3% on the next $52,740, +
18.3% on the amount over $184,590
Prince Edward Island 9.8% on the first $31,984 of taxable income, +
13.8% on the next $31,985, +
16.7% on the amount over $63,969
Nova Scotia 8.79% on the first $29,590 of taxable income, +
14.95% on the next $29,590, +
16.67% on the next $33,820, +
17.5% on the next $57,000, +
21% on the amount over $150,000
New Brunswick 9.68% on the first $41,675 of taxable income, +
14.82% on the next $41,676, +
16.52% on the next $52,159, +
17.84% on the next $18,872, +
20.3% on the amount over $154,382
Quebec Go to Income tax rates (Revenu Québec Web site).
Ontario 5.05% on the first $42,960 of taxable income, +
9.15% on the next $42,963, +
11.16% on the next $64,077, +
12.16% on the next $70,000, +
13.16 % on the amount over $220,000
Manitoba 10.8% on the first $31,843 of taxable income, +
12.75% on the next $36,978, +
17.4% on the amount over $68,821
Saskatchewan 10.5% on the first $45,225 of taxable income, +
12.5% on the next $83,989, +
14.5% on the amount over $129,214
Alberta 10% on the first $128,145 of taxable income, +
12% on the next $25,628, +
13% on the next $51,258, +
14% on the next $102,516, +
15% on the amount over $307,547
British Columbia 5.06% on the first $39,676 of taxable income, +
7.7% on the next $39,677, +
10.5% on the next $11,754, +
12.29% on the next $19,523, +
14.7% on the next $39,370, +
16.8% on the amount over $150,000
Yukon 6.4% on the first $46,605 of taxable income, +
9% on the next $46,603, +
10.9% on the next $51,281, +
12.8% on the next $355,511, +
15% on the amount over $500,000
Northwest Territories 5.9% on the first $42,209 of taxable income, +
8.6% on the next $42,211, +
12.2% on the next $52,828, +
14.05% on the amount over $137,248
Nunavut 4% on the first $44,437 of taxable income, +
7% on the next $44,437, +
9% on the next $55,614, +
11.5% on the amount over $144,488

Addendum

A commenter has pointed out another excellent resource in this area TaxTips.ca , check them out too!

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