CRA Quick Response

Careful What You Wish For From the CRA

I was delighted to see a response on my re-assessment, so quickly after I had called asking for status. After logging in to look at “My Account” I was a little concerned when I saw my account balance continued to be $0 (zero dollars).

Going into the Email section, I found out that I had made a bad assumption, and it was going to cost me more time. I had sent my support documentation for my claim that my son’s school fees were a medical expense in December. This package included letters from various professionals agreeing with this claim.

The package was sent on a Tuesday, however, on the Thursday afterward I received a package from the CRA. This package was all the supporting receipts for the same claim. I didn’t think much of it, but that was where I blundered.

This past Friday the CRA granted my claim for my son’s school fees as a medical expense. They pointed out, however, that since they didn’t have any receipts, they could not actually refund me any money.

After an obscenity filled few minutes, I calmed down, and realized how the sequence of events had worked against me.

What I Should Have Done?

I should have gone back on-line and submitted the receipts (again) to the CRA, with my supporting documents. The receipts have been sent again, however, I am back in the CRA queue, and I will need to follow up with them until they finally refund me my money (from 2017).

Guess I should have taken my own advice, that you can never send too much documentation to the CRA.

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Thinking like the Tax Folk

This week another chapter was written in my saga with my friends down at the CRA. Maybe I should just join the tax folks.

Previously you read about:

Earlier this week I received an envelope with all my receipts (from the 2018 pre-assessment) along with a letter stating the CRA allowed all of my claims in my 2018 return. I assumed this meant I would receive my complete tax refund, but I was also wary.

Tales from the CRA

The CRA thinks I owe them $4K so what was going to happen?

The CRA gave me my full refund for 2018 minus the $4K “owed” for the 2017 return. While annoying, I suppose it is nice to get some money back.

I now have the following quandaries:

  1. For 2018 claiming my son’s school fees as a medical expense has been allowed (so far). I have no aspersions that I may get another request for justification about this, but that remains to be seen.
  2. If the school fees are allowed for 2018, will they be allowed for 2017 given:
    1. This is the same school
    2. The same evidence was submitted to the CRA and OK’ed for tax year 2018
  3. If the school fees are allowed for tax year 2017, the CRA now owes me over $4K, which they have already have taken as payment from my 2018 refund.

What to Do Now?

Do I dare call the CRA and ask about this? Yes, I should. If I do not follow up the 2017 tax situation will continue to drag on. Yes, it may trigger a review of my 2018 return as well, but that is a risk I will deal with, if it transpires.

When you have a child on the Spectrum, and you have a non-standard tax return, life is never dull.

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Income Tax Receipts

After posting my taxes on Sunday, I was wondering how things would go with my return. I am currently in a reassessment for the previous tax year, so what would the CRA do about this?

It did not take long, as they replied on-line with a message asking for receipts for the tax year for the exact areas where I am being reassessed for the previous tax year. This actually makes perfect sense, to me. This process is called a pre-assessment, which seems to imply, they want to verify my claims before processing.

Given my previous year reassessment is still in process, I will include all the information from that process, just to be thorough. I am attempting to make the same claims that I am having reassessed, so it is better to give too much information, than not enough.

Remember, in these situations, always have a complete cover letter. The cover letter must identify the process identifier, and should inventory all the documentation you are sending.  I am also having my wife check what I am sending, it never hurts to have another set of eyes check things for you.

The only interesting part is that they are asking for receipts for my charitable donations, which has nothing to do with my reassessment. The value has gone up, but I am curious as to why they are asking for that as well.

What to Do?

I will be submitting them all on-line (for speed), and shall see what comes of this.

This is all part of the whole tax process, but does seem to be how this year is going for me as well (i.e. things that can get complicated, do get complicated).

Remember to keep those receipts too!

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A Tax Quandary

Thanks to my issues with my son’s Medical Credit claim, I have had an income tax quandary.

Given the initial assessment refused my son’s Medical Claim for his schooling to be a medical expense (for last tax year), I have asked for a reassessment. The bill for the initial refusal is not insignificant, however I am hopeful that we will prevail in the end.

Given I currently owe the CRA a significant amount of money, and my taxes are due, what to do?

First question: Do I do my taxes this year assuming my son’s schooling expenses are a medical expense or not, given the CRA has denied this for the past year? My call is that I will try to claim it this year, assuming we prevail with our re-assessment. If this thing backfires, I assume I am going to have a world more problems with the CRA, but let’s remain optimistic.

Next question, given I should be getting a refund from the CRA, should I file before I hear about the re-assessment results? If I file, with no resolution, the CRA will simply take my refund to pay my “debt” to them.

  1. If the reassessment ends up against my claim, I receive whatever is left from my refund, and the CRA is paid
  2. If the reassessment ends up for my claim, and the CRA has already taken their “payment” I must then ask for my money back, which will mean delays and more paperwork.

We decided to simply file and see what happens. Currently my life is a bit chaotic (to say the least), so it would be better to tie off loose ends before things possibly go pear shaped.

Better to Act Sooner

Given I may be very distracted soon by other issues, it is better to file my taxes, and let the CRA decide how things will transpire.

Medical Expense Resources

Here are a few of the articles I have written about if your child has a valid Disability Tax Certificate (DTC), how you can claim their training or schooling as a medical expense.


Going Pear Shaped: An English colloquialism meaning things going very wrong.


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Pay Taxes or Your RRSP ?

Given my love for the RRSP (or the Tax Deferral Savings Plan), I was wondering whether folks use it to defer owed taxes? The simple question is Pay Taxes or Your RRSP ?

If you received my T4 early enough that you could estimate my taxes, what would you do if you estimated you owed $500 taxes?

You have two options:

  1. Give the CRA their $500 and forget about it
  2. Put enough money into your RRSP (before March 1st) to counteract the owed taxes. This means you would then owe $0 in taxes.

The argument I keep hearing is that if I put money away in an RRSP now, I’ll just end up paying a higher tax rate on it when I take the money out. There is a school of thought that you might be in a higher tax bracket when you retire. To me, it seems an odd statement given the money will grow (hopefully) in your RRSP. This mean you’ll have more money to be taxed, albeit at a higher rate ?

I tried very hard to find what your nominal tax rate might be in Ontario, but let’s just assume it’s 50% for you.

This means you need to put about $750 into your RRSP to not pay $500 in taxes to the CRA. To do this exercise, if you have Quicktax or something similar, you can simply plug numbers into their RRSP estimator. This might be a better way to estimate, how much to pay.

Now you have $750 in your RRSP, and say you are 32. You have about 30 years until you want to take your $750 out. Assuming a simple growth 4.5% year over year, it will be about $3100.

Why not Put It in an RRSP ?

You now take $3100 out at a higher tax rate (say 60% again hopefully taxes in 32 years are not that brutally high), but it is still about $1300 dollars net. The bonus is you didn’t have to pay the CRA $500 32 years ago (an added bonus).

A net investment of $250 (you were going to have to spend $500 no matter what) you end up with $800 ? Seems like a winner to me.

Why wouldn’t you do this? If you didn’t have $750 dollars I suppose that might stop you, but are there other reasons?

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