CRA Arbitrary Tax Assessment

Arbitrary Tax Assessment

Arbitrary Tax Assessment

CRA Arbitrary Tax Assessment

What happens when you don’t file income tax returns, HST returns, or corporate tax return? The CRA files your taxes for you. That’s right, they calculate your income based on past years income and assess you an arbitrary tax amount. The arbitrary assessment amount usually does not take into account any of the tax credits or breaks that could apply. The CRA will apply interest and penalties on the arbitrary amounts and send out a notice of assessment.

The process usually starts with few letters and followed by phone calls. If the CRA does not receive an answer, the next step is the arbitrary assessment. This is usually when clients call and need our assistance. We have the expertise to file your back taxes and get the arbitrary amounts corrected through appeals and amendments. We prepare and file the returns with great detail to avoid unwanted audits and future re-assessments.

The best way to avoid this hassle is to file your back taxes even if you are not able to pay off the taxes owing. We have the expertise to negotiate with the Canada Revenue Agency to setup a payment plan until the amounts are paid off.

Contact our tax accounting firm located in Brampton and Mississauga for all your back tax needs. 

Interest and penalties

Interest

If you have a balance owing for 2014, the CRA will charge compound daily interest starting May 1, 2015, on any unpaid amounts owing for 2014. This includes any balance owing if we reassess your return. In addition, the CRA will charge you interest on the penalties starting the day after your return is due. The rate of interest we charge can change every three months. See Prescribed interest rates.

Late-filing penalty

If you owe tax for 2014 and do not file your return for 2014 on time, the CRA will charge you a late-filing penalty. The penalty is 5% of your 2014 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.

If the CRA charged a late-filing penalty on your return for 2011, 2012, or 2013 your late-filing penalty for 2014 may be 10% of your 2014 balance owing, plus 2% of your 2014 balance owing for each full month your return is late, to a maximum of 20 months.

 

Non-residents selling rental property in Canada | Brampton | Mississauga | Oakville

Non-resident Canada

Selling Canadian Property

Buying and Selling Canadian Rental Property:


Canadian Economy

Canada’s solid banking system coupled with a strong economy have attracted investors from all over the world. Non-resident individuals have purchased rental properties across Canada. Owning a rental property in Canada can be profitable if you understand the Canadian tax laws that apply to non-resident individuals.

To own a rental property in Canada you are not required to be a citizen or even a resident. However, if you have Canadian source income you will be required to comply with Canada’s tax laws and file a annual income tax return. The Canada Revenue Agency imposes hefty interest and penalties on non-resident individuals if they don’t file Canadian income tax returns correctly.

What’s required to file a tax return?

Before you can file a tax return in Canada, you need to apply for a tax account number, usually referred to as Social Insurance Number (SIN) or Individual Tax Number (ITN). If you are a non-resident and need to file a tax return, you can submit an application to receive an ITN number. The supporting documents submitted must be certified true copies of the original document.

Non-Resident Withholding Tax 25%

Your tenant or property manager is required to pay 25% withholding tax on gross rental amount of your property to the CRA. This has to be done on a monthly basis usually on or before the 15th day of the month following the month the rental income is paid to you. The CRA imposes interest and penalties if the tax payer does not withhold and remit tax on a monthly basis.

At the end of the year your tenant or property manager is required to issue a NR4 return which shows the rental amount paid to you during the year and the amount of non-resident tax withheld.

In certain circumstances 25% withholding tax may not be required if you file the appropriate approvals before you start collecting rental income.

Example:

Anthony emigrated from Canada in 2013 and became a resident of England. He did not sell his house when he left Canada and decided to rent it out for a few years. In 2015, his property manager in Canada withheld and remitted non-resident tax of $5,000 (25% of the gross rental income of $20,000) to the CRA withholding tax division. Anthony had the following income and expenses from the property in 2015:

Gross rental income …………………………………………… $20,000
Less expenses: Allowable expenses ……………………. –$6,000
Net rental income ………………………………………………. $14,000

 To recover the extra taxes paid Anthony has the option to file a tax return and pay tax based on the $14,000 net rental income. Since Anthony has already paid taxes of $5,000 (which was based on the gross income of $20,000) the CRA will refund the extra taxes paid.

Expenses you can deduct related to your rental property: 

Advertising Legal & accounting Property taxes
Insurance Management fees Utilities
Interest Repair & maintenance Travel Costs

Non-Residents Selling Canadian Rental Property

When a non-resident sells Canadian rental property they must notify the CRA within 10 days, or face a $2,500 penalty. The sale proceeds will be held in Canada until you can obtain a clearance certificate. A clearance will only be issued once you have met all the tax requirements of the CRA.

 Who Can help me?

Our firm is specialized in non-resident tax matters and we can help you file all the required documents in a timely manner and be compliant with all the CRA reporting requirements. CRA imposes strict penalties on individuals who miss deadlines and these penalties can be high as $2,500 per tax payer. Contact our firm for all your non-resident tax needs.

Non-resident Sale Rental Property

CRA has more information on its website for non-residents owning rental properties in Canada: http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nnrs-eng.html

Non-residents selling rental property in Canada | Brampton | Mississauga | Oakville

Reminder-Monday, June 15, 2015, is the Deadline for Self-Employed Individuals to File Their 2014 Income Tax Return

Deadline for Self-Employed Individuals to File Their 2014 Income Tax Return

Deadline for Self-Employed Individuals to File Their 2014 Income Tax Return

Reminder-Monday, June 15, 2015, is the Deadline for Self-Employed Individuals to File Their 2014 Income Tax Return

We would like to remind self-employed individuals and their spouses that this year’s filing deadline is midnight on Monday June 15, 2015.  If you had an outstanding balance for 2014, it would have had to be paid on or before April 30, 2015. However, due to a CRA glitch the deadline to pay 2014 outstanding taxes was extended to May 5, 2015 this year.

If you don’t file your return, your GST/HST credit (including any related provincial credit), Canada child tax benefit payments (including related provincial or territorial payments), and old age security benefit payments may be delayed.

Contact our office if you still need help completing your 2014 self-employed business tax returns.

Canada Revenue Agency Scams

CRA Phone Call Accountant

Canada Revenue Agency Scam Phone Calls & Emails

 Over the last several months we have seen an increase in taxpayers receiving fraudulent communications that claim to be from the Canada Revenue Agency (CRA). Taxpayers are contacted by telephone, mail, text message or email. In all these cases, the communication requests personal information, such as a social insurance, credit card, bank account, and/or passport numbers, from the taxpayer.

These fraudulent communications typically insist that this personal information is needed so that the taxpayer can receive a refund or benefit payment. Other communications urges taxpayers to visit a fake CRA website where the taxpayer is then asked to verify their identity by entering personal information. These are SCAMS and taxpayers should NEVER respond to these fraudulent communications, or click on any of the links provided.

What should I do if I receive a phone call from the CRA?

We encourage all our clients to contact our office before responding to emails, phone call, text messages, or letters. We can contract the CRA directly and verify the validity of the correspondence.

Examples of a fraudulent website which claims to provide you with a tax refund by entering information into the online form:

File my Tax

 

Example of fraudulent email sent which looks like an Interact Email Money Transfer.:

Accountant tax filing

Example of a fraudulent letter: 

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Example of a fraudulent text message: 

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Example of a fraudulent email message: 

Download (PDF, Unknown)

 What should I do if I receive CRA fraudulent correspondence? 

We encourage all our clients to contact our office before responding to emails, phone call, text messages, or letters. We can contract the CRA directly and verify the validity of the correspondence.

CRA Audit of Moving Expenses

 

CRA Audits Moving Expenses

CRA Audits Moving Expenses

CRA audit of moving expenses

The Canada Revenue Agency (CRA) allows taxpayers to deduct moving expenses if they move closer to work or school. To qualify, the new residence should be at least 40 kilometers closer to work or school (measured by the shortest usual public route).

In the case of Trudy Hauser (Taxpayer) vs. Her Majesty The Queen (The Crown), the CRA audited the moving expenses of the taxpayer.  The main argument became how each of the parties were measuring the distance between the old home and the new place of work. The Crown had measured the distance using an urban route, which was the shortest distance. The Taxpayer had measured the distance using a rural route, which was the fastest route. The Taxpayer had indicated that the urban route was inefficient because of the construction on the route.

Despite the Taxpayers testimony and evidence The Tax Court sided with the Canada Revenue Agency and concluded that the urban route is the most appropriate route to measure the distance between the new place of work and the old home.

Read more about Trudy Hauser  case – CRA Audit of Moving Expenses below:

Download (PDF, Unknown)

Audit & Appeal

Our team is dedicated to assist you in all your CRA appeals. We make sure that your company’s tax audit is handled smoothly and efficiently. We can assist you with the tax audit process starting from the information gathering stage to negotiation with the tax authorities. We can also help in negotiating payments and even apply for interest or penalty relief.

Brampton Tax Accountants

Tax Accountant

Tax Accountant

Cheema & Assocaite – Your Local Brampton Tax Accountants 

Cheema & Associate CPA Professional Corporation is an accounting firm located in Brampton, Ontario at the main intersection of Kennedy Rd S and Clarence St. Our office address is 143 Clarence st. Suite 5, Brampton ON L6W 1T2.

We provide income tax services to all types of clients from Brampton. We have been serving the Brampton market for over three years. Tax has evolved over the years with strict regulations imposed by the Canada Revenue Agency. We can professionally prepare your tax returns while maximizing your refund by designing and catering unique tax planning strategies. Our professionals have experience in handling wide rage of unique tax returns. Contact us for your 2014 personal income tax returns.

Our Brampton tax accountants are dedicated in assisting you in all your income tax needs.

Personal Income Tax
Personal tax has evolved over the years with strict regulations imposed by the Canada Revenue Agency. Your local Brampton tax accountants can professionally prepare your tax return while maximizing your refund by designing and catering unique tax planning strategies. Our professionals have experience in handling wide rage of unique tax returns.

Corporate Tax
Our uniquely designed tax programs can assist you with complying with the complicated provisions of the Income Tax Act (ITA) while minimizing tax liabilities. We can structure your business to maximize profitability and minimize tax risks.Contact us for your 2014 corporate tax returns.

Audit & Appeal
Our team is dedicated to assist you in all your CRA appeals. We make sure that your company’s tax audit is handled smoothly and efficiently. We can assist you with the tax audit process – starting from the information gathering stage to negotiation with the tax authorities. We can also help in negotiating payments and even apply for interest or penalty relief.

Non-resident eligibility of child tax benefits and GST/HST rebate

Non-residents - Child Tax Benefits

Non-residents – Child Tax Benefits

Tracking Canadians emigrating to other parts of the word has become a serious challenge for the Canada Revenue Agency (CRA). Over the past several years the CRA has begun targeting non-residents claiming child tax benefits and GST/HST rebates. This has created confusion among taxpayers in determine if they qualify for these benefits while they are residents/non-residents. Although a taxpayer files tax returns as a resident, they still may not be eligible for the child tax benefits and GST/HST.

This is exactly what happened with a Calgary family living in China for the past several years and filing tax returns as residents. Although the tax returns were accepted by the CRA, they have still assessed the family with $18,000 tax bill for child tax benefits and gst/hst rebates for which the CRA claims they did not qualify for.

 

Download (PDF, Unknown)

CRA Auditing – HST New Housing Rebates

Goods and Services Tax/Harmonixed Sales Tax (GST/HST) New Housing Rebate

Goods and Services Tax/Harmonized Sales Tax (GST/HST) New Housing Rebate

The Canadian Market

The housing market in Toronto and the suburbs has been booming over the last several years. This has allowed investors from all over the world to cash in. The strategy was to purchase a newly constructed home or condominium unit from the builder and sell it a few months later for profit. This strategy seemed like people had finally figured out how to pull ahead in this struggling economy. For some this had even become a full time job with endless rewards. With the Canada Revenue Agency (CRA) only taxing half of the capital gain this was the right way to retain your money.

HST New Housing Rebate

With the CRA looking to increase tax revenues they started reviewing the New Housing Rebate applications  and determined a large number of people had claimed the GST/HST New Housing Rebate incorrectly. They were able to determine a large number of investors never even moved into the newly constructed property but they had sold it few months after they took possession. In this case they would not qualify for the rebate and they would be required to pay the HST balance to the CRA. A lot of investors had already sold the property and had failed to collect HST on the sale, which would mean they were still required to pay back the HST. This was a sticky situation with some investors on the hook for over $24,000. In some instances the CRA waited 3 years to reassess the taxpayer. Read more

CRA – Business Tax Reminder’s App

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The App

When the Canada Revenue Agency (CRA) announced they were going to introduce a mobile app. I was very excited as it would allow me to access information on the go. I had expected they would add in an accountant component allowing me to access client records on the go (much like they did with My Business Account). However, the CRA introduced an app which works much like the calendar I use in Outlook.

The Mobile App allows users to add in their different CRA accounts and pop-up reminders of payments and due dates.

The Future of the APP

I would like to see the CRA connect the app to My Business Account allowing business owners to see information on the go. Read more