More Excuses For Not Filing on Time : CRA SOTW

Excuses For Not Filing on Time :CRA SOTW

More than one million don't file tax returns on time, have wacky
excuses
People duck deadlines, incurring fines, losing benefits

CanWest News Service
Published: Monday, November 26, 2007

According to the Calgary-based firm Personal Tax Consultants, more
than a million Canadians each year file their returns late or not at
all -- scary in that there's a five-per-cent fine the first time you
file late, plus an interest penalty of one per cent per month you're
late, and numerous social benefits such as the GST credit get held up
until you file.

According to PTC president Neel Roberts, the top 10 reasons given to
him for filing late or not at all are:

10) I am too young.

9) I don't make enough money.

8) I am dead.

7) I don't have all my information; I think my dog ate some receipts.

6) I will get to it someday, I have other priorities right now, and
I'm too busy.

5) I think I owe too much money.

4) I think they owe me money, so the longer I wait the more they will
owe me.

3) Maybe they will forget about me.

2) I thought my wife did it this year.

1) You mean I have to pay taxes in this country? I did not know this.

Meanwhile, Leger Marketing recently conducted the Mackenzie Financial
Great Canadian Tax Test, asking 1,536 people 10 true-or-false
questions on recent tax changes.

The percentage of correct answers ranged from 45 per cent of people
knowing they could now claim a physical-fitness tax credit of up to
$500 for each child under 16 (with proper receipts), to only 17 per
cent knowing that the $4,000 yearly maximum contribution to a
registered education savings plan had been eliminated, as the lifetime
limit was increased from $42,000 to $50,000.

When the RESP changes were announced, many advisers said a person
would actually be better off making a one-time $50,000 contribution
instead of a series of $2,500 annual contributions. The theory was
that although you would get the Canada Education Savings Grants only
once (now increased to $500 on the first $2,500 contributed annually,
still up to a lifetime maximum of $7,200), the tax-deferred
compounding effect of returns on $50,000 over 25 years would be
greater than the loss of CESGs.

The wisdom of that strategy has been challenged by Jamie Golombek,
vice-president of tax and estate planning with AIM Trimark.

He has crunched the numbers and says: "While it depends on a number of
factors, including the age of the child and, perhaps most important,
the type of investment returns generated [income, dividends or capital
gains] and the rate of return, in nearly all cases the benefits of the
tax-deferred growth inside an RESP do not outweigh the loss of
potential CESGs."

On the subject of tax shelters, Golombek quoted a Canada Revenue
Agency statement of Aug. 13: "If it sounds too good to be true, don't
fall for it. Taxpayers need to know that the Canada Revenue Agency is
auditing all tax-shelter gifting arrangements."




© The Vancouver Province 2007

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