Information Profusion

FLOYD MURPHY, CFP, CLU, CHFC, THE NAK AMUN GROUP, VANCOUVER

two people using a laptop and ipad on a wooden tabletop, there are "idea lines" floating in the air between them

Electronic access to information is fast, easy, and convenient, not just for us, but also for regulatory authorities such as Canada Revenue Agency (CRA). CRA has more readily available information about us than ever before, and they are willing to share with us.

However, be aware that CRA’s information is only as accurate as the sources providing the data to them. Generally, the information about you is correct and useful, but verifying and crosschecking is incumbent upon you.

TAX SLIP INFORMATION

several papers and a calculator being used on a desktop. a pen is being held in a hand over the calculatorThe information on tax slips you receive has always been sent to CRA as well, but now, whatever they have about you is accessible to you on CRA’s website if you have a registered online personal account. If you prepare your own tax returns and use software certified for the Netfile program, in some cases, the forms will automatically be filled in with information CRA already has. While this is convenient for you, there are two potential problems:

  1. If you file too early, you and CRA might not have all the required information to complete your tax return. If additional information is received after you’ve filed, you must file an amendment before the tax return deadline, especially if you owe more money. If you don’t meet the deadline, you could face significant penalties and interest, particularly if your failure to report income occurs with any frequency
  2. The information you download from CRA could be incorrect. While mistakes are rare, they do happen, so double-check CRA’s information. If something looks wrong to you and you have information that you believe is correct, override the downloaded data and manually input your own numbers. If you need help to determine where an error occurred, contact your accountant or your Nakamun Advisor

The New T5008

The 2016 tax year was the first time T5008s were issued for securities transactions in non-registered accounts, whether the result was a gain or loss on an actual or deemed sale. In the past, these transactions would appear on your year-end statements, but would not necessarily result in a T-slip being issued. Again, you are responsible for reporting any income from the sale of securities, and the T5008 should simplify that for you.

Principal Residence Sales

If you sell your principal residence, you now have to report that on your income tax return. There are specific rules that can jeopardize your principal residence status. For example, structurally modifying your residence to create a rental suite could make a difference. Be sure to seek professional advice before making changes or if you are planning to sell a property that has been modified.

Canada/US Information Sharing

More and more information is being shared between Canada and the United States. If you are a US citizen or hold a valid US green card, you must file a US tax return. If one or both of your parents were born in the US, even if you were born in Canada and have never lived in the US, you could still be considered a US citizen.

Knowing which country or countries require you to file an income tax return is important, so if you aren’t certain, consult an expert.

Information Overload

Availability and access to electronic information are not always advantageous and beneficial. Where involvement with CRA, or any other regulatory authority is concerned, easier access to information is perhaps more convenient for everyone, but fact checking becomes more onerous for you, albeit no more or less important than it’s ever been. As always, your Nakamun Advisor maintains accurate and detailed data relevant to the services we provide to you, so please call if we can help you reconcile information you see online with whatever our dealings are with you.

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