Q re: income tax on savings account

[1HandInMyPocket]

I have a Savings Account with ING (not tax-free). Since I did more investing this past year, I did not keep a lot in my account (I wanted immediate access to my funds when needed). Now because of this I made less than $50 in interest, and from their website they stated they do not issue tax receipts for interest earned under $50. I do know the exact amount of interest I did earn in 2010, but do I still need to state this amount regardless if I have a tax receipt or not?

Thanks in advance,
1Hand

 

[danmand]

I have a Savings Account with ING (not tax-free). Since I did more investing this past year, I did not keep a lot in my account (I wanted immediate access to my funds when needed). Now because of this I made less than $50 in interest, and from their website they stated they do not issue tax receipts for interest earned under $50. I do know the exact amount of interest I did earn in 2010, but do I still need to state this amount regardless if I have a tax receipt or not?

Thanks in advance,
1Hand

You are required to report all interest. However, if ING does not send a T5 to you they will not send one to revenue Canada either. You have an ethical problem. LOL

 

[T.O.tourist]

You are required to report all interest. However, if ING does not send a T5 to you they will not send one to revenue Canada either. You have an ethical problem. LOL

Ethics have nothing to do with filling out a tax return. LOL

 

[needinit]

I claim all interest but I also claim costs of having the account open (i.e. Monthly fees) as well...sometimes I am at a 'loss' when submitting both

 

[CapitalGuy]

I have not claimed interest in the 20-some years I've been paying taxes. No consequences so far. Risk it.

 

[Hangman]

Or, report the $50 amount. I'm willing to bet that it does not have any material effect on your refund or taxes owed.

You could also look at your ING statements and add up the interest they paid you and add it.

Of course, when your return doesn't match your T-slips, you're begging for an audit.

 

[Moraff]

From the CRA website:

Line 121: "You may not receive a slip if the income is less than $50, but you must still report this income."

And I wouldn't be so sure CRA wouldn't receive a T5 slip from the bank... they'd be submitted electronically and it costs the same for them to send a T5 for $49.99 as it does for $50.00.

 

[Moraff]

I claim all interest but I also claim costs of having the account open (i.e. Monthly fees) as well...sometimes I am at a 'loss' when submitting both

What line do you claim the costs on? Didn't think individuals could claim bank fees as tax credits.....

 

[Tangwhich]

If you don't have a T5, then your interest is less than $50. Why risk tax evasion charges for such a small amount of money? You might get away with it, but if you don't it'll put a flag on your SIN that will be a nightmare for life. It's not worth it.

 

[CapitalGuy]

If you don't have a T5, then your interest is less than $50. Why risk tax evasion charges for such a small amount of money? You might get away with it, but if you don't it'll put a flag on your SIN that will be a nightmare for life. It's not worth it.

You don't get charged with tax evasion for $50. You are told that you owe $X taxes from previous years, or the pick up your error while validating your file, and add the interest charge to your taxable income, no penalties added. If they "flagged" the SIN of every Canadian who made a minor oversight in their taxes that required correction, then every Canadian who pays taxes would have a flagged file.

 

[Tangwhich]

You don't get charged with tax evasion for $50. You are told that you owe $X taxes from previous years, or the pick up your error while validating your file, and add the interest charge to your taxable income, no penalties added. If they "flagged" the SIN of every Canadian who made a minor oversight in their taxes that required correction, then every Canadian who pays taxes would have a flagged file.

You might be right, but is it worth taking a risk for such a tiny reward?

 

[Fred Zed]

You might be right, but is it worth taking a risk for such a tiny reward?

The risk is virtually non-existent in this case, if he files on time and doesn't owe CRA. Even if they find out, the interest penalties
on $50 are very small. Having said that, why not just report the $50. It will not make much difference to the refund or the amount owed.

 

[Tangwhich]

The risk is virtually non-existent in this case, if he files on time and doesn't owe CRA. Even if they find out the interest penalties
on $50 are very small.

Yeah, but I'm talking about years down the road if it's repeated. I agree, it's a tiny amount but I again have to ask, why take any risk for practically no reward?

 

[Fred Zed]

Yeah, but I'm talking about years down the road if it's repeated. I agree, it's a tiny amount but I again have to ask, why take any risk for practically no reward?

Even for large amounts that are owing the most CRA will do is charge interest and penalties. The only problem is when you can't pay what you owe.
And you have assets [home, car, investments etc] that CRA can take from you. Just like any other big money operation CRA don't waste much time collecting small amounts of money. He has nothing to worry about.

 

[middleweight]

I have not claimed interest in the 20-some years I've been paying taxes. No consequences so far. Risk it.

Big or small amounts? also were T5's issued to you?

 

[Moraff]

Yeah, but I'm talking about years down the road if it's repeated. I agree, it's a tiny amount but I again have to ask, why take any risk for practically no reward?

Generally speaking the first time you get caught omitting to report income you pay the interest on whatever debt occurs from the date the income ought to have been reported by (generally the 30th of April for whatever tax year the income is from) up until the day CRA found out about it and put it on your file.

If you repeat the offense within the next 3 years you will be charged the arrears interest plus a penalty of 10% of the unreported income. This penalty is assessed for both the federal and provincial taxes - so in effect it's 20% in total.