Another Tax Question

My recollection is the law says that, when reasessed, you pay first, then dispute and hopefully get a refund. Naive justice says that if you honestly filed a truthful, accurate return, the late clock should only start ticking when you were informed of your good-faith 'error'. But if their position is that your tax obligation was/should have been obvious to you at the time, then they'd consider you late from Day1 and charge accordingly.

The various appeals within the CRA and the courts eventually would sort it out. Big deal, if you pay more than the four grand for advice and representation to get off. You can, of course, represent yourself, and might consider it at the first level if your case seems clear.

The bigger question would be: What does the reason they give for the additional tax do to this year and previous years? E.g. If they've assessed $2000 additional taxes because they disallowed $6000 in expenses for 'workclothes', and you pay. They could then ding you similarly for a few years back, and the coming year as well. Which might make the cost of fighting seem more reasonable.

Worth a call to the number on the form for as much info as they'll give out. Everytime I've had to deal with folks at the CRA, I've found them polite, informative and reasonable to talk to. Do not argue with them, but certainly state your case clearly, succictly and politely. If all it is is a misunderstanding—if only—you may be happily surprised how far you get.

Best of luck, do not let them wear you down.
 
I second danmand's suggestion of going to a real accountant, one that does personal income taxes of course. He/she could steer you in the right direction as to stating what line of work you are in. Self employed, as an adult entertainer would work and this is an area in which they can help. Your annual income is another area. If you make over XX amount of dollars, then you have to register yourself ( a $200 fee I believe ), the accountant can help you here too and this is a deduction too. Now with their expertise you can start writing things off. A good aggressive accountant will write off things just under RevCans thresh hold so that the chances of being audited are slim. If you do get audited, they will represent you, sort of like a lawyer and all matters will be directed to them from RevCan. Go to an accountant today and keep it all above the table because the accountants fees are also tax deductible, so start keeping your receipts.
 
Catherine said:
Regarding claiming 'self employed'... Anything over 30K u need a GST #.

Kat
Good point, one that an accountant would think of and not that a GST # should scare you off from doing this as you do not have to collect any more $ for GST, you only have to submit it and you can have it as part of your fee structure for what you do. As an adult entertainer, (stripper) you may not have to charge GST, so it is a moot point. As well, T4's may not be needed if you are self employed and work for yourself. You keep track of earnings on your own, with a receipt book of course, no the client does not need the receipt (not unless they can write it off). You needn't worry about all the ins and outs, this is what an accountant gets paid to do, they will tell you what you need to do to make this work.
 
It appears that I misunderstood some of it. *blushes* I consider myself to be pretty smart but when it comes to income taxes, my intelligence seems to fly out the window. I always get all confused and flustered. No, it appears that I don't have any late fees or penalties after all. I guess I'll just suck it up and pay what I owe...:( (It is justified). Thanks all for the advice!

Chloe
 
Well, awful sorry about the expense, but real glad your record's still clean, and your future bright. Taxes is murky stuff; tax troubles is even murkier.
 
MissCroft said:
It appears that I misunderstood some of it. *blushes* I consider myself to be pretty smart but when it comes to income taxes, my intelligence seems to fly out the window. I always get all confused and flustered. No, it appears that I don't have any late fees or penalties after all. I guess I'll just suck it up and pay what I owe...:( (It is justified). Thanks all for the advice!

Chloe
I know people who are extremely intelligent make hundreds of thousands of dollars per year in the finance world yet they cannot read a Notice of Assessment properly (especially the RRSP deduction limit calculation). So don't feel so bad! Sorry you have to pay but make sure you really owe the money and that CRA hasn't erred.
 
Sukdeep said:
Sorry to hear of your troubles, Miss Croft.

Charging penalties sounds unusual, if you filed on time. Interest is due if they find more taxes payable. It doesn't sound right that interest/penalties should make up a "fair chunk" of the balance due.

yes, they can go back seven years and reassess. If they suspect fraud, there is no limitation period.

I thought individuals are more like 3 years? Fraud or misrep results in no limitation.
 
Albert Einstein

[on filing for tax returns]

This is too difficult for a mathematician. It takes a philosopher.

The hardest thing in the world to understand is the income tax.
 
As long as you've filed an honest assessment of your income you have nothing to fear from an audit. If they come along and quibble that dollars in one box should have been in another the impact on the balance due will be generally nothing, and you're not going to be in any seriously hot water for reporting something honestly but incorrectly anyway.

So don't worry.
 
MissCroft said:
It appears that I misunderstood some of it. *blushes* I consider myself to be pretty smart but when it comes to income taxes, my intelligence seems to fly out the window. I always get all confused and flustered. No, it appears that I don't have any late fees or penalties after all.

I take back what I said above. It turns out that just over $500 of it is indeed interest for being 'late'. So my initial question still stands. See how confused I am?
 
keeferz said:
They can go back 7 years, but in most cases, they don't, more like 3

Wrong.

This got me curious and the answer is 3 years per section 152(3.1) definition of "normal reassessment period" for an individual. It is extended for another 3 years for a total 6 years in circumstances described in 152(4)(b). Then, there is no limitation period where there has been fraud/misrep or a waiver has been filed.

http://laws.justice.gc.ca/en/showdoc/cs/I-3.3/bo-ga:l_I-gb:l_I//en#anchorbo-ga:l_I-gb:l_I