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Canadians are tuning out real tax agents because of CRA phone scammers

Telephone scamming has become so frequent in Canada that it has become difficult for real tax agents to contact citizens. The Canada Revenue Agency (CRA) says that fraudsters pretend to be tax enforcers when they call Canadians with threats related to owed taxes and further penalties. These calls have become so commonplace that real CRA agents are often assumed to be fraudulent. A spokeswoman from the CRA notes that they do not call to ask for payment, although they may call to verify information.

“Some people are so used to receiving the fraudulent calls that they assume any communication from the tax-collection agency is bogus.”

Canada’s income tax rates have become uncompetitive, and the economy will pay the price

A new report by the Fraser Insitute shows that Canada’s personal income tax rate is significantly higher than those of the U.S. in addition to other countries. In 2017, Canada’s top marginal income tax rates were the seventh highest top tax rate out of 34 industrialized countries. When people with higher incomes are taxed more, it results in less economic growth. As the government continues to raise the tax rate for potential spending, it could backfire for them with taxpayers responding by working less to avoid paying these taxes, resulting in less money paid to the government.

“Canada’s top marginal tax rates are punitively high, have put Canada in an uncompetitive position and discourage individuals from engaging in productive economic activity, ultimately hindering economic growth and prosperity”

What to expect when the Canada Revenue Agency (CRA) contacts you

Canadian citizens know who the Canada Revenue Agency (CRA) is, so if you’re contacted, be sure that you’re communicating with the real CRA. Scammers impersonating CRA agents are rising in numbers, and for this reason it is critical that Canadians know what a CRA agent would ask and would not ask. For instance, on a phone call, a CRA agent will never demand immediate payment or threaten you with imprisonment, and the same goes for mail. Additionally, CRA agents will never request payment over emails – so be wary.

Key Takeaways:

The CRA will never ask for financial information by email and ask you to click on a link to complete a form.
The CRA won’t demand immediate payment by Interac e-transfer, bitcoin, prepaid credit cards or gift cards.
The CRA may verify your identity by asking for personal information such as your full name, date of birth, and address; or for a business, they may ask for details about your account.

“When in doubt, ask yourself – Why is the caller pressuring me to act immediately? Am I certain the caller is a CRA employee?”

Money in the bank: Ottawa looks for new ways to tax dormant accounts

Canada’s Department of Finance is looking at reforms to reduce or eliminate interest paid on unclaimed dormant bank accounts and terminated pension plans. It is estimated that it amounts to $742 million as of Dec. 31, 2017. It is proposing that balances that stand stagnant in bank accounts, and balances with less than $100 will be held for a shorter period time than the current 30 year waiting period. They also want to expand it to unclaimed pensions and possibly add dormant accounts in U.S. dollars and other foreign currencies.

“The Bank of Canada holds at least $742 million in unclaimed balances that Canadians apparently have forgotten they own. The federal government wants to revamp and expand the system to include some unclaimed pensions.”

5 Common Tax Mistakes Canadians Make Every Year

If you haven’t filed your taxes yet, you might want to avoid these common mistakes that could end up costing you more money. Here are five areas where Canadian commonly make mistakes. Filing late can lead to interest and penalties. Not all medical expenses are deductible, especially alternative healers. Tuition as well as student-loan interest expenses are not in every case eligible for a deduction. Many moving expenses are eligible but not as many as you may expect. If you are unsure, consult a tax professional before you end up making a costly mistake on your taxes.

“Making a mistake on your tax return can cost you dearly. So what do you need to look out for?”

Many Canadian SMEs face taxing problems

Many small businesses can find themselves the subject of a CRA audit, especially if they are in certain industries or take a lot of payments in cash. Even companies that are the most compliant will lose time and money because of an audit. Because of the possibility of an audit, businesses such as restaurants that deal with cash should consider legal expense insurance or work with an accounting firm who know your business and have access to these specialists.

Key Takeaways:

In Canada, there are many mid-sized businesses that get audited by the CRA, but precisely how the CRA determines which businesses will be audited is understandably kept under wraps.
Some sectors are more likely to face an audit than others, especially in industries that are known to be less compliant.
It’s important to have a specialist and accounting professionals to work with you until the conclusion when you’re going through an audit.

“For many business owners, the stress of facing a CRA audit is as much about the additional work as the possibility that auditors might actually find something amiss.”

Did you donate to a charity? You may be able to claim a charitable donation tax credit

If you donated to a registered charity, then hopefully you kept the receipt they gave you a proof of donation, because it is good for a tax credit. Donations include any property including land, cash and goods. There are several ways to determine if the charity qualifies, but the easiest method is to call them or through an online search. Receipts must be kept up to six years after you make the claim. Any unclaimed donations can be used during the year they were made or for the last five years. If it was a gift of ecologically sensitive land made after February 10, 2014, then it can be claimed within ten years of the donation.

“You need an official receipt to claim a charitable donation tax credit.”

12 things you might have missed in budget 2019

The Federal government released their latest budget, and BNN Bloomberg highlights 12 items in the 2019 budget. There’s help for students; new excise duties imposed on edibles, extracts and topicals which increase with higher quantities of tetrahydrocannabinol (THC); high-speed Internet accessibility for those living in remote and northern communities; increased investment in cyber security; improved access to The Canada Workers’ Benefit for low-income workers; and not just help for new home buyers but also more housing supply. A crackdown on fraud and money-laundering in Canada’s real estate market; an annual $200,000 cap on the preferential treatment of stock options; one-time boost to the Gas Tax Fund; increased support for the Public Prosecution Service of Canada; help for supply-managed farmers; and support for small-and-medium-sized businesses that produce and use steel and aluminum.

“Here’s a look at the new measures you may have missed in budget 2019.”

What you need to know about the tax consequences of employee stock options

Employee stock options are a popular tool companies use to reward existing staff and attract new employees. However, these options have major tax implications. The options – when exercised carry with them taxes. Usually, this is half the amount of shares optioned which goes to the tax authority. In the event of stock decline from when the shares were optioned – the decline is booked as a capital loss and is not deductible and will result in a mismatch on the individual’s yearly tax form.

Key Takeaways:

Stock option benefit is classified as employment income not capital gain.
If an employee decides to sell his/her stock, they become an investor and is no longer considered an employee.
The law was changed in 2010 which now allows the government to collect taxes when certain options are exercised and employees need to be mindful.

“A capital loss can only be used to offset other capital gains and cannot be deducted against the taxable employment benefit that arose upon acquisition of the shares through the option exercise.”

Everything you need to know about the enhanced CPP — from how much you’ll pay to how much you’ll get

Generations of young workers will benefit from new reforms to the Canadian Pension Plan. These changes will happen in two phases with a rise in contribution rates being seen in each phase. The reformations should be fully in place by 2065. Employers will be affected differently with varying contributions depending on if they are in the private or public sector. It will essentially be a better package than is available to the current retiring baby boomers.

“Higher premiums to fund it began this month. Once fully phased in almost half a century from now, CPP will replace 33.33 per cent of the average worker’s lifetime earnings to a higher pensionable earnings limit of $65,400 (rounded down, 2019 dollars.)”