upon a conviction, and written up on the CRA’s website in the Media Room section under “Convictions.”
6. Tax Preparation
Millions of tax returns are prepared each year in Canada. Many people turn to professionals to prepare their returns, and as computer literacy has increased, more people have started to prepare their own returns either online or with purchased tax software.
It does not matter how you have your return prepared or how you file — as long as the return is correct and filed on time. If you wish to manually prepare your own General Income Tax and Benefit Return, it is accessible on the CRA’s website. You can download, view, and print the return. If more convenient, a hard copy of the package, as well as other CRA publications and forms, may be ordered directly from the CRA website.
6.1 Tax software
Many paid commercial and non-commercial tax preparation software packages exist in order to prepare your tax return either on your computer or online. Freeware or non-commercial tax preparation software is available online. Additionally, for the budget conscious do-it-yourselfer, tax returns may be filed online free of charge through NETFILE, a CRA run service.
In order to be sure that the software or online tool that you choose is compatible with the CRA NETFILE electronic tax filing service, you must ensure that the software chosen is CRA certified. The earliest time to check the list of certified commercial software is in late January, as the software is tested and certified by the CRA sometime between December and March. The CRA provides a list of certified software programs on their NETFILE website (netfile.gc.ca).
If you choose to use the NETFILE system or any other online filing system, keep in mind that not all returns may be filed online. You cannot file online if you —
• are in the process of bankruptcy,
• are filing for previous years (you can only file online for the current tax year),
• have never filed a tax return with the CRA before, and
• are not resident of Canada.
6.2 Using an accountant or a tax return preparer
A great many Canadians engage the services of accountants and tax return preparers each year during income tax season.
One thing to consider when you are getting help is that not all help is good help. In fact, a great deal of my clients are taxpayers who need assistance sorting matters in which their “accountant” had led them astray or given them poor advice or service. Invariably they refer to the person who was doing their taxes or handling their negotiations and dealings with the CRA as their “accountant,” yet in many cases the person was not an accountant at all. Oftentimes, the client had engaged the services of somebody who was unreliable or unqualified.
“Accountant” is not a protected word, unlike the words “police officer” and “lawyer.” That is to say that anybody may claim to be an accountant or may provide accounting services, even if they are not a licensed or credentialed accountant, whereas not everybody can call themselves a police officer or lawyer.
This is not to say that you should always engage a Chartered Accountant to prepare your tax returns. If your taxes are simple, you may fare much better by having a tax return preparer do your taxes. If the preparer knows what he or she is doing, the returns will likely be correct and you will pay a much lower rate than the Chartered Accountant would have charged you. However, if you have a more complicated tax return, you may want to seek the type of a tax professional that you believe would be best suited to give you advice. It may be a Certified General Accountant, a Chartered Accountant, or even a Tax Lawyer depending on the issues and the level of complexity.
As always, read your return and verify the contents before signing — regardless of who prepared it. Once you sign the return, you become liable for any inaccuracies, and you can be severely penalized or punished for false statements.
7. Things to Consider When Preparing Your Return
The following three sections discuss things you should consider when preparing your tax return or late tax returns.
7.1 Amended tax returns
Sometimes a taxpayer must file a return with all the information he or she has at the time — even though some information may come at a future date. In this case, the taxpayer is not necessarily evading taxes, but he or she is filing a return with an estimate built-in. Once the information becomes available, there is a process by which the tax return can be updated to reflect the true figures. In order to update or make changes to a personal income tax return that was previously filed, the CRA prefers that the taxpayer complete a T1 Adjustment Request (T1-ADJ) form, rather than to file an amended return. The T1-ADJ can be found on the CRA’s website as well as in the offices of local tax service providers.
Once the T1 Adjustment Request is received by the CRA, it can either process it as filed, or it may choose to audit the request to verify its validity.
7.2 Waiver in respect of the normal reassessment period of extended reassessment period
Sometimes when the taxpayer requests adjustments to returns at a time when the CRA would no longer be allowed to reassess those returns because of a limitation under the law, the CRA will request that the taxpayer provide a signed waiver permitting the CRA to reassess the taxpayer outside of the allowable time. In circumstances where the taxpayer will benefit from the reassessment, he or she may consider signing the waiver, but the person should seek legal advice.
Be careful if you are going to consider signing: I have on various occasions represented clients against unscrupulous CRA auditors who had provided a waiver for my client to sign because he or she had waited too long to reassess the taxpayer, which would have made the audit a waste of time. One of those times the auditor went around my back and contacted my client directly. In cases involving an audit which had been delayed, the signing of a waiver could be detrimental to the taxpayer, except in the extreme unlikely case of the audit results being found in favour of the taxpayer. As such, a taxpayer should not sign any waiver until he or she has received proper legal advice.
7.3 If you have not filed your return
If you are not up-to-date on your filings, or you have not fully reported your income, the matter should be considered serious and attention should be focused immediately on resolving the situation. Your course of action would differ depending on whether you have been contacted by the CRA regarding your failure to file. If you have not yet been contacted by the CRA, either in writing, by telephone, or in person, it is likely that you may qualify for the Voluntary Disclosure Program, which could help you avoid penalties and prosecution (see Chapter 10 for more information).
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