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Last chance to correct old tax returns?
12/13/2017 12:46:16 AM
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By Knowledge Bureau  | Tuesday, September 26, 2017


 

TAX PLANNING FROM THE KNOWLEDGE BUREAU



By Evelyn Jacks

Did you know that the CRA’s Voluntary Disclosures Program (VDP) is proposed to change soon, restricting the ability to correct errors and omissions within a 10-year period? What can be done now to avoid the serious cost implications for taxpayers who have made errors or omissions on previous tax returns?

Should the changes come to fruition, not only will taxpayers lose the opportunity for full relief on interest and penalties owing, but a prepayment of taxes owing may also be required.

If you think you may need to make adjustments to previous years’ returns, Be sure to talk to your tax advisor to see if you should request an adjustment to tax years 2007 to 2016 before December 31, 2017, especially if you have missed reporting capital losses or principal residence dispositions or failed to file lucrative deductions for the following: moving expenses; child care expenses; business investment losses; carrying charges; or tax shelter deductions.

Use the following checklists to discuss common misses in filing prior returns with your advisor:

ERRORS OR OMISSIONS IN REPORTING INCOME

* Reporting income from joint accounts.
* Missed interest or dividends from private investments.
* Missed income from life insurance policy transfers.
* Missed income or expenses on portfolio statements.
* Errors in calculating adjusted cost base of mutual funds and other securities.
* Errors in reporting rental income – especially on restorations and repairs.
* Missed reporting of personal residence dispositions.
* Errors in reporting foreign currency exchange transactions and filing of T1135 forms to report offshore assets.

MISSED DEDUCTIONS

* Carrying charges including deductible investment counsel and safekeeping fees.
* Safety deposit box fees (2007-2013).
* Missed Exploration & Development expenses.
* Errors in claiming flow- through tax shelters.
* Missed application of allowable business investment losses on inactive or bankrupt private corporations.
* Missed reporting of capital losses.
* Errors in reporting net partnership losses

MISSED TAX CREDITS

* Donations: make charitable gifts through will to maximize refunds.
* Transfer securities to charity or private foundations to avoid taxes on gains.
* Give life insurance, but recognize excess of fair market value over cost of policy.
* Net income limit is 100% on gifts of ecologically sensitive property, certified cultural property and recapture of CCA.
* AMT – Alternative Minimum Taxes previously paid.

Evelyn Jacks is the founder and President of Knowledge Bureau. This article originally appeared in the Knowledge Bureau Report, © 2017 The Knowledge Bureau, Inc. Reprinted with permission. All rights reserved. Follow Evelyn Jacks on Twitter @EvelynJacks. Visit her blog at www.evelynjacks.com.

Her latest book, Family Tax Essentials, is now available.

Notes and Disclaimer

©2017 by Fund Library. All rights reserved.

The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.

 
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