CRA recently implemented a penalty for missing a slip when you file your tax return. The penalty can be very EXPENSIVE!
The T4’s that your employers send to you generally are not a problem. You probably remember who you worked for and it is unlikely that you would forget to include the income. Information slips for investment income, including bank interest and dividends on stocks (T3’s and T5’s), are easier to miss and much easier to get lost. For many people, especially when using investment advisors, the number and types of slips issued may change from year to year. This makes it very difficult to determine whether a slip (or slips) is missing.
Sometimes, the mail is not reliable, and if you have moved during the year – you may not have provided your new address to everyone who might be sending you tax slips. CRA gets copies of all of your slips, and if you miss one or more the “matching process” will catch it. The first time it happens, they’ll just adjust your return for you and let you know how much more tax you owe. No big deal most of the time. If you do get a notification, you should immediately contact the issuer to figure out what went wrong and ensure they have your correct address on file.
BUT, the second time you miss reporting that slip, (or any other slip) there is a whopping BIG penalty of 20% of the AMOUNT OF THE INCOME on the missing slip! That is a penalty on top of the tax and interest you’ll be assessed!
If you have any concerns, you or your Chartered Professional Accountant can contact CRA before your return is filed to see what they have on file. If you call yourself, you can call CRA and speak with an agent at 1-800-959-8281 and press *. Have your last Notice of Assessment or last filed tax return available so that the agent can verify your identity
Jerry Paskowitz is a Partner with Sloan Partners with over 30 years experience in all tax and financial matters. Contact Jerry for an appointment to discuss tax savings opportunities and financial strategy for your business.