Tax advice - compensation for help!

[Travis Munroe]

I want to start out by saying that I am more than happy to compensate anyone who is able to help me out in this situation.

Ill keep it short and if someone has advice, I can get into more details.

My prior brokerage paid my corporation and everything was real standard. When I made the switch to Re/Max I was collecting cheques and depositing them myself into my corporation. The idiot in me didnt think anything of the cheques saying my name on them as it was going straight into the corporation.
Ffwd to a few days ago when I am emailed a T4A showing personal income.
I figured it would be a easy fix but apparently not. My accountant had me inquire on amending the T4A and changing the SIN to my Business number however my brokerages accountant refuses to do so.
Without that change my accountant has told me that the CRA will come knocking on the door for personal income tax on that amount on top of the Corporate tax that I have claimed as business income. Essentially paying tax twice/three times on the exact same amount. I say three times because I pay tax on depositing into the business, then pay tax on paying myself from the business and then paying it again as if it never went into the corporation.

.... Despite being able to prove that the cheques made out to me were 100% deposited into the corporation it sounds as if I am out of luck.

Any advice would be greatly appreciated on getting out of this expensive error. I know the oversight by me not questioning the cheques in my name was the big mistake however it was one of those things where I would barely look at the cheques and hand them over to the teller.

[Calgary14]

Hey Travis, in this case the tax either needs to be paid either personally or thru your corp. it sounds like your brokerage accountant is being difficult which means a less than ideal situation (personal rather than corp). Your accountant is right, once CRA gets that T4A with your name on it they won't eve let it go (without an amended one, which you can't seem to get). Talk to whoever does the books for your corp - if the income wasn't in the the corp it shouldn't be recorded in there. That's a simple acct fix (ie acct entry). In this case if you received the cheques then out them into the corp it would be a shareholder loan, so eliminate the income and the other side is the shareholder loan.

You won't be double taxed, or triple taxed, but CRA will want their tax $ from you personally.

In the future, and I'm sure you know this already, I'd run all professional income (and expenses) thru your corp. I haven't seen the numbers but likely a lower rate and then you can tax plan within the corp via either dividends or salary. Or a mix of both. Your accountant should know about this. If you receive any cheques in your name and not your corp I wouldn't cash them as that's the issue here

Good luck!

[pylon]

Contact Locke. This is what he does for a living, and I would want a professional to file for me in a scenario like this.

[Travis Munroe]

Thanks for the tips...
The cheques were always intended for the corp and always deposited into it. The issue is paying the tax on the legit income into the corp (these cheques made out in my name) and then the CRA expecting me to pay tax on the income stated by my T4A.
There are ways to lessen the blow however I am looking to eliminate it. I spoke to 2 others today who have made the same mistake. The difference was that they were able to get a new T4A issued under the corps name.
I am going to speak to our owner next week as I am sure he has more pull where as the gal who does the books or the brokerage accountant are just following standard protocol.

[Calgary14]

Originally Posted by Realtor 1

Thanks for the tips...
The cheques were always intended for the corp and always deposited into it. The issue is paying the tax on the legit income into the corp (these cheques made out in my name) and then the CRA expecting me to pay tax on the income stated by my T4A.
There are ways to lessen the blow however I am looking to eliminate it. I spoke to 2 others today who have made the same mistake. The difference was that they were able to get a new T4A issued under the corps name.
I am going to speak to our owner next week as I am sure he has more pull where as the gal who does the books or the brokerage accountant are just following standard protocol.

Yeah that would likely be the easiest and cheapest way. That is the main problem, once CRA gets the original slip in your name without an amended one they'll want personal taxes. If an amended slip is not an option though the solution would be the acct entry. CRA wouldn't expect you to pay income in the corp if it's reversed out (with it being paid personally instead). It's fair to pay taxes on the income received but you wouldn't have to pay both corp and personal, although CRA would probably like that

For most clients I see we'd advise them to get the amended slip but if not try to lessen the blow by fixing the accounting within the corp. Then going forward all income (cheques) are made to the corp.

In future years you should likely consider finding the optimal mix of salary, dividends or both. Or even a bonus. You'd have 6 months to pay so you'd need the cash flow but it may make sense. Your accountant should be able to advise on your own personal situation and which is optimal

[Ace]

You could call CRA and ask what to do if you receive a T5A in error? If you get a good answer, ask for it in writing.

[darklord700]

Travis, you have two ways to deal with it.

First, because of the T4 matching program CRA uses, it doesn't matter that you deposited the cheques to your corp. CRA will treat those income on T4A as personal income. You can transfer those amount from your corp to your personal account and just leave your corp out of this for this year.

Second, you can ask Re/Max to admend the T4A if they are willing to.

Assuming Re/Max does not agree to admending the T4A this year, you must include the amounts on your T1. Failing that you might run into s. 163(1) trouble which carries a huge 20% penalty.

[robaur]

I might or might not work with the CRA....and see these kind of cases a lot...

Everyone in this thread thus far is correct. You have 2 options:

1) Back income out of corporation and pay personal taxes. (easy fix)

2) Fight with your employer to amend the T4A. (harder fix)

As stated above...If employer doesn't amend T4A and you fail to report it as income....you will be red-flagged and have to pay heavy penalties for misreporting income ....CRA doesn't take that lightly and the onus really is placed on the employer and employee to sort matters like these on their own and understand their tax filing obligations.

Lastly, I would seriously consider having a heated discussion with the accountant for Remax. Obviously a stupid mistake.

Also....if you called CRA...they would tell you to take it up with your employer and if it doesn't get resolved then u can file a formal complaint....u don't want to go down this route as it would take months to resolve and possibly sour your relations.

[Travis Munroe]

Originally Posted by robaur

I might or might not work with the CRA....and see these kind of cases a lot...

Everyone in this thread thus far is correct. You have 2 options:

1) Back income out of corporation and pay personal taxes. (easy fix)

2) Fight with your employer to amend the T4A. (harder fix)

As stated above...If employer doesn't amend T4A and you fail to report it as income....you will be red-flagged and have to pay heavy penalties for misreporting income ....CRA doesn't take that lightly and the onus really is placed on the employer and employee to sort matters like these on their own and understand their tax filing obligations.

Lastly, I would seriously consider having a heated discussion with the accountant for Remax. Obviously a stupid mistake.

Also....if you called CRA...they would tell you to take it up with your employer and if it doesn't get resolved then u can file a formal complaint....u don't want to go down this route as it would take months to resolve and possibly sour your relations.

Thank you for the insight (everyone)

It was of no fault to our office accountant.... I didnt follow through like I should have when everything from office A was transferred to office B.

[squiggs96]

How were you able to deposit personal cheques into a business account? I don't know of any banks that will accept those transactions.

[kipperiggy]

Originally Posted by squiggs96

How were you able to deposit personal cheques into a business account? I don't know of any banks that will accept those transactions.

I'm no banker and just guessing but if the cheque is made out to "Realtor1" and he puts it into business account with the account name "Realtor1 Corporation" maybe they don't even look twice.

[zarrell]

Originally Posted by squiggs96

How were you able to deposit personal cheques into a business account? I don't know of any banks that will accept those transactions.

Just the opposite. If you are the owner or director or your corporation personal cheques will go through no problem. I've made this mistake before and the teller didn't even inform me at the time.

[squiggs96]

Originally Posted by zarrell

Just the opposite. If you are the owner or director or your corporation personal cheques will go through no problem. I've made this mistake before and the teller didn't even inform me at the time.

Oops. My mistake. I did have it backwards, and I've even deposited my business cheque into my personal account via the ATM, and had it rejected before.

Originally Posted by kipperiggy

I'm no banker and just guessing but if the cheque is made out to "Realtor1" and he puts it into business account with the account name "Realtor1 Corporation" maybe they don't even look twice.

I do enjoy how you can make a statement, without knowing anything about it. I'm not astronaut, but I'm guessing if you hit the blue button the module will deploy.