Accounting and Taxes Thread

[DoubleF]

Originally Posted by Table 5

Thanks everyone, appreciate the insight. I wasn't even really thinking about the CRA angle, but that's definitely something to keep in mind (even though things would still be well within the rules).

Opendoor, I wish we were talking about a $500K gain, ha. Definitely not at that level, but I agree there are some long term implications of reducing the capital invested due to the earlier tax payment. I think my timeline would be not quite that long (more like 2-3 years, which in todays environment can feel like a long-term investment!), but definitely still something to calculate out.

Another facet that might tilt it heavily in favor of crystalizing is the CDA account.

After mulling things over a little bit, forget what the CRA might or might not do. I can't imagine they could do something to taxpayers crystalizing gains prior to the rule kicking in without a sudden full on revolt and demand for tax reform.

My apologies for letting my annoyances and frustrations get the point of going a little chicken little in the previous post.

[DinnerDog]

I work in valuations, mainly for tax crystallizations, family law, estate planning, employee share purchase plans, etc., we haven't had much detail on what CRA will be allowing in the next few months, although we are expecting to be busy.

The increase in LCGE is also going to be a factor (albeit a smaller one) in determining course of action for some in the next few months.

[Nancy]

I think this falls under the "obvious" category, but I just want to be sure.

For those who are Co-Op members, how have you been entering your Co-Op T4A?

My understanding is that since Co-Op switched to the new points/merchandise based dividends, the T4A issued is no longer taxable, and they basically say that on their website (below). But, if you download your receipts from the CRA website using TurboTax, it gets entered as taxable income. So I am assuming I can just go ahead and manually override what has been imported in TurboTax? This is legit, right? It's worth ~$170 in extra refund, and I guess I can re-file last year as well.

Also, TurboTax finally has the digital T3 form update, so you can now NetFile.

https://www.calgarycoop.com/membership/updates/

But good news—your return isn’t necessarily taxable! Returns from consumer goods (groceries, household items, gas for private car use, etc.) for personal use are not subject to tax. Any withheld tax as outlined on your T4A can be claimed as a credit when you file your personal taxes. Just write “Consumer Goods Only” on the face of your T4A.

[DoubleF]

Originally Posted by Nancy

I think this falls under the "obvious" category, but I just want to be sure.

For those who are Co-Op members, how have you been entering your Co-Op T4A?

My understanding is that since Co-Op switched to the new points/merchandise based dividends, the T4A issued is no longer taxable, and they basically say that on their website (below). But, if you download your receipts from the CRA website using TurboTax, it gets entered as taxable income. So I am assuming I can just go ahead and manually override what has been imported in TurboTax? This is legit, right? It's worth ~$170 in extra refund, and I guess I can re-file last year as well.

Also, TurboTax finally has the digital T3 form update, so you can now NetFile.

https://www.calgarycoop.com/membership/updates/

You are correct. For most individuals, Coop T4A you can move to non-taxable. I've then had people ask if they can just not input the slip. Nope, I wouldn't recommend that. Non-taxable doesn't mean no need to report. There's usually income tax deducted on those slips, so you'd lose out on that amount for reduction of taxes/increased refund. That's not including the annoyance if CRA does a slip matching investigation.

[Locke]

Originally Posted by DoubleF

You are correct. For most individuals, Coop T4A you can move to non-taxable. I've then had people ask if they can just not input the slip. Nope, I wouldn't recommend that. Non-taxable doesn't mean no need to report. There's usually income tax deducted on those slips, so you'd lose out on that amount for reduction of taxes/increased refund. That's not including the annoyance if CRA does a slip matching investigation.

This is correct.

[Nufy]

What is the deadline for companies to submit all t4's and other tax slips to the CRA.

And after that date...can I just download them all from my CRA account instead of waiting for my copies to come in the mail or d/l electronically ?

[DoubleF]

Originally Posted by Nufy

What is the deadline for companies to submit all t4's and other tax slips to the CRA.

And after that date...can I just download them all from my CRA account instead of waiting for my copies to come in the mail or d/l electronically ?

Feb 28 normally, Mar 7 this year.

Let's just say that if you just blindly autofill a return and file, it's like relying on autopilot to drive you. Completeness of slips in MyCRA is not at the level that most people think it's supposed to be and this year is the worst I've seen since they released AFR.

I've heard many large banking and investing institutions are telling people they are currently aiming for March 20-28 for RRSP contributions and other tax slips.

[gasman]

Question about Capital Gains Tax inside of Holding Companies. If shares of a related Active Operating company are sold at a capital gain, is the taxable portion of the capital gain taxed at the general rate of 23% or at the investment income rate of 46.67%. In this case Holdco is related, but not the sole owner of the Opco.

I think I know the answer, but I'm hoping the businesses being related allows for the general rate vs the investment rate.

[Leondros]

Originally Posted by gasman

Question about Capital Gains Tax inside of Holding Companies. If shares of a related Active Operating company are sold at a capital gain, is the taxable portion of the capital gain taxed at the general rate of 23% or at the investment income rate of 46.67%. In this case Holdco is related, but not the sole owner of the Opco.

I think I know the answer, but I'm hoping the businesses being related allows for the general rate vs the investment rate.

I will let Locke validate this one as its been a decade since I wrote the UFE but my understanding is that when the holding company sells shares of a related active operating company at a capital gain, the taxable portion (50% of the capital gain) is treated as passive investment income. The taxable portion of the capital gain (50%) is taxed at the investment income rate of 46.67%, not the general corporate tax rate of 23%. However, part of this tax is refundable when dividends are paid out of the company.

One last consideration would be if the holding company has over 10% of the operating company, it might qualify for the Capital Dividend Account, which would allow the non-taxable portion (50%) of the capital gain to be shielded and distributed tax-free in the future.

[calgarygeologist]

A question regarding T4 slips. My company issued me two T4s for 2024 because my employment status changed throughout the year. I can see both in our payroll system. In my CRA account only one T4 shows up? Should I be considered about this at all? Should I indicate this to payroll at work?

[kipperiggy]

Originally Posted by calgarygeologist

A question regarding T4 slips. My company issued me two T4s for 2024 because my employment status changed throughout the year. I can see both in our payroll system. In my CRA account only one T4 shows up? Should I be considered about this at all? Should I indicate this to payroll at work?

Kinda weird when it's the same employer, but I have one employer that submitted and another that didn't, I just made sure to report the combined correct amount.

[kipperiggy]

Originally Posted by Leondros

I will let Locke validate this one as its been a decade since I wrote the UFE but my understanding is ...

I'm impressed you remember anything about taxes after writing the UFE, that whole time period is a blur for me!!

[Nufy]

Originally Posted by DoubleF

Feb 28 normally, Mar 7 this year.

Let's just say that if you just blindly autofill a return and file, it's like relying on autopilot to drive you. Completeness of slips in MyCRA is not at the level that most people think it's supposed to be and this year is the worst I've seen since they released AFR.

I've heard many large banking and investing institutions are telling people they are currently aiming for March 20-28 for RRSP contributions and other tax slips.

Those are the ones I am waiting on.

With personal and company RRSP's plus stock RRSP's and some other type of company stuff...I seem to file and then a week later get another slip...Then a few weeks later again...another one.

[Locke]

Originally Posted by Leondros

I will let Locke validate this one as its been a decade since I wrote the UFE but my understanding is that when the holding company sells shares of a related active operating company at a capital gain, the taxable portion (50% of the capital gain) is treated as passive investment income. The taxable portion of the capital gain (50%) is taxed at the investment income rate of 46.67%, not the general corporate tax rate of 23%. However, part of this tax is refundable when dividends are paid out of the company.

One last consideration would be if the holding company has over 10% of the operating company, it might qualify for the Capital Dividend Account, which would allow the non-taxable portion (50%) of the capital gain to be shielded and distributed tax-free in the future.

This is a pretty good explanation, the general rule is 'it depends' on how much is in there relative to operating income, Capital Dividends, etc.

Originally Posted by calgarygeologist

A question regarding T4 slips. My company issued me two T4s for 2024 because my employment status changed throughout the year. I can see both in our payroll system. In my CRA account only one T4 shows up? Should I be considered about this at all? Should I indicate this to payroll at work?

This is very common actually. You see it a lot especially in Government work, specifically AHS, when an employee either changes positions or goes from Part-Time to Full-Time or vice versa, ond/or in Corporate circles if theres been a merger or acquisition or even just a change in payroll companies.

You do have to add them both together on your taxes though.

[Lubicon]

Originally Posted by DoubleF

Feb 28 normally, Mar 7 this year.

Let's just say that if you just blindly autofill a return and file, it's like relying on autopilot to drive you. Completeness of slips in MyCRA is not at the level that most people think it's supposed to be and this year is the worst I've seen since they released AFR.

I've heard many large banking and investing institutions are telling people they are currently aiming for March 20-28 for RRSP contributions and other tax slips.

Still waiting for some of mine too, and one of the institutions I use indicated 'end of March' to expect them.

[Nancy]

Originally Posted by DoubleF

You are correct. For most individuals, Coop T4A you can move to non-taxable. I've then had people ask if they can just not input the slip. Nope, I wouldn't recommend that. Non-taxable doesn't mean no need to report. There's usually income tax deducted on those slips, so you'd lose out on that amount for reduction of taxes/increased refund. That's not including the annoyance if CRA does a slip matching investigation.

Thanks for confirming.

I think I am wrong about refiling last year's return, though. That T4A would have been for the dividend issued in January 2023, which was still a cash dividend.

[DoubleF]

Originally Posted by Nancy

Thanks for confirming.

I think I am wrong about refiling last year's return, though. That T4A would have been for the dividend issued in January 2023, which was still a cash dividend.

For a Co-op T4A slip? I'm pretty sure it'll always display as a patronage allocations.

[TorqueDog]

I have some US ETFs paying regular distributions that include a Return of Capital portion. While TD Direct Investing will ensure the ROC portion is not included on the T5, and WealthSimple will provide an amended T5 if you provide documentation outlining the ROC portions of the distributions, neither -- rather annoyingly -- applies to Questrade who will include the amount on the T5 and apparently won't provided amended T5s, which is really making me rethink if I want to keep my main investment account with them in spite of their new $0 commissions scheme.

So my question to the tax guys in the thread is, if you report a value other than the amount on the T5 and include the relevant documentation outlining the ROC portion of the foreign income, are you setting yourself up for a painful CRA audit?

[DoubleF]

Originally Posted by TorqueDog

I have some US ETFs paying regular distributions that include a Return of Capital portion. While TD Direct Investing will ensure the ROC portion is not included on the T5, and WealthSimple will provide an amended T5 if you provide documentation outlining the ROC portions of the distributions, neither -- rather annoyingly -- applies to Questrade who will include the amount on the T5 and apparently won't provided amended T5s, which is really making me rethink if I want to keep my main investment account with them in spite of their new $0 commissions scheme.

So my question to the tax guys in the thread is, if you report a value other than the amount on the T5 and include the relevant documentation outlining the ROC portion of the foreign income, are you setting yourself up for a painful CRA audit?

What box on the T5 are the ROC being included/excluded?

Yes, if you mess with a slip, there's a high likelihood CRA will do a slip matching investigation. It happens frequently for original vs amended slip differences when filing.

[Fuzz]

Originally Posted by DoubleF

What box on the T5 are the ROC being included/excluded?

Yes, if you mess with a slip, there's a high likelihood CRA will do a slip matching investigation. It happens frequently for original vs amended slip differences when filing.

If the CRA screws up and reassess you by adding a slip from the wrong year that you already claimed in the correct year, what's the best way to resolve? I've gone in online and edited my updated return by setting that amount to zero for the slip, in hopes they might read the ####ing year properly, since there is no where to enter words to tell them of their ####up, and they say they've contacted me or my representative for more info. I assume that'll come as letter mail in 6 months...in the meantime they want me to pay it by April 6th, or face penalties.


Can I just ignore it, and they'll sort out the interest charges themselves, or is this gonna be a PITA for months until I talk someone there?