This article was originally written for Business First, a TC Media publication.

Did you ever wish the Canada Revenue Agency would send you a thank you letter?  You know, something that reads like this: “We have reviewed your tax records for last year, and it looks like you did a great job.  We appreciate your efforts, and we’re going to leave you alone this year.”  Or maybe a card at Christmas saying something like “At this time of year, the entire staff of the Canada Revenue Agency want to thank you for paying our wages.”  OK, I admit that would be a waste of taxpayer resources.

Unfortunately, over the next few days and weeks, 33,000 taxpayers in Canada will receive a letter that may send a shiver through them.  It’s called the Annual Letter Campaign.  If you are self-employed, receive rental income, or have claimed employment expenses, you are considered to be a potentially risky taxpayer.  You also may be one of the 33,000 to receive a letter.

There are two different types of letters sent out.  One is an educational letter.  This letter is to educate you about what you can and cannot claim.  The other letter is the intent-to-audit letter.  This letter advises taxpayers that they may be chosen for an audit.  You are asked to review your records, and if you find any errors, to adjust your tax return promptly.

So, what do you do if you receive one of these letters?  Obviously, if you actually have made an error, whether it was intentional or not, you will want to make it right.  You have several different options to make corrections.  If only a small correction is needed your best option is probably just to send in a letter with the details of the adjustment needed.  If you have made a substantial error or filed incorrect tax returns repeatedly, you may want to go through the Voluntary Disclosure Program.  The VDP can provide relief from penalties.

Why does the Canada Revenue Agency use this Letter Campaign?  Well, let’s face it – they have limited resources.  I have been told that when they use these mass-mailers, they get a 4% – 8% response from taxpayers, depending on which letter they use. So let’s assume they get a 6% response.  On 33,000 letters, that’s close to 2,000 tax returns voluntarily adjusted, just by sending out a letter!  Not bad.

I personally think that one of the reasons they choose to send out these letters in January of each year is because that’s precisely when many people are beginning to think about their taxes.  If you just received a letter that states you are at risk for audit, are you going to be more likely, or less likely, to be careful?  Yeah, exactly.  And the government knows this.

This is the fourth year the Canada Revenue Agency has done this Letter Campaign.  That means it’s been successful enough that they likely will keep on.  So if you haven’t received your letter yet, don’t be surprised if you receive one.  Just don’t expect it to be a Thank You letter!

Filed under: Personal Tax by David Boese No Comments »




Did you know you were able to defer taking your Old Age Security past the age 65?  It really only makes sense if you working, and you stand to lose a large portion of your OAS to taxes.  If this is the situation you find yourself in, consider deferring the OAS until your income drops.  You can defer it up to the age 65.  Each month you defer it, you get a “bonus” for doing so.

Head over to Service Canada’s Q&A website for more details.

Filed under: Personal Tax by David Boese No Comments »




2012 Medical Travel Rates


January 3rd, 2013

Here are the medical expense travel rates that can be used on your 2012 tax return, if you choose to use the simplified rate.

Province or territory Cents/kilometre
Alberta 50.0
British Columbia 49.5
Manitoba 47.0
New Brunswick 49.0
Newfoundland and Labrador 52.0
Northwest Territories 58.0
Nova Scotia 50.5
Nunavut 58.0
Ontario 55.0
Prince Edward Island 49.5
Quebec 57.0
Saskatchewan 45.0
Yukon 61.5 

www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns248-260/255/rts-eng.html

The meal rates didn’t change at all; it’s still a flat $17.00 per meal.

Filed under: Personal Tax by David Boese No Comments »




2013 Mileage Rates


December 28th, 2012

Mileage rates increased by 1 cent per kilometre, for 2013.   The new mileage rates are $0.54 / kilometre for the first 5,000 kms driven, and $0.48 / kilometre for each additional km.

Here’s the official announcement, along with other rates.

If you receive a tax free travel allowance, be sure your employer is aware of this change.

Filed under: Business tax, Personal Tax by David Boese No Comments »