Author Topic: Tax System vent  (Read 1726 times)

daverobev

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Tax System vent
« on: April 12, 2018, 05:42:46 PM »
Vent or rant.

It feels like 'everything' in the tax system here is more complicated than it needs to be.

Examples:

Lending Loop. They put SOME of the interest on loans on a T5 slip, but not all of it. Why?! (I have an idea why, but it is a case of probably simpler for them but more complex for their customers).

Brokerages don't have to track ACB. I get it - you might have accounts with different brokerages - but put a simple disclaimer and calculate the correct number for the stuff they DO have for you? Or even better, send that info to the CRA and have THEM store the ACB across any and all brokerage accounts!

Parental EI - there is a new pilot that uses a different calculation to work out how much you are allowed to earn a week before it gets deducted from your EI. But it isn't done automatically/to your advantage - you have to call in. Basically once your mat leave is over, "Hi, I'd like some more money please!" "Ok, let me check... all right, here's another thousand dollars". Apparently we're late calling in (should be within 30 days of claim end). So now.. they'll do a 'ruling' to see if we can be granted a 'late asking' exception; and if they say yes, then another month before we get the money. Ok.

Informal trust accounts - the T3 slips come in the trustee's name, with the trustee's SIN. Um. So I'm going to have to argue with the CRA (or just get reassessed) every year? Why not just have a simple system where the child's name and SIN is there on the slip?

T1135! You already have to report foreign income, but you have to - EVERY YEAR - declare the value of foreign property you own, if the total is over $100k. Bank accounts, stocks, the lot. I already pay tax on this stuff - what does it matter if I have $50 in a bank account? The penalties for not filling this damn thing in are ridiculous. Over $250k it gets worse in terms of the info you have to provide. This is nothing to do with taxation - it is just an asset declaration, really.

Why are there so many exclusions and work-arounds? So many - as they call them - boutique credits and deductions?

My return - the PDF I saved from the tax software - was ~40 pages.

Why is so much of the onus on the taxpayer to verify everything, when the financial institutions and companies generally should do it?

Here's what happens in the UK, where the only tax returns I filed were actually after I'd ceased to be resident: Normal employees file nothing. You get a form at the end of the tax year telling you a breakdown and what your tax code will be the next year. Your tax code tells your employer how much tax free allowance you have. If you have underpaid tax by a small amount in one year, they will just adjust your tax code for the following year. Banks - savings accounts - just deduct income tax at source. And because there are basically two tax brackets, you either get one percentage or the other deducted.

I will admit that my situation here is very different than it was in the UK. But, were I still in the UK I'd be moving all my money into an ISA (like a TFSA), using the capital gains and dividend allowances (ie, don't even need to tell the government if you get small amounts - "small"), and generally NOT spending any time on my tax return. I doubt I'd have to file one.

I also understand that there are 10 provinces and 3 territories all with different rates, compounded by the federal stuff (and of course... Quebec). But that is the excuse.

Do one of two things: Make the federal government collect all tax - so there is no provincial return - and just split back out whatever goes to the province. Or vice versa - get the province to collect all tax and send whatever to the feds. But in doing this, drastically simplify the process for taxpayers. I never want to see a T5. I want an approximate amount of tax withheld, and just to be dealt with by a 'tax code' or refund at the end of the tax year. There should be two or three tax brackets in each province, from there you should be able to approximate tax based on the previous year's circumstance (and obviously have a mechanism to say, hey, that capital gain was a one off, or whatever - just getting a new job should trigger this calculation because the employer will tell the government your new amount of pay). I should be telling the government one thing: Foreign income, net of foreign tax paid. Everything else they should get the info directly and deal with it directly; not they send me (and the CRA) a slip, then I have to tell the CRA about the slip and all the other slips.

The provinces/territories and feds should have synchronised tax brackets. The rate can be different between provinces, but the brackets themselves should be the same (to allow all the simple stuff).

In short: Simplify everything. Making 20+ million people have to learn (or, more likely, misfile or pay someone too much to do this stuff for them) this system is crazy.

The CRA (call centre people) don't know. They even say not to take advice given by call centre agents as gospel. On asking companies about why forms are done in such a way or why interest is not on a slip, I get told - talk to a tax professional.

For god's sake! I shouldn't need to.

I want to smash my head into my keyboard, honestly. Some of this is my own doing - I seem to have done every thing that causes complications

Thankfully my return should be much simpler next year.

Greenway52

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Re: Tax System vent
« Reply #1 on: April 14, 2018, 02:16:29 PM »
Totally agree with you on the T1135. There is no reason for it at all. This form is one of the reasons I chose to go with Canadian Listed US ETFs rather than US listed ones which would have counted as a foreign asset.

Not sure if you're in Ontario, but the worst is Ontario tax. It's so convoluted. Specially the Ontario surtax. It's basically a tax on tax. If they wanted the revenue ... just raise the tax rates, instead of adding additional complexities of tax on tax. And then on top of the "regular " calculated Ontario tax, and Ontario surtax, there is the Ontario health premium. Again, why not just keep things simple and raise the rates instead of adding more complexities?

daverobev

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Re: Tax System vent
« Reply #2 on: April 14, 2018, 03:46:23 PM »
Totally agree with you on the T1135. There is no reason for it at all. This form is one of the reasons I chose to go with Canadian Listed US ETFs rather than US listed ones which would have counted as a foreign asset.

Not sure if you're in Ontario, but the worst is Ontario tax. It's so convoluted. Specially the Ontario surtax. It's basically a tax on tax. If they wanted the revenue ... just raise the tax rates, instead of adding additional complexities of tax on tax. And then on top of the "regular " calculated Ontario tax, and Ontario surtax, there is the Ontario health premium. Again, why not just keep things simple and raise the rates instead of adding more complexities?

Totally agree. Yeah, they are talking about getting rid of the surtax, at least.

Missy B

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Re: Tax System vent
« Reply #3 on: April 14, 2018, 06:12:13 PM »
Vent or rant.

Why are there so many exclusions and work-arounds? So many - as they call them - boutique credits and deductions?


In a word: Politics. Our tax system is an aggregate of years (decades, even) of election bribes, provincial-federal power struggles, attempts at social engineering, and control games.
I'm intrigued and amazed that the UK system is so evolved. I thought they would be just as convoluted as us. Perhaps there's hope for us all.
And yes, Revenue Canada agents are known for giving incorrect information, particularly on the business side. I normally ask 2 or 3 times before I believe them.

RichMoose

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Re: Tax System vent
« Reply #4 on: April 14, 2018, 10:10:55 PM »
Amen. The overcomplicated condition of our tax system should be illegal.

bluebelle

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Re: Tax System vent
« Reply #5 on: May 01, 2018, 12:56:48 PM »
The T1135 realy drives me bonkers....I'm supposed to report the highest value during the year?  So I'm supposed to keep track of the value every day and the daily exchange rate and report the highest number.....wtf.....like others said, I'm already paying tax on it....I'm not trying to hide money....because of few of the fat cats hide money, (and probably still do), our government created a punative system to make things more difficult for the average person....

bluebelle

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Re: Tax System vent
« Reply #6 on: May 01, 2018, 01:01:03 PM »
another tax system vent.....if you're one of the lucky few with a defined benefit pension, you get to claim the pension credit when you start drawing the pension ....if you are in the majority and have had to save for your own retirement, you don't get the pension credit until age 65 (and only if you convert part of your RRSP to a RRIF)....how is that fair?

joonifloofeefloo

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Re: Tax System vent
« Reply #7 on: May 01, 2018, 01:17:55 PM »
Yep.

I spend quite a bit of money every year on a tax preparer because it's all so crazy. How would I possibly know all this stuff, be able to keep up with all this stuff?

I have a few to add:

1. For some things, the return is due the same day banks are required to send out the slips! Thus, it is not possible to file an accurate return. CRA knows this and asks people to simply file twice every year. ??? wtf? Why not just move one of those deadlines (forward or back) by a month?

2. The banks don't necessarily send out the slips by the due date, either, so even if you literally wait til the last day, surprise! You're still doing an amended return as well.

3. Post-secondary slips don't match what happened, so you have to track everything as you go. Well then don't have them issue random slips!

4. Banks don't send out slips for under $50 or whatever, but we're required to report that. Well, why not require them to send out slips for that amount too then?? Why some arbitrary line here?

PoutineLover

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Re: Tax System vent
« Reply #8 on: May 01, 2018, 02:39:31 PM »
Oh yeah. The whole system is annoying, especially if you change provinces. I am trying to recoup tax credits for tuition that I earned while I was a resident of another province and it has been such a hassle. There has got to be a better way.

marty998

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Re: Tax System vent
« Reply #9 on: May 01, 2018, 03:21:35 PM »
Yep.

I spend quite a bit of money every year on a tax preparer because it's all so crazy. How would I possibly know all this stuff, be able to keep up with all this stuff?

I have a few to add:

1. For some things, the return is due the same day banks are required to send out the slips! Thus, it is not possible to file an accurate return. CRA knows this and asks people to simply file twice every year. ??? wtf? Why not just move one of those deadlines (forward or back) by a month?

2. The banks don't necessarily send out the slips by the due date, either, so even if you literally wait til the last day, surprise! You're still doing an amended return as well.

3. Post-secondary slips don't match what happened, so you have to track everything as you go. Well then don't have them issue random slips!

4. Banks don't send out slips for under $50 or whatever, but we're required to report that. Well, why not require them to send out slips for that amount too then?? Why some arbitrary line here?

Can you not just look at your summary on your Bank's internet banking page which has total interest earned and interest paid for the financial / tax year?

joonifloofeefloo

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Re: Tax System vent
« Reply #10 on: May 01, 2018, 03:23:40 PM »
Can you not just look at your summary on your Bank's internet banking page which has total interest earned and interest paid for the financial / tax year?

No, because that doesn't exist :)

daverobev

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Re: Tax System vent
« Reply #11 on: May 01, 2018, 03:25:06 PM »
Yep.

I spend quite a bit of money every year on a tax preparer because it's all so crazy. How would I possibly know all this stuff, be able to keep up with all this stuff?

I have a few to add:

1. For some things, the return is due the same day banks are required to send out the slips! Thus, it is not possible to file an accurate return. CRA knows this and asks people to simply file twice every year. ??? wtf? Why not just move one of those deadlines (forward or back) by a month?

2. The banks don't necessarily send out the slips by the due date, either, so even if you literally wait til the last day, surprise! You're still doing an amended return as well.

3. Post-secondary slips don't match what happened, so you have to track everything as you go. Well then don't have them issue random slips!

4. Banks don't send out slips for under $50 or whatever, but we're required to report that. Well, why not require them to send out slips for that amount too then?? Why some arbitrary line here?

Can you not just look at your summary on your Bank's internet banking page which has total interest earned and interest paid for the financial / tax year?

If only they sent out/had a yearly summary.

Mine, you get 14 months of statements. Even in late February I couldn't get the previous year's amount online.

The banks should just communicate directly with the CRA (which they *do*), and omit us peons ALL having to tell the CRA what they already know - and get penalties if you forget (to tell them something they already know).

joonifloofeefloo

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Re: Tax System vent
« Reply #12 on: May 01, 2018, 03:34:11 PM »
Yep. We're required to communicate very much that is already communicated.

Because I enter all transactions into YNAB, I do have a record of everything, including bank interest. So if I categorize and label consistently, I can create a report for myself, then check which banks issued which slips for over $50, see if those match, if they do, write up the few remaining ones independently, provide that to the accountant...

There's a way to do all of what CRA asks. However, to do so many of us are going to be doing a LOT of extra steps, plus amended returns, year after year after year, though. Silly, wastes a lot of people's time and money, causes a lot of stress for heaps of people, etc -all unnecessarily.

Prairie Stash

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Re: Tax System vent
« Reply #13 on: May 01, 2018, 04:34:37 PM »
Yep. We're required to communicate very much that is already communicated.

Because I enter all transactions into YNAB, I do have a record of everything, including bank interest. So if I categorize and label consistently, I can create a report for myself, then check which banks issued which slips for over $50, see if those match, if they do, write up the few remaining ones independently, provide that to the accountant...

There's a way to do all of what CRA asks. However, to do so many of us are going to be doing a LOT of extra steps, plus amended returns, year after year after year, though. Silly, wastes a lot of people's time and money, causes a lot of stress for heaps of people, etc -all unnecessarily.
I enjoy a good rant, but there is an easy solution. I have no problems with what you describe, hopefully you don't either.

RBC sent my T5 (interest on saving acount) to the CRA on March 14. I signed up for the auto-fill, it automatically puts all the information into my tax return. It was all completed 100% correctly with the push of a button. Why not use the information that CRA already has?

For the record, all T4 income is automatically entered into my tax return too. T5008 from banks are also there (I didn't sell anything this year). My dividends on my account were reported though, that was RBC Direct and all entered for me. I had a small mutual fund ($1000 that I bought to qualify for free banking), that was auto filled for the dividend it threw off too ($2 I think).

All that was missing were my deductions for daycare and charities.

Reading this thread makes me wonder, did you know about the auto fill button with simpletax? It's been a couple years since I entered a T3, T4 or T5, I was an early adopter of autofill.

https://www.canada.ca/en/revenue-agency/services/e-services/about-auto-fill-return.html

joonifloofeefloo

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Re: Tax System vent
« Reply #14 on: May 01, 2018, 04:59:10 PM »
It's a lovely system, Prairie Stash, but don't know how this resolves the matters I ranted about.

I have no trouble entering info from slips on time, when slips (1) exist and (2) arrive within the proscribed schedule. Entering produced info on time is fun and easy, whether done via autofill or otherwise, yes.

daverobev

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Re: Tax System vent
« Reply #15 on: May 01, 2018, 05:14:22 PM »
Yep. We're required to communicate very much that is already communicated.

Because I enter all transactions into YNAB, I do have a record of everything, including bank interest. So if I categorize and label consistently, I can create a report for myself, then check which banks issued which slips for over $50, see if those match, if they do, write up the few remaining ones independently, provide that to the accountant...

There's a way to do all of what CRA asks. However, to do so many of us are going to be doing a LOT of extra steps, plus amended returns, year after year after year, though. Silly, wastes a lot of people's time and money, causes a lot of stress for heaps of people, etc -all unnecessarily.
I enjoy a good rant, but there is an easy solution. I have no problems with what you describe, hopefully you don't either.

RBC sent my T5 (interest on saving acount) to the CRA on March 14. I signed up for the auto-fill, it automatically puts all the information into my tax return. It was all completed 100% correctly with the push of a button. Why not use the information that CRA already has?

For the record, all T4 income is automatically entered into my tax return too. T5008 from banks are also there (I didn't sell anything this year). My dividends on my account were reported though, that was RBC Direct and all entered for me. I had a small mutual fund ($1000 that I bought to qualify for free banking), that was auto filled for the dividend it threw off too ($2 I think).

All that was missing were my deductions for daycare and charities.

Reading this thread makes me wonder, did you know about the auto fill button with simpletax? It's been a couple years since I entered a T3, T4 or T5, I was an early adopter of autofill.

https://www.canada.ca/en/revenue-agency/services/e-services/about-auto-fill-return.html

Half my stuff appears, half does not, using auto-fill.

Several T5s were missing. I got one for $2 of interest with EQ Bank, but not one for $45 with Simplii.

Prairie Stash

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Re: Tax System vent
« Reply #16 on: May 02, 2018, 05:09:23 PM »

Half my stuff appears, half does not, using auto-fill.

Several T5s were missing. I got one for $2 of interest with EQ Bank, but not one for $45 with Simplii.
RBC had all mine; dividends, saving accounts etc. I'm more curious which institutions are like Simplii and suck at reporting now. I thought every bank was on board with the process by now. The rule should change so that all T5 amounts are reported to CRA, I doubt it would be that hard for the banks to pull off. I don't think mailing them out is very efficient, I hate seeing receipts for $1 and the postage on the fromt is $0.85 (inefficient). I own stock in all these banks, I can't stand inefficiencies that might hurt my stocks (somewhat kidding, I realize its inconsequential)

EQ sounds lovely to work with, I'll gladly deposit with them since they make tax time easy. Maybe this thread needs to be about who makes tax time easy such as EQ vs. which instutions are a pain.

joonifloofeefloo

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Re: Tax System vent
« Reply #17 on: May 02, 2018, 09:27:23 PM »
Mine showed up electronically...a day after it was required :)

RetiredAt63

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Re: Tax System vent
« Reply #18 on: May 03, 2018, 07:24:21 PM »
Autofill missed two T5s for me, plus had the sale price but not the original price of a mutual fund I had sold. I would have paid tax on gross not net if I had not caught that.