Unexpected bill from CRA?
December 31, 2018 aadolphLate T5008's
Has CRA reassessed you (or you mother) for sale of shares she ‘forgot’ to report?
For a long time now I have been filing my mom’s income taxes for her. She never loses things, so when the unthinkable happened in the 2017 tax year, I relied heavily on CRA’s “Autofill My Return” service.
This service made preparing my mom’s income tax return a breeze, even if it was a little unsettling how much info the government is receiving on us all. Her return was happily accepted and assessed well before the April 30 deadline, and remained the same until this past week when she received an unexpected bill from CRA for $173.
Reason: unreported sale of a security.
Careful: The info the CRA gets usually only reports proceeds of disposition on a sale of securities.
This wasn’t the only disposition mom had in 2017, the others we knew about and reported were based on what AutoFill provided us. The unreported sale in question must have been a “Johnny Come Lately” that Autofill knew nothing about until after her tax return was filed.
The bill my mom received for $173 only reflected the proceeds of disposition, but not the cost of buying the security in the first place.
Why Doesn’t CRA need T5008 issuers to report ACB?
First, it isn’t to their advantage. CRA Executive bonuses rely on statistics about taxes collected. Besides, they know most people will just pay the bill.
Second, determination of the cost of a security, or a particular block of securities sold as a part of larger holdings, can be subjective sometimes and is difficult to report accurately. Even if there was a way to report ACB accurately on T5008’s, it will always be important to check the accuracy of the reported figure, or pay far too much tax on the capital gain.
How many people (or their representatives) just accept AutoFill figures when filing their client’s returns? Having worked at CRA for over 25 years, there is probably a third of people (or their reps) just accepting their assessment without verifying if their cost base was considered.
Likewise, how many great grandmothers are getting these unpleasant surprises from the CRA that are totally overstated?