If your federally-regulated pension plans has been transferred to a:

• Locked-in RRSP
• Locked-in Life Income Fund (LIF); or
• Restricted Life Income Fund (RLIF)

Then the following unlocking provisions are available:

Small balance unlocking

Individuals 55 or over with LIF holdings of less than 50% of the Yearly Maximum Pensionable Earnings (YMPE, 50% = $25,550 in 2013) will be able to wind up their accounts with the option to convert to a tax-deferred savings vehicle, such as an RRSP or RRIF.

One-time 50% unlocking

Individuals 55 or older will be entitled to a one-time conversion of up to 50% of holdings value into a tax-deferred savings vehicle with no maximum withdrawal limits.

Financial hardship unlocking

The amount that can be unlocked is:

1. Low income – the amount is based on the expected income (line 236 on your tax return) for the year, and varies from a withdrawal of 50% of the YMPE (50% = $25,550 for 2013) for $0 in expected income, to no withdrawal allowed when expected income is 75% of the YMPE (75% = $38,325 for 2013)
2. High medical or disability related costs – the amount of medical expenses can be unlocked, up to a maximum of 50% of the YMPE, as long as medical expenses exceed 20% of the YMPE (20% = $10,220 for 2013).  The medical expenses can include expenses of the plan holder or others, including a spouse or dependant.

Non-resident unlocking

If you are no longer employed by the employer from which the pension funds originated, and you have been a non-resident of Canada for at least 2 consecutive years, then you can unlock the total value of your plan funds.

Shortened life expectancy unlocking

If a physician has certified that you have a shortened life expectancy due to a physical or mental disability, then the total value of your plan funds can be unlocked.

The yearly maximum pensionable earnings (YMPE), is the maximum amount on which contributions to the Canada Pension Plan (CPP) are based.  Thresholds which are based on the YMPE will change each year as the YMPE changes.  See the CPP/EI page for the YMPE.

Note that the unlocking of these funds will lose the protection from creditors provided to locked-in funds.

The Office of the Superintendent of Financial Institutions Canada information on Pension Unlocking provides more information on federally-regulated pension plans.

Returns by filing method

Total returns assessed – from 2013-02-11 to 2013-05-09

Returns by results

Returns assessed - from 2013-02-11 to 2013-05-09

Previous-year statistics

Returns assessed by filing method

Ontario Trillium Benefit (OTB)

The Ontario 2013 Budget proposes to modify the OTB so that, beginning with 2014 benefits, each recipient can choose to receive the benefit either monthly or in a single payment at the end of the benefit year.

Tax filers would choose which option they want when they file their 2013 income tax return in 2014.  However, those receiving an annual benefit of $360 or less will be paid in a single payment in July 2014 – they cannot opt for monthly payments.  Others opting for a single payment would receive the single payment for 2014 benefits in June 2015.  Those opting for monthly payments would receive the payments from July 2014 through to June 2015.

Employer Health Tax (EHT)

The budget proposes to eliminate the EHT exemption of $400,000 for private-sector employers, including groups of associated employers, with annual Ontario payrolls over $5 million.  For small employers, including small businesses, charities and not-for-profit organizations, the exemption would be increased from $400,000 to $450,000.  These changes would take effect January 1, 2014.  The exemption would be adjusted for inflation every 5 years using the Ontario Consumer Price Index.  At projected inflation rates the exemption would increase to $500,000 in 2019.

As a self-employed real estate agent, Mr. Lassu failed to file the 2004 and 2005 GST returns. He filed the outstanding tax returns only after the CRA laid charges.

The preceding information was obtained from the court records.

When individuals or corporations are convicted of failing to file tax returns, in addition to any fines imposed by the courts, they are still obligated to file the tax return and pay the full amount of taxes owing, plus interest, as well as any civil penalties that may be assessed by the CRA.

Taxpayers who have not filed returns for previous years, or who have not reported all of their income, can still voluntarily correct their tax affairs. They may not be penalized or prosecuted if they make a valid disclosure before they become aware of any compliance action being initiated by the CRA against them. These taxpayers may only have to pay the taxes owing, plus interest.

Further information on convictions can be found in the Media Room on the CRA website at www.cra.gc.ca/convictions.

“Canada’s strong economic and fiscal fundamentals make us a global leader in helping guide the investments made by institutions such as the EBRD,” said Minister Menzies.

Canada is a founding member and the eighth largest shareholder of the EBRD. Through its position on the EBRD’s Board of Directors and Board of Governors, Canada helps to set the institution’s agenda and provides oversight of its finances and operations.

“The EBRD is facing new challenges and opportunities as it undertakes the expansion of its operations into the Southern and Eastern Mediterranean region,” said Minister Menzies. “We strongly support the EBRD’s mission of focusing on countries that have demonstrated a real commitment to economic and democratic reforms and to building market-oriented economies.”

Following the EBRD annual meeting, Minister Menzies will travel to Amman, Jordan, where he will meet with government and business leaders to promote Canada as a solid trading partner and destination for investment, and discuss ways that both governments can support small and medium-sized enterprises.

Economic Action Plan 2013 is helping Canadian businesses compete in the global economy by supporting Canada’s manufacturing sector, building on past investments in Canada’s infrastructure through the new Building Canada Plan, and introducing an innovative new program to match the skills training Canadians are receiving with the needs of employers. The Plan also opens new markets to Canadian exporters and encourages investment in Canada by keeping taxes low, reducing unnecessary red tape and removing barriers to trade.

Action Plan 2013, including tax relief for investments in new manufacturing machinery and equipment, and indexing the Gas Tax Fund to offer stable, predictable funding for municipal infrastructure.

“While Canada has fared better than most in the aftermath of the worst recession in a generation, the global economy remains very challenging,” said Minister Flaherty. “Through the Economic Action Plan 2013 Act, No. 1 the Harper Government remains squarely focused on what’s important to Canadians, creating jobs and economic growth—while keeping taxes low and balancing the budget by 2015.”

Measures in the Economic Action Plan 2013 Act, No. 1 advance economic progress and prosperity by:

Building a stronger economy and promoting job growth:

• Extending for two years the temporary accelerated capital cost allowance for new investments in machinery and equipment by Canadian manufacturers.
• Indexing Gas Tax Fund payments to better support job-creating infrastructure in municipalities across Canada.
• Reforming the Temporary Foreign Worker Program to ensure that Canadians are given the first crack at available jobs.
• Extending for one year the Mineral Exploration Tax Credit for flow-through share investors.
• Modernizing the Investment Canada Act as announced in December 2012 to clarify the treatment of proposed investments in Canada by foreign state-owned enterprises and the timeline for national security reviews.
• Providing $165 million in multi-year support for genomics research through Genome Canada.
• Providing $18 million to the Canadian Youth Business Foundation to help young entrepreneurs grow their firms.
• Providing $5 million in 2013–14 to Inspire for post-secondary scholarships and bursaries for First Nations and Inuit students.
  

Supporting Canadian families and communities:

• Promoting adoption by enhancing the Adoption Expense Tax Credit to better recognize the costs of adopting a child.
• Introducing a new, temporary First-Time Donor’s Super Credit for first-time claimants of the Charitable Donations Tax Credit to encourage all young Canadians to donate to charity.
• Expanding tax relief for home care services to better meet the health care needs of Canadians.
• Removing tariffs on imports of baby clothing and certain sports and athletic equipment.
• Providing $56 million in total transfer protection payments to Manitoba and New Brunswick.
• Providing $30 million in 2013–14 to support the construction of new housing in Nunavut.
• Investing $20 million in the Nature Conservancy of Canada to continue to conserve ecologically sensitive land.
• Providing $3 million to the Pallium Foundation of Canada to support training in palliative care for front-line health care providers.
• Committing $3 million to the Canadian National Institute for the Blind to expand library services for the blind and partially sighted.
• Supporting veterans and their families by no longer deducting veterans’ disability benefits when calculating other select benefits.
• Streamlining the process for approving tax relief for Canadian Armed Forces members and police officers.

Respecting Canadian taxpayers’ dollars: 

• Improving the fairness of the tax system.
• Eliminating duplication.
• Taking steps to align employee compensation offered by Crown corporations with what is available to federal employees.

“Canada’s Economic Action Plan 2013 advances a solid vision that has a proven track record,” said Minister Flaherty. “This is an intentional, consistent plan for jobs, growth and long-term prosperity that we have implemented with firm commitment.”

On February 1, 2013, and in accordance with subsection 168(1) of the Income Tax Act, the CRA issued a notice of intention to revoke the registration of Trinity Global Support Foundation as a charity. The letter stated, in part, that:

Our audit revealed that the Organization devoted a significant portion of its resources to the promotion of the Mission Life Financial Inc. and Canadians Care donation arrangements. As a result of its participation in these arrangements, between June 1, 2007 and May 31, 2010, the Organization reportedly received nearly $25 million in cash and in-kind property.

With respect to the Mission Life Financial Inc., a registered tax shelter, the Organization issued tax receipts exceeding $1.13 million for cash contributions and $16 million for pharmaceuticals. Of the cash contributions received, the Organization paid nearly $1.03 million to the promoters of the tax shelter and to the Organization’s directors or related parties. It is our position the Organization issued the tax receipts improperly, particularly given our finding that the $16 million recorded for the pharmaceuticals were grossly inflated. As a result, we conclude neither contribution qualifies as gifts at law.

With respect to the Canadians Care promoted donation arrangement, the Organization issued tax receipts exceeding $7.8 million for leveraged cash contributions. The Organization invested over $7 million into investments held by corporations related to its directors and also related to the donation arrangement. These funds were subsequently lost due to the actions of those corporations. The Organization was also found to have improperly paid over $865,000 to individuals and corporations related to the Organization’s directors.

For example, if you choose a June 30 year-end for your self-employment business which started on July 1, 2002, you would not have to report income from this business for your 2002 tax return.  You would have to elect on Form T1139 to have a June 30 year-end.  On your 2003 tax return you would report the income for your fiscal year ending June 30, 2003.  Then you would have to add an amount for estimated earnings for July 1 to December 31, 2003.  You would thus be paying tax on 18 months of income, which may put you in a much higher tax bracket.  The 6 months of estimated earnings are based on your first fiscal year (July 1 to June 30) earnings.  You can later convert to a December 31 year-end, so you could then eliminate the calculation of the estimated amount, and use your actual earnings instead.

It’s easy to make a correction to your income tax and benefit return if you realize you made a mistake after filing.

Changing your return

You will need to wait to receive your notice of assessment from the Canada Revenue Agency (CRA) before you can make a change to your return.

Once you receive your notice of assessment, you can:

• use the Change my return option found in My Account, one of the CRA’s secure online services;
• send a completed T1 Adjustment Request form (T1-ADJ) to your tax centre; or
• send a signed letter to your tax centre asking for an adjustment to your return.

If you send a letter, be sure to give your name, address, and social insurance number and tell us which tax year you want to adjust. You will also need to provide any supporting documents for your change. For example, if you want to change the amount you claimed for charitable donations, you have to submit all your charitable donation receipts to support your claim.

For information please see: Tax Centres and T1 Adjustment Request

It’s easy to make a correction to your income tax and benefit return if you realize you made a mistake after filing.

Changing your return

You will need to wait to receive your notice of assessment from the Canada Revenue Agency (CRA) before you can make a change to your return.

Once you receive your notice of assessment, you can:

• use the Change my return option found in My Account, one of the CRA’s secure online services;
• send a completed T1 Adjustment Request form (T1-ADJ) to your tax centre; or
• send a signed letter to your tax centre asking for an adjustment to your return.

If you send a letter, be sure to give your name, address, and social insurance number and tell us which tax year you want to adjust. You will also need to provide any supporting documents for your change. For example, if you want to change the amount you claimed for charitable donations, you have to submit all your charitable donation receipts to support your claim.

The following provides information on the tax debt in Canada, and what the CRA is doing to address it.

What is the tax debt?

If an individual or business fails to pay their taxes on time, those amounts become a tax debt owed to the Government. The CRA works to collect all debts through the collections process. The outstanding tax debt is an inventory of amounts owed that are known and actively managed by the CRA. New amounts are continually added, while others are collected or addressed through other measures.

Why is the tax debt increasing?

A number of factors influence the amount of the tax debt at any given time. In recent years, the reasons for the increase in tax debt include:

• An increase in overall revenue due to higher population and more businesses as well as the harmonization of federal and provincial taxes;
• More effective targeting of measures to combat aggressive tax planning and transfer pricing, leading to additional amounts to be collected; and
• Interest charges on outstanding debts which are themselves added to the debt.

How does the CRA collect the tax debt?

The majority of Canadian taxpayers pay amounts owing on time. Over the last five years, over 90% of individuals and corporations paid their taxes on time and without any intervention.

Taxes owing that are not paid are resolved through different means, depending on complexity, the taxpayer’s previous compliance history, and ability to pay. Low complexity accounts are resolved through reminder phone calls or letters to taxpayers.

How successful is the CRA at collecting tax debt?

The CRA has focused on continuously improving its tax collection program through the introduction of better strategies to prevent the debt from occurring, or resolving it before legal action is required. That has resulted in increased productivity through earlier intervention at a lower cost. As a result, the amount recovered has grown by 87% between 2005-2006 and 2011-2012. In the 2011-12 fiscal year alone, the CRA recovered $40 billion in tax debts.

An international tax benchmarking study in 2011 highlighted Canada’s strength in collecting tax debt and ranked Canada in the top 2 among 10 countries reviewed in the study, for:

• The lowest cost of collecting a dollar of debt; and
• Collecting the most debt as a percentage of total tax revenues.

Canada also has one of the lowest levels of new debt per taxpayer – an indication that the CRA’s approach is effective at ensuring that a higher proportion of taxes owed is paid in full and on time.

How is the CRA managing the tax debt?

The total amount of the tax debt, currently $29 billion, represents numerous types of debt, and most amounts owing are secured or under active collection. The CRA is working to recover all debts, either through automated strategies led by the Debt Management Call Centre, payment arrangements, or active collections by the CRA’s Tax Service Offices.