Don't sweat a tax filing mistake
You make a diligent effort to collect all your tax slips, receipts and trading confirmations to meet the tax filing deadline and, wouldn't you know it, the day after you file an errant slip turns up. What do you do?
Luckily, there are a couple of easy ways to make changes to your return after the fact.
Contrary to popular belief, to make a change on a return you've already submitted, you do not file an amended return. You simply send in the change.
You can do this online by using the "My Account" feature on the Canada Revenue Agency website and choosing the "Change My Return" option. You simply enter and submit any changes to the return you are changing. You can amend your 2009, 2008 and 2007 tax returns online.
Alternatively, you can also adjust your tax return by completing and mailing to your Tax Centre office Form T1-ADJ "T1 Adjustment Request" (which is available online) or simply send a signed letter to the CRA providing the details of your request, your social insurance number, address and daytime telephone number.
For paper adjustments, the CRA also requests that you mail in any supporting documents for the changes you want to make in addition to supporting documents for your original claim, if you haven't submitted them previously.
The CRA will review requests relating to the 10 prior tax years.
Perhaps one of the most common reasons for requesting an adjustment is due to a T-slip coming in after you already filed. While the CRA advises you to wait until you receive your notice of assessment before requesting any change to a return that hasn't yet been processed, you may wish to file your adjustment immediately before CRA catches on to you.
That's because under the Income Tax Act, a person who has failed to report an income amount, and who had failed to report such an amount in any of the three preceding years, could face a "repeat omission penalty" of 10% of the current year's unreported amount.
A tax case decided last month dealt with a taxpayer who was hit with such a penalty because she failed to include $1,800 of income in her 2006 return and then failed again to report over $37,000, which came on a late T4 Slip, in her 2007 return, resulting in a $3,700 penalty.
When she received her 2007 T4 slip after she had already filed for 2007, her tax advisor told her that it would be automatically "matched" against CRA records. The taxpayer relied on that and the fact that her employer had already withheld taxes at source so it was not as if she was avoiding tax on the "non-reported" income.
Luckily, the judge took that into consideration and ordered the penalty to be reversed.