# Compiling a list of problems in the Canadian Income Tax system that shouldn't exist



## MDTaxes (Jul 18, 2015)

Welcome all income tax professionals. Here's a chance to vent some of your frustrations. 

I'm researching problem areas in the Canadian Income Tax system (from either the T1, T2 or T3 returns) that can be fixed with either a simple policy change or even upholding existing policy. I'm looking for tax professional to let me know of problems you've encountered that really shouldn't exist. 

Two examples of what I'm looking for (which have bugged me for years) are:

1) There is no standard format forT4s. Most T4s come in the basic configuration with the boxes appearing in numeric order. But once in a while, I come across a T4 where the there is no order for the boxes and information is posted randomly all over the T4 slip. Returns with these slips are susceptible to errors because it's layout can cause us to miss information. This problem can be avoided by creating a standard T4 that should be used by all. This is a ridiculous issue that can be avoided with a policy change which I can't believe is not in place.

2) Another example of a simple problem that can be solved with enforcing a policy are incomplete T5008. Most of the time Box 20 (which is the cost or book value of the securities involved) are not filled out and we only have the proceeds of disposition (Box 21). Last I checked, financial institutions were required to fill out slips properly too. If the security was purchased in a past year, then it won't show up on the current years trading summary and we are required to take extra steps in obtaining the missing information. The institutions have this information on-hand (I know because they are the ones I call to get the missing securities costs) but their systems are not rigged to print it in box 20. This is just a programming flaw with the financial institution's tax slip software. If the CRA enforced their own rules, they would fine them for producing incorrect tax slips and in the end force the software changes.

Corrections of these absurd problem areas would save countless hours of work for tax preparers and for the CRA. That's less returns for the CRA to re-evaluate, less reassessments to send out, less clients calling up their tax professional to find out what happened and creating extra work, etc. 

These are only two or the countless issues I have with the CRA which shouldn't be present. I want to find as many of these types of flaws in an effort to get some corrected. I look forward to seeing everyone unloading their grievances here  

Thanks in advance for your input.


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## steve41 (Apr 18, 2009)

Sounds a tad self-destructive. If it is made too easy, more people will want to do it themselves.


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## MDTaxes (Jul 18, 2015)

I don't see this as being self-destructive. I'm mostly asking about problem areas that plague professionals, not ways on how to make the system simpler. Fixing a few glitches won't hurting the industry.


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## Numbersman61 (Jan 26, 2015)

I definitely do not want the banks filling out my book value in box 20 since their information is not necessarily accurate. There are too many variables in the calculation. Examples - superficial loss rules, return of capital in the case of unit trusts and REITS.


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## kcowan (Jul 1, 2010)

I agree with Numbersman. Plus I may hold the same stock in multiple accounts at different institutions. And the costs of acquiring and disposing of them will be different.

As for the T4s, if they had a standard for it, it would be way too big to account for all the potential boxes. Plus this data is forwarded to CRA electronically. What I would like to see is them (e.g. the broker/bank) sending the electronic file to me so I can preload my tax return software with this data to avoid rekeying it all. That way I only have to deal with exceptions.


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## Robillard (Apr 11, 2009)

I know that there is a problem with tax, CPP and EI withholding if you hold a second job or change jobs in a year. This is because your second employer doesn't know what the first employer withheld. Of course, this could be less a "problem" and more of a "feature" of the system, since it ensures that you don't end up underpaying tax, CPP and EI. 

I had a problem with my FY2014 tax return, where I undercalculated the amount of tax payable (I still can't figure out where I made the mistake on my return). Of course, the CRA starts charging interest on any debit balance from the filing due date, and they don't care whether you have received your notice of assessment or not before starting to charge interest. (Again, probably not a "problem" but a "feature" of the system.) When I asked the CRA agent whether I could send a wire transfer from my foreign bank account to pay my outstanding tax liability, I was told that they can't receive wire transfers. I ended up having to pay the CRA by drawing on a line of credit, then wiring funds in to pay off the line of credit. I think the inability to take payment via wire transfer is a problem that shouldn't exist.


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## Guban (Jul 5, 2011)

Here's a problem that shouldn't exist. Many people shouldn't have to file a tax return. 

We should be able to log into a secure CRA site and ask them for our tax return. CRA has a lot of the relevant information for many Canadian tax payers. They get T slips, RRSP contributions, ... They know how many kids we have and if we are married. I suspect that for many Canadians, it would be simply a matter of clicking "ok" and asking for their refund. 

For those people with additional information, we should be able to key in the relevant numbers such as medical expenses, donations, child care, ... and other simple add ins. CRA has the software to do this already! They don't crunch the numbers we submit via net file by hand! Why are people doing the job twice? Once by taxpayers, and the second by CRA when they say: "hey, you forgot this slip", or "hey, you made a math error". I'm suggesting that we turn the process around. They do most of the work, and we check their completeness. They even have the secure site and we are already able to log in to see much of our information and past tax returns.

Of course, this won't work for some taxpayers. People that have business income or rental income, for example, have much more complicated returns that may still require a traditional tax return. I'm not sure how many Canadian taxpayers would fall in the more complex group, but I suspect that many (the majority?) of taxpayers would be saved a lot of time and money by having CRA fill out the tax return for us first. Think of how much simpler tax time would be!

There would be a lot of opposition to this by certain groups. Tax preparation firms and accountants would hate this. Makers of tax filing software would object. CRA employees would have to be decreased, I suspect. On the whole, however, Canadians would be a big winner.


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