From: none@none.com   
      
   10 myths about taxes that mislead Canadians   
      
   Misinformation, misunderstandings abound when it comes to our tax   
   system   
      
   By Tom McFeat   
      
   There is no shortage of confusion and misinformation out there when it   
   comes to filing your taxes. Advisers like Cleo Hamel, right, of H&R   
   Block help clients separate myths from fact.   
   There is no shortage of confusion and misinformation out there when it   
   comes to filing your taxes. Advisers like Cleo Hamel, right, of H&R   
   Block help clients separate myths from fact.   
      
   A certain amount of folklore has developed over the years around the   
   income tax system and the filing of tax returns, but many of those   
   age-old perceptions are no longer accurate.   
      
   File by May 5 or face potential penalties   
      
   Here are some common myths — and the corresponding facts that could   
   mean extra money in your pocket or at least prevent you from running   
   afoul of the Canada Revenue Agency's rules.   
      
   Myth 1: The person whose name or social insurance number is on the tax   
   slip is the person who must report the interest in a joint account.   
      
   Not necessarily. "Income earned in joint accounts must be reported by   
   the person who earned the capital in the account," says tax expert   
   Evelyn Jacks in Jacks on Tax. "Where more than one person contributed   
   capital in their own right, then the income in the account must be   
   allocated based on the capital provided by each contributor."   
      
      
   Myth 2: The CRA completely agrees with the information you submitted in   
   your return if it sends you back a Notice of Assessment that doesn't   
   dispute what you submitted.   
      
   A Notice of Assessment is just the result of a quick assessment that   
   will have fixed mathematical mistakes you may have made, but it doesn’t   
   mean that the CRA has examined and OK'd everything you’ve submitted.   
   "The fact that a particular claim is allowed at this point does not   
   mean that the CRA … is 'letting' you claim it," notes KPMG in its   
   annual tax planning guide. "It merely means that the CRA has not   
   addressed the issue in any detail." The tax agency generally has three   
   years after the Notice of Assessment is sent to review your file.   
      
   Myth 3: Gifts from your employer are never taxable.   
      
   Modest gifts from the boss do escape the tax collector's attention but   
   only within strict limits. Non-cash gifts worth a total of less than   
   $500 a year aren't taxable if they're given to mark birthdays, holidays   
   or similar special occasions. Your boss can also give an employee up to   
   $500 in a non-cash gift once every five years to mark long service or   
   an employment anniversary with no tax consequences to the employee. The   
   boss can also provide a tax-free party or social event worth up to $100   
   per employee. Cash gifts are always taxable.   ?   
      
   Myth 4: I should have refused that pay raise because it will bump me   
   into a higher tax bracket.   
      
       Federal tax brackets — 2013   
       Income 	   Tax Rate   
   Up to $43,561	      15%   
   $43,562 – $87,123     22%   
   $87,124 – $135,054    26%   
   Over $135,054	      29%   
   Source: CRA   
      
   Canadians face four federal tax brackets and up to six brackets   
   provincially. But "bumping into the next bracket" means just that one's   
   income in the higher bracket will be taxed at the higher rate – not   
   that the higher rate will apply to all of the person's income. "All of   
   the money you earned below the new tax bracket remains taxed at the   
   lower rates," points out Edmonton-based financial educator Jim Yih in   
   his Retire Happy blog. "The bottom line is you should never, ever, ever   
   turn down money. Enjoy every pay increase you receive without tax   
   worries, and remember that those higher paycheques mean more money in   
   your pocket."   
      
   Myth 5: The U.S. does not impose withholding taxes on U.S. investments   
   if they're held in registered Canadian accounts.   
      
   The U.S. does not recognize the registered status of TFSAs so any   
   dividends paid by U.S. stocks will face a withholding tax of up to 30   
   per cent. Retirement accounts like RRSPs and RRIFs are exempt from U.S.   
   withholding taxes.   
      
   Myth 6: Employment insurance income received during maternity leave is   
   not taxable.   
      
   Not true. All EI benefits, including maternity benefits, are taxable.   
   "In most cases, Service Canada withholds less than the lowest tax rate   
   so you may have tax obligations at the end of the year," says Cleo   
   Hamel, a senior tax analyst with H&R Block.   
      
   Myth 7: If you file your taxes online, your odds of being audited   
   increase.   
      
   Since it's not possible to file paper receipts or tax slips online, the   
   Canada Revenue Agency does sometimes ask people who file online to send   
   in supporting documents. But the CRA says this is just "routine   
   verification" and not an audit. "When the CRA flags a file for audit,   
   the criteria are broad, complex and not based on filing method," the   
   agency says.   
      
   Myth 8: The Canada Revenue Agency doesn't pay snitches.   
      
   Big Tip   
      
   The largest reward paid by the U.S. Internal Revenue Service for a tax   
   tip was the $104 million US a former banker received for ratting out   
   his former employer, the Swiss bank UBS, and for helping authorities go   
   after the bank's clients for tax evasion.   
      
   The tax department has always encouraged reliable tips about Canadians   
   who might not be paying what they should. But it has never rewarded   
   tipsters whose information led to recovered taxes — until now. Early   
   this year, the CRA announced it would start to pay people whose tips   
   pan out cash rewards of five to 15 per cent of the extra tax collected.   
   For now, the new snitch line (1-855-345-9042) is just aimed at those   
   whose funnelling of money offshore results in unpaid tax revenue of at   
   least $100,000.   
      
   Myth 9: You can't take advantage of the RRSP Home Buyers' Plan unless   
   you have never owned a home before.   
      
   Ottawa requires users of the Home Buyers' Plan to be "first-time   
   buyers." But it defines this as people (and their spouses) who have not   
   owned a principal residence in the five calendar years up to and   
   including the current year. For those who owned a home more than five   
   years ago, they can still withdraw up to $25,000 tax-free from their   
   RRSPs ($50,000 for a couple) to help them buy a home.   
      
   Myth 10: Everyone hates doing their taxes.   
      
   Not true, if the pollsters are correct. A survey commissioned by   
   Thomson Reuters and the maker of a tax software program asked 1,009   
   Canadians last year if they liked filing their taxes. A significant   
   minority — 41 per cent — said yes.  It's worth noting that the survey   
   did not ask if people liked paying their taxes.   
      
   http://www.cbc.ca/news/business/taxes/10-myths-about-taxes-that-   
   mislead-canadians-1.2508364   
      
   --- SoupGate-Win32 v1.05   
    * Origin: you cannot sedate... all the things you hate (1:229/2)