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[Don't be afraid to ask]

Forgetting to include a slip on a tax return seems like a small error but for one of our clients, it meant an overpayment of $8,000 on her tax payable. The Georgetown, Ontario client missed an off-setting deduction and ended up writing a cheque to the government for a lot more than she owed. Fortunately, she came into H&R Block and with some adjustments got her money back.

The Canadian tax system is a self-assessment system and places the onus on taxpayers to get their taxes right. Once you sign your tax return, you are saying that you believe your tax return is correct.

Once your tax return arrives at the Canada Revenue Agency (CRA), it is reviewed but not double checked. It is not the responsibility of the CRA to find errors or correct your mistakes. They will look for areas where you failed to claim income but credits and deductions have to be recorded in the CRA's files.

So even if you make a mistake, you shouldn't rely on the CRA to correct it for you. If you have any doubts on claiming a deduction or a question about where to include slip information, it is always best to ask a professional. Even if you are not a client, most tax professionals will answer a few questions. Missing a deduction can be costly and the biggest mistake taxpayers make is assuming they do not qualify for a credit.

For the average Canadian, there are a limited number of ways to reduce the tax payable. But if you have made contributions to your Registered Retirement Savings Plan (RRSP), had medical expenses or cared for an elderly parent, you should make sure you fill out your return correctly.

For our client in Georgetown with one small error on her return, it took more than a year with several appeals led by an H&R Block tax associate to correct and get her money back from the CRA. The client did have to pay for her initial adjustment filing but all of the additional work by the tax associate was provided at no extra cost.

If you have any questions about your return, H&R Block tax associates are available in your area to make sure you understand what you are entitled to. To find the location nearest you, call 1-800-HRBLOCK or www.hrblock.ca.

 

[Pension income-splitting... I still have questions]

Canadians have been filing their 2007 tax returns over the last couple of months and many have enjoyed savings thanks to recent tax changes. Pension income splitting is one of these changes that could have a positive impact on a tax return. The first step is to determine which pension income is eligible and then how much income to split. Special attention should be paid to how the income splitting might affect certain federal and provincial benefits.

Here are some of the more common income splitting questions from Insight readers.

My husband retired with a full pension and now works at another company, full-time. Neither of us is 65 years old yet. Can he split his pension with me and can we both claim the pension income amount?

The short answer is yes. You can split income from eligible pension income like an annuity from superannuation, pension plan or pension fund. Your husband's full pension should fall into one of those categories. Generally this income is reported on line 115. Once you have determined to split the income then both the transferor and the transferee are able to claim the pension income amount.

Can you split the regular payments out of your Registered Retirement Income Fund (RRIF) account - if you are over 65? Is it true that any excess withdrawal (from a RRIF) cannot be split?

Withdrawals from an RRIF are reported in Box 16 of a T4 (RIF) and are eligible for the pension income amount.

 

The list of eligible pension income does not include Old Age Security (OAS) payments, Canada Pension Plan (CPP) benefits, retiring allowances, death benefits or lump sum withdrawals from your RRSP.

 

In the case of excess withdrawals from a RRIF, this amount is included in Box 16 of the T4 (RIF) and is eligible for income splitting.