Koroll & Company Blog

The fact that Canadian households are carrying a significant amount of debt isn’t really news anymore. For several years, both private sector financial advisers and federal government banking and finance officials have warned of the risks being taken by Canadians who took advantage of historically low interest rates by continuing to increase their secured and unsecured debt.

The risks most commonly cited by those advising debtors on having a greater degree of borrowing restraint was the impact that an increase in interest rates would have on their ability to repay — or even service — the debt they had accumulated.

In addition, those advising debtors on borrowings secured by home equity were concerned about a downturn in the real estate market could put those borrowers at risk, or even in a negative equity position, where the amount still owing on their home-related borrowings was greater than the value of their home.

Cyberattacks on government or on a private company, in a single country or worldwide, are more frequently making headline news. The hackers who perpetrate the attacks seek to profit by it — either by demanding payment from the entity whose systems have been compromised, or by obtaining confidential personal information (especially identifying or financial information) about individuals, which can then use fraudulently or sold to others who wish to do so. 

In September of this year, the credit reporting firm Equifax, one of the largest in the industry,  announced that it had been subject to a major cyberattack. The attack was especially concerning, both because of the nature of the information Equifax holds, and because of the number of Canadians affected.

Most Canadians approaching retirement know that they will be able to receive retirement income from the Canada Pension Plan (CPP) and Old Age Security (OAS) programs. Many, however, are unaware that there is a third federal program — the Guaranteed Income Supplement (GIS) — which provides an additional monthly income amount to eligible individuals who already receive Old Age Security.

The problem is, automatic enrollment in GIS is something that is planned for future implementation, but is not yet in place, which means that anyone who wishes to receive the GIS must apply for it. As such a number of Canadians are not taking advantage of it.

The good news? Where individuals receive the Guaranteed Income Supplement, whether the full benefit or partial amounts, all such amounts received are non-taxable.

The Canada Revenue Agency (CRA) doesn’t publish information or statistics on the number of individual taxpayers who owe them money in the form of back taxes, interest, or penalties.

Nonetheless, it’s a safe assumption that some percentage of the 28 million or so Canadians who filed a tax return this past spring either couldn’t pay their 2016 taxes when due or still owe money from past years, or both.

Being unable to pay one’s bills on time obviously isn’t desirable, no matter who the creditor is. There are, however, a number of reasons why owing money to the tax authorities is a particularly bad idea.

Here are 3 reasons you should avoid not paying your taxes owed to the CRA.

The end of summer means back to school for students of all ages. For parents of elementary and secondary school students the focus is on obtaining back to school clothes and supplies and starting the process of enrollment in after-school activities for the fall.

For those already in (or starting) post-secondary education, choosing courses, finding a place to live and paying the initial bills for tuition and residence are more likely to be on the immediate agenda.

What both groups of parents and students have in common this school year, however, is that this is the first full school year which will be affected by previously announced tax changes.

Although they aren’t usually thought of in such terms, Canadian charities can be big businesses. The difference between them and a large corporation is that they collect and disperse money in order to support and advance causes, which create a public benefit.

As such, charities are afforded special status under Canadian tax laws.

Our tax system effectively subsidizes the activities of charitable organizations by providing a tax deduction or tax credit to companies and individuals that contribute to those organizations and by exempting the charities themselves from the payment of income tax. 

As it usually does when a natural disaster occurs, the Canada Revenue Agency (CRA) issued a press release, reminding affected taxpayers that they could seek relief from any interest and penalties which might otherwise be imposed as the result of late filing or payment of taxes.

Such relief is provided under the federal Taxpayer Relief Program and, although natural disasters are the most publicized instances in which the Program is utilized, it is in fact available to all Canadian taxpayers in a variety of circumstances.

While Canadians typically think of taxes only in the spring when the annual return must be filed, taxes are a year-round business for the Canada Revenue Agency (CRA). The CRA is busy processing and issuing Notices of Assessment for individual tax returns during the February to June filing season.

To date, in 2017, the CRA has received and processed just under 28 million individual income tax returns. That volume of returns and the CRA’s self-imposed processing turnaround goals (two to six weeks, depending on the filing method) mean that the CRA cannot possibly do an in-depth review of each return filed prior to issuing the Notice of Assessment.