When a P.E.I. woman got a letter asking for taxes on money she hadn’t earned, she thought she was being scammed.
“When I opened it, I thought it was a scam printed on [Canada Revenue Agency] paper, because I know there have been scams, so I didn’t pay too much attention to it,” Mary Mullen, a French Village resident, told CBC.
She showed it to her son and daughter and they told her to check with CRA.
Canada’s tax-collecting agency told Mullen the letter was in fact real, and that the government can require people to pay tax instalments in advance of actually earning money if they owed more than $3,000 that year (or $1,800 for Quebec residents).
“I was very shocked. I kept telling them this is income I haven’t totally earned yet,” Mullen said.
While most Canadians file their income tax returns in the spring for the previous year, this year, some 1.8 million people got a “reminder” that they may have to pay a chunk of 2021’s bill this year.
“I’ve always paid my taxes on time, before they were due, and in the full amount,” said Mullen, who retired from one job but still works. “I could maybe understand [it] had I been delinquent in taxes for the last number of years and they wanted some assurance they would get taxes.”
An estimated 1.8 million Canadians received a letter last month reminding them they may have to pay a tax instalment on income they’ve earned this year. (Submitted)
The letter told her to pay two instalments of more than $3,000 each. The first was due Sept. 15 (but was extended to Sept. 30) and the second on Dec. 15. CRA told her there is a penalty for late payment of the advance instalments but that she could appeal if she thought she’d earn less this year and thus accrue a lower tax bill.
Mullen said she can make the payments, but not everyone is as lucky.
“I am certainly concerned about people who may not be in the position I am and maybe haven’t been working this year, especially during COVID. Are they going to have to come up with an amount of money?” she asked.
Why CRA collects in advance
The CRA said there are situations where the instalment reminders may be ignored. If you got the letter but owed less than $3,000 in 2020 ($1,800 in Quebec), “you can disregard this notice.”
Sylvie Branch, a CRA spokesperson, said instalments are required when someone earns income that has no tax withheld, or not enough tax withheld. She said that includes self-employed people, people with more than one job or people with rental and investment income. Pension payments also can be included in some cases.
“To treat individuals fairly, those who do not have enough tax withheld from their income have to pay a reasonable estimate of their tax throughout the year, rather than on April 30 of the next year,” Branch said.
“It is important to note that if a taxpayer’s 2020 net tax owing will be less than $3,000 ($1,800 for residents of Quebec), instalment reminders may be disregarded and instalment interest will not be assessed if quarterly payments are not made,” another CRA spokesperson, Paul N. Murphy, said in a subsequent email.
WATCH | Thousands of CRA accounts hacked in August cyberattack The Canada Revenue Agency has shut down its online services after 5,500 people had their CRA accounts hacked. Experts say the thieves are after emergency funds meant for pandemic relief, but there are doubts about CRA’s claim that people’s password habits made them vulnerable. 2:01
Dalhousie University professor emeritus Shirley Tillotson, a tax historian, said that advance instalments are a routine occurrence for some Canadians.
“But if you’re someone who finds, as many people do, any communication from the CRA terrifying, this is set up in a way that doesn’t highlight the fact that what they’re offering is an option to pay smaller instalments this year, or maybe none at all if your income has really been hit hard,” she said.
Tillotson, who notes she is not a tax accountant, said while the letter is precise and accurate, if people don’t read it or understand it, “it’s going to be, ‘Oh my God, I owe $3,000,’ or whatever the amount is.”
Most people actually pay instalments
Tillotson said the advance instalment system was created to prevent people from falling behind in their income tax payments. It also helps CRA avoid having to chase down small amounts of owed taxes with “aggressive” collection tactics.
She said most people actually pay their taxes ahead of time. “When we salaried income or wage income earners get that line on our pay stub that says ‘income tax withheld,’ that’s paying by instalments,” she said.
She said the CRA is looking at ways to make 2020 tax payments easier for people but she thinks it could make its message clearer.
“There’s a communication job here for the CRA and for the revenue minister, or some other minister, to additionally communicate what they’ve already said about extending deadlines, about trying to accommodate in the administration of income tax the extreme uncertainties and the real hits that people have taken,” Tillotson said.
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She said in the past, the CRA has addressed public concerns in ways that allow everyone to understand what it’s saying.
“They’ve done cartoon strips and ads with strong visual components to them,” she said. “Different people hear things by different means and it may be this is one of those many uncertainties that might require some of the same quality of visual graphic communication as the public health advisors had [for COVID-19].”
What can you do?
Murphy, the CRA spokesperson, said taxpayers expecting their income to be significantly different this year compared to previous years can estimate their instalment payments based on this year’s income.
He said taxpayers who are unable to pay their 2020 advance instalments due to circumstances beyond their control can request relief from penalties or interest after their 2020 return has been assessed.
Mary Mullen said she will pay the instalments ahead of the deadlines this year, but she has asked her employer to start deducting income taxes.
She has also completed a simple CRA form that allows taxpayers to request either a fixed amount or a percentage of their Canadian Pension Plan and/or Old Age Security be deducted for taxes.
Human Resources Officers must be very busy these days what with the general turnover of employees in our retail and business sectors. It is hard enough to find skilled people let alone potential employees willing to be trained. Then after the training, a few weeks go by then they come to you and ask for a raise. You refuse as there simply is no excess money in the budget and away they fly to wherever they come from, trained but not willing to put in the time to achieve that wanted raise.
I have had potentials come in and we give them a test to see if they do indeed know how to weld, polish or work with wood. 2-10 we hire, and one of those is gone in a week or two. Ask that they want overtime, and their laughter leaving the building is loud and unsettling. Housing starts are doing well but way behind because those trades needed to finish a project simply don’t come to the site, with delay after delay. Some people’s attitudes are just too funny. A recent graduate from a Ivy League university came in for an interview. The position was mid-management potential, but when we told them a three month period was needed and then they would make the big bucks they disappeared as fast as they arrived.
Government agencies are really no help, sending us people unsuited or unwilling to carry out the jobs we offer. Handing money over to staffing firms whose referrals are weak and ineffectual. Perhaps with the Fall and Winter upon us, these folks will have to find work and stop playing on the golf course or cottaging away. Tried to hire new arrivals in Canada but it is truly difficult to find someone who has a real identity card and is approved to live and work here. Who do we hire? Several years ago my father’s firm was rocking and rolling with all sorts of work. It was a summer day when the immigration officers arrived and 30+ employees hit the bricks almost immediately. The investigation that followed had threats of fines thrown at us by the officials. Good thing we kept excellent records, photos and digital copies. We had to prove the illegal documents given to us were as good as the real McCoy.
Restauranteurs, builders, manufacturers, finishers, trades-based firms, and warehousing are all suspect in hiring illegals, yet that becomes secondary as Toronto increases its minimum wage again bringing our payroll up another $120,000. Survival in Canada’s financial and business sectors is questionable for many. Good luck Chuck!. at least your carbon tax refund check should be arriving soon.
NORMAN WELLS, N.W.T. – Imperial Oil says it will temporarily reduce its fuel prices in a Northwest Territories community that has seen costs skyrocket due to low water on the Mackenzie River forcing the cancellation of the summer barge resupply season.
Imperial says in a Facebook post it will cut the air transportation portion that’s included in its wholesale price in Norman Wells for diesel fuel, or heating oil, from $3.38 per litre to $1.69 per litre, starting Tuesday.
The air transportation increase, it further states, will be implemented over a longer period.
It says Imperial is closely monitoring how much fuel needs to be airlifted to the Norman Wells area to prevent runouts until the winter road season begins and supplies can be replenished.
Gasoline and heating fuel prices approached $5 a litre at the start of this month.
Norman Wells’ town council declared a local emergency on humanitarian grounds last week as some of its 700 residents said they were facing monthly fuel bills coming to more than $5,000.
“The wholesale price increase that Imperial has applied is strictly to cover the air transportation costs. There is no Imperial profit margin included on the wholesale price. Imperial does not set prices at the retail level,” Imperial’s statement on Monday said.
The statement further said Imperial is working closely with the Northwest Territories government on ways to help residents in the near term.
“Imperial Oil’s decision to lower the price of home heating fuel offers immediate relief to residents facing financial pressures. This step reflects a swift response by Imperial Oil to discussions with the GNWT and will help ease short-term financial burdens on residents,” Caroline Wawzonek, Deputy Premier and Minister of Finance and Infrastructure, said in a news release Monday.
Wawzonek also noted the Territories government has supported the community with implementation of a fund supporting businesses and communities impacted by barge cancellations. She said there have also been increases to the Senior Home Heating Subsidy in Norman Wells, and continued support for heating costs for eligible Income Assistance recipients.
Additionally, she said the government has donated $150,000 to the Norman Wells food bank.
In its declaration of a state of emergency, the town said the mayor and council recognized the recent hike in fuel prices has strained household budgets, raised transportation costs, and affected local businesses.
It added that for the next three months, water and sewer service fees will be waived for all residents and businesses.
This report by The Canadian Press was first published Oct. 21, 2024.
TORONTO – A new report says many Canadian business leaders are worried about economic uncertainties related to the looming U.S. election.
The survey by KPMG in Canada of 735 small- and medium-sized businesses says 87 per cent fear the Canadian economy could become “collateral damage” from American protectionist policies that lead to less favourable trade deals and increased tariffs
It says that due to those concerns, 85 per cent of business leaders in Canada polled are reviewing their business strategies to prepare for a change in leadership.
The concerns are primarily being felt by larger Canadian companies and sectors that are highly integrated with the U.S. economy, such as manufacturing, automotive, transportation and warehousing, energy and natural resources, as well as technology, media and telecommunications.
Shaira Nanji, a KPMG Law partner in its tax practice, says the prospect of further changes to economic and trade policies in the U.S. means some Canadian firms will need to look for ways to mitigate added costs and take advantage of potential trade relief provisions to remain competitive.
Both presidential candidates have campaigned on protectionist policies that could cause uncertainty for Canadian trade, and whoever takes the White House will be in charge during the review of the United States-Mexico-Canada Agreement in 2026.
This report by The Canadian Press was first published Oct. 22, 2024.
