The CRA is now requiring taxpayers to use Two Factor Authentication (2FA) in order to log into their computer systems.
The version of 2FA that the CRA uses is based on SMS or VoiceCall to a known phone number. That is, they will either text or call you with the access code. If you try to access the account too many times without successfully logging into the account, your account will be locked.
Clients are advised to ensure that their phone number is kept up to date at the CRA as I do not transmit phone numbers to the CRA when I file the tax return.
(Be advised that the 2FA that the CRA is using can be hacked by SIM swapping as well as when you lose your cell phone. Caution is advised.)
I have now heard from a few clients about their employer saying that I don’t need the T2200S to claim my home office expenses. Is that correct?
There are a couple of points that I would like to make about employers telling their employees that they don’t need the T2200S.
One, the employers do not have the right to instruct their employees on how they are to file the tax return. If they do, they are over-reaching their authority as an employer. No employer has the right to instruct their employees what they are to do outside of work, unless that behaviour reflects badly on the employer. Equally, by doing so, the employer is opening themselves up to being sued by their employees for providing bad advice if the method that the employer wants the employees to use isn’t to the advantage of the employee.
Would you be willing to commit fraud because your employer instructs you to do so?
Two, the CRA requires that you provide the T2200S later, if they then demand the T2200S from the employer to prove that you can claim the deduction. All that they have said that you don’t need the T2200S at the time of filing. They said nothing about requiring it later. They can ask for it up to six years after they issued the Notice of Assessment.
Finally, the CRA has privately indicated to tax preparers that we are required to ask for the T2200S before we file the tax return. Otherwise, they will charge us!
So I recommend that all employees ask their employer for the T2200S automatically if they were moved to working from home due to COVID-19 on or after March 15, 2020.
I just noticed this error on a government T4 slip. This is for T4 slips for employees posted overseas. The primary worker who may be affected are members of the Diplomatic Corp. Individuals working in private industry such as the Oil Sector may also be affected.
The definition for province codes for T4 slips may be found by checking this following web page. If you check the instructions for Box 10 – Province of Employment, the government has standardized all the codes.
These codes reflect the same two character provincial abbreviations used by Canada. The only two exceptions are:
- US – for employment in the US, and
- ZZ – for other, meaning that the employee worked in a country other than Canada or the United States, or if the employee worked in Canada beyond the limits of a province or territory (for example, on an offshore oil rig).
Phoenix has used the code EX instead of the authorized codes.
All government workers who work outside of Canada (principally the diplomatic corp,) will probably have their T4 slips registered at the Canada Revenue Agency with this wrong code in box 10. As a result, any person who downloads these tax slips will likely have a problem with importing the tax slip into their tax return, if you use tax software.
A previous common practice of putting children on family properties is now causing conflicts with current laws.
What has happened in the past is that children would be put on the title for the family properties for the purpose of moving the properties to the children seamlessly for estate purposes. The thought was that the children then could take over the family property, generally a family cottage, with little hassle when the parents are no longer able to manage the property.
Conflict with tax law
Doing so creates issues with tax law. This maneuver is an attempt to circumvent the deemed disposition of the property on death. While the parents can “gift” the property to the children, the property is deemed to have been sold at fair market value at the time this occurred. If this did not happen (and the tax department actually keeps these details on file,) then the capital gains can be significant.
Another problem is if the property is sold after the addition of the child, but before the child receives the full ownership of the property. For example, if the child was put on the title when they became of legal age, then the property is sold decades later, the child isn’t aware that they have to declare that sale on their tax return. This has been required in Canada for the past few years and there are several people who have discovered that they didn’t declare the sale when they should have. Or the child wasn’t called into the meeting to handle the sale of the property to the new owners, rending the actual sale at risk!
Property ownership issues
It is equally possible that the parents may have financial difficulties while the child has been put on to the property title. As a result, the municipality and/or mortgage company may seek redress from the child for outstanding debts that the parents were unable to pay. This is a concern that all individuals who are on title should be aware of as it does impact their personal credit risk. Lenders are increasingly wary when people have their name on multiple titles.
Conflict with estate law
Another issue that has come up is the conflict with estate law, specifically probate. While this isn’t an issue in some jurisdictions, others have indicated that they consider the placement of children on title for the purpose of transferring the property outside of probate is possible fraud. I am not presently aware of any court cases which have settled this situation, but it is another risk that people should be aware of.
This article touches on some legal matters which is better addressed with your legal adviser to provide specific and personal advice for your personal situation. It is only an introduction to the matter and is not intended to replace legal advice from a lawyer or other member of the legal profession.
I was recently interviewed by the CEO of Gamechangers, Jordan Samuel Fleming, on how I developed my internal management system. This is featured on the SuperCharged! Podcast of August 7, 2019.
You are invited to listen to this podcast on the web; It is also available on iTunes, Spotify and Google Play.