I have an interesting episode recently, which drew my attention one of the great lies about taxes. That lie (quote) is:
I am from the Government and I am here to help you.
I’ve forgotten who came up with that quote, but it is rather apropos in this age.
Now, we in Canada are familiar with Phoenix, specifically the government’s payroll system. Most people who receive a T4 out of this system approach the slip with some trepidation. They are not convinced that the slip is correct. Even when they check against their bank account and the amounts deposited match the slip.
So then, why do people trust the tax slip download (called Auto-Fill My Return) from the Canada Revenue Agency as if it is gospel?
Every year, I find out about one investment firm or another who have issued incorrect tax slips. Very few investment firms remain unblemished by this error and quite simply, those who prepare taxes know this. We also know that several slips are filed with the government incomplete.
So I have a few clients who came to me this year and, to properly file their tax return, I ask to check prior year returns. Here is a couple of the recent errors involving downloaded tax slips that I saw in the previous couple of months:
- One of these clients did not think that I needed to get the actual slips from his investment firm. I got the slips and found that there was a substantial deduction on the slips that was not copied to the versions that the government received. In fact, that one deduction pays for my service.
- Another client downloaded the slips last year and didn’t check the information. They paid $3,300 more than they needed to last year. They were persuaded to come to see me, but neglected to provide a copy of the prior year return. I needed to check something between the two years and noticed this error. We are working on a correction.
Trusting the downloaded information is unwise. Yes, it is quick to download. But the downloaded information may be wrong or incomplete. Check the information.
Otherwise, that quote that I started with should be rewritten to say,
I am from the Government and I am here to help the Government to your money.