In Trust Accounts - CRA reassessments

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Yasehtor
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In Trust Accounts - CRA reassessments

Post by Yasehtor »

My wife has in trust accounts for our children and for years filed her return and claimed any income or capital gains on tax returns filed by the children. In the last couple of years she has been reassessed for T5 or T3 slips CRA says she didn't report, because the slips come under her SIN. It seems CRA uses computer to match slips and automatically reassess if the computer sees something under your SIN that is not claimed on the return. The investment company can't change the SIN on the accounts. She writes CRA a letter and the reassessment gets reversed but it is a hassle months after she files. Anyone run into this problem? Any suggestions on how to file to avoid this?
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Peculiar_Investor
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Re: In Trust Accounts - CRA reassessments

Post by Peculiar_Investor »

Yes I've run into this problem and can confirm that for many years CRA apparently didn't match slips because they accepted our and our kids returns as filed with the in-trust account capital gains claimed on the kids tax returns. But I do recall that something changed not that long ago and I started getting CRA reassessments indicating I had included the in-trust accounts. Particularly in this era of NetFile where you don't send any paperwork to CRA, their automated matching will probably continue to trigger these reassessments.

I think I went one go round with CRA and TD Waterhouse to change SIN numbers on the in-trust accounts to make everyone happy, but IIRC TDW wouldn't allow the kids SIN number to be the primary on the in-trust account. I don't recall if it was a CRA or TDW rule, but they wouldn't budge.

So how to avoid it? In my case, my children are now old enough and the in-trust account has been transferred into their own name and they've given me power of attorney to manage the account(s).

If your children are still young enough that an in-trust account is the only vehicle and the investment company won't (or can't) change the SIN on the accounts, then I'd just make the sending of the letter post reassessment part of your tax filing process. Maybe even proactively send the letter when the taxes are NetFiled.
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Re: In Trust Accounts - CRA reassessments

Post by Mouly »

I also have to go thru this dance every year:
- file
- accepted
- re assessed
- pay
- appeal
- appeal accepted
- refund

I don't see any way around it, for a while I was thinking I would move the investments away from dividend producing but now it's just a few minutes of work every year (since I now have this down to a routine). I may rethink it if they ever deny the appeal.

Not sure why you are claiming the capital gains on your own return tho, those can be taxed on the child's return.
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Zipper
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Re: In Trust Accounts - CRA reassessments

Post by Zipper »

Ran into this same problem with the Zipper grandkids.

If it shows up here on our little FW Forum they must be casting a wide net.

Seems CRA is trying to squeeze every last nickel and dime.

And yet guys like that sleaze de Zen employs offshore schemes and avoid millions.
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Re: In Trust Accounts - CRA reassessments

Post by Peculiar_Investor »

Zipper wrote: 24 Mar 2017 16:23 If it shows up here on our little FW Forum they must be casting a wide net.

Seems CRA is trying to squeeze every last nickel and dime.
I would suggest it is just a byproduct of CRA's move to matching properly slips. The same functionality that now gives us the ability to download tax slips into tax software. If indeed the problem is becoming widespread, then perhaps the solution is for CRA (or the financial institutions) to allow the minor's SIN to be on the account.
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Yasehtor
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Re: In Trust Accounts - CRA reassessments

Post by Yasehtor »

Thanks for the input...

Mouly...perhaps I wasn't clear but .. . the capital gains are taxed on the children's return as is the inome.

I don't think CRA is out to get me at all.. otherwise why agree with my appeal letter and refund the reassessment. No, its just the move to more and more on the computer... The increased use of computers by CRA is actually quite helpul. Just wish they could tag accounts like mine so they know in future years not to reassess... I am sure a computer programmer could easily figure it out... .but no doubt its pretty low on their priority list.................
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Re: In Trust Accounts - CRA reassessments

Post by Houska »

Mouly wrote: 24 Mar 2017 12:58 [...]
- re assessed
- pay
- appeal
- appeal accepted
- refund
Perhaps there are other circumstances (and it won't quite fix the problem of course...), but my understanding is that if you're confident your appeal will be accepted, you shouldn't need to pay the reassessed amount. Any interest accrued should be reversed when the appeal is accepted.

I haven't had to deal with In Trust account snafus but I've had numerous mini-messes where the CRA thought for some time I owed more tax than I actually did. All resolved amicably with balance owing cheerfully reduced to zero.
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