But here is where it gets a bit interesting. When I looked back at their tax return history I was a bit surprised to find that their filing both of their tax returns is spotty at best and not optimal. There are a couple of years where CRA indicates the return as "Not received", for one or both of them. My father is old school: a hardcopy tax guide, a pen, and a calculator. Unfortunately I have discovered that he has missed a number of optimization opportunities such as pension splitting and Ontario Trillium Benefits.
I have spent numerous hours reviewing their paperwork against what CRA says exists, have paid all outstanding balances and penalties showing on their accounts. I am somewhat surprised that CRA has not been chasing them for the "Not received" tax returns, on the CRA website we can see that CRA has all their tax slips for those years.
I have reached the point where I have almost all of the missing tax returns ready to be filed, both for 2012, and my mother's for 2008-2010. But I have hit a bit of a roadblock, or perhaps a bump in the road. My parents are low income seniors with a very small RRIF, CPP, OAS and GIS as their sole income source, so any past tax relief would be helpful.
Since Pension splitting was introduced in 2007, they completely missed this opportunity, which would have saved them significant dollars. I was all ready to prepare and send in a decade's worth of T1-ADJ forms to claim the pension split until I found the linked TaxTips.ca page
This would seem to rule out most of their potential claims. But I'm wondering if the fact that I'm catching up and filing one or both of their 2008-2010 and 2012 tax returns and each of "Not received" returns involves a T1032 Joint Election to Split Pension Income, will the three year rule apply?TaxTips.ca on Pension Splitting wrote:If you should have split pension income in a prior year but didn't, it's not too late - you can adjust your prior tax returns to do so. However, make sure that combined taxes payable are reduced by doing this, and keep in mind that the taxes payable of one spouse will probably increase, resulting in interest on the tax amount payable. A late or amended election, or revocation of an original election can only be done if the application is made on or before the day that is three calendar years after the filing-due date for the year that the election applies. The taxpayer must be resident in Canada at the time the application for amendment is made. If the taxpayer is deceased at the time the application is made, the taxpayer must have been resident in Canada immediately before the time of death. This means that an application to amend the pension splitting for the 2011 taxation year would have to be made on or before April 30, 2015, because the original 2011 tax return was due on April 30, 2012.
Does anyone have any suggested strategies for playing catch-up with CRA? For sure we are going to get the "Not received" tax returns filed and I'm thinking that along with those returns we should send them T1-ADJ requests for pension splitting going all the way back to 2007 and see how rigidly CRA applies the three year rule.
Just when you think you have your financial affairs well under control, along comes a curveball like this one.