Sunday, January 27, 2013

MRJ Financial Solutions 1st Newsletter

Issue: #1January 2013
Welcome to MRJ Financial Solutions newsletter in which I wish to share some tax tips that will save you money. Feel free to forward this newsletter to your connections.

matt giving tax tips
Mathew speaking at Entrepreneur Speed Networking at Montana's Restaurant on Jan. 9, 2013
7 Income tax items that will cause an audit
 You have just finished filing your income tax return and you get a notice from Canada Revenue Agency (CRA) saying they want to see the receipts for your tax return. This scenario is enough to send shivers down any taxpayer's spine. This is what is casually known as an 'audit' and is akin to going to the dentist: painful. It appears that CRA has decided that of all the tax returns to audit, your name came up. What caused this to happen you ask? Well to be honest there are probably several 'red flags' in your tax return that would justify a closer look.  I am going to list 7 of the most common items that will cause an audit.
  1. RRSP contributions are a prime candidate for audit. Of all the deductions a taxpayer can make, this is near the top of the tax man's hit list. RRSP contributions frequently get targeted for audit because, taxpayers often over contribute.  If a tax payer over contributes, a penalty of a 1% tax per month is assessed on your unused contribution that exceeds your RRSP contribution limit by $2,000.
  2. Income and deduction spikes:  Sudden spikes in income and deductions from one year to the next will certainly flag your tax return for an audit. If a taxpayer reports making $30,000 one year and then declares $300,000 the next year, CRA has the authority to audit both or all years leading up to the year the $300,000 was claimed.  Not only will they audit, they can also assess fines or penalties according to the income tax act. Conversely if a taxpayer claimed a few thousand dollars in deductions from a business one year and tens of thousands of deductions the next, is a guarantee that the tax return is flagged for audit.
  3. Charitable donations:  Making large charitable donations compared to your income is a good way to get the tax man's attention and that is not a good thing. If the charitable donations you are making are significantly more than your income, it gets CRA's attention.  This is due to the fact that CRA has software programs that calculate the average charitable donation for your income bracket.
To find out more click on this link or call us today to set up a personalized and confidential appointment.  
Thank you for reading our newsletter. 
We welcome your feedback on our first newsletter. 
Mathew Jazenko
MRJ Financial Solutions

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