AFM462 Study Guide - Final Guide: Tax Avoidance
15 Jul 2018
School
Department
Course
Professor
Filing Requirements
Individual
Corporation
Return required
if
Tax is payable;
1.
The individual has a taxable
capital gain or disposes of
taxable Canadian property in
the year;
2.
The Minister of National
Revenue has issued a
“demand to file”;
3.
The individual has a positive
Home Buyers’ Plan or
Lifelong Learning Plan
balance at year end; or
4.
A non-resident individual has
a taxable capital gain
5.
Tax is payable (or would be,
in the absence of a treaty);
1.
At any time in the year, the
corporation:
Is resident in Canada;
a.
Is carrying on
business in Canada;
b.
Has realized a taxable
capital gain; or
c.
Disposes of a taxable
Canadian property
d.
2.
Prescribed form
T1
T2
Filing deadline
April 30
1.
June 15, if taxpayer or
spouse carried on a business
2.
Later of six months after the
date of death and normal
filing deadline, if the
taxpayer passed away during
the year.
3.
Six months after year end
Balance due date
April 30
Two months after year end
1.
Three months after year
end for certain Canadian-
controlled private
corporations (CCPCs)
2.
Notice of
objection
90 days after the date of the
notice of reassessment
•
April 30, 20XX - one year
after the due date for the
filing of the return that is
being assessed
•
90 days after the date of the
notice of reassessment
•
Interest and Penalties
Compliance Problem Interest/Penalty
Arrears interest —
missed payment
deadline
Interest is charged on taxes owing at a rate equal to the
prescribed interest rate + 4%* until the amount is paid in
full.
Interest is compounded daily until the amount is paid in full;
if the amount was owing on April 30, interest would be
charged beginning May 1 until the amount is paid.
*Corporate taxpayers’ loans or indebtedness is at a rate of
4.5%.
Late or deficient
instalments
Interest is charged on late or deficient instalments at a rate
equal to the prescribed interest rate + 4%.
Interest applies from the date the instalment was due or
deficient to the earlier of:
The date the instalment is paid•
The balance due date for the taxpayer’s taxation year•
Penalty is 50% of the amount by which the interest on the
late or deficient instalments exceeds the greater of:
$1,000•
25% of the interest that would have been payable if
no instalments had been made
•
Refunds owed to the
taxpayer from the
Canada Revenue
Agency (CRA)
For individuals:
Interest paid to an individual = refund amount ×
(prescribed rate + 2%).
•
Interest is calculated starting on the latest of the
following dates and ends on the day that the refund is
paid:
30 days after the balance due date for the
relevant tax return
1.
30 days after the return is actually filed2.
The day on which the overpayment arose3.
•
For corporations:
Interest paid to a corporation = refund amount ×
prescribed rate.
•
Interest is calculated starting on the latest of the
following dates and ends on the day that the refund is
paid:
120 days after the end of the relevant taxation
year
1.
30 days after the return is actually filed2.
The day on which the overpayment arose3.
•
Failure to file return by
due date
Penalty for first occurrence:
Penalty is the total of:
5% × unpaid tax•
1% × unpaid tax × number of months return is
outstanding (not more than 12)
•
Penalty for subsequent occurrences:
Penalty is the total of:
10% × unpaid tax•
2% × unpaid tax × number of months return is
outstanding (not more than 20)
•
Repeated failure to
report income
equal to or greater
than $500 (more
than once in any three-
year period)
Penalty is the lesser of:
10% × amount of unreported income•
An amount equal to 50% of the difference between
the understatement of tax (or the overstatement of
credits) and the amount of tax paid in relation to the
unreported amount
•
False statements or
omissions, knowing or
gross negligence
Penalty is the greater of:
$100•
50% of the understated tax•
(Penalty may be waived if the taxpayer voluntarily tells the
CRA about the amount that was not reported.)
Failure to e-file by tax
preparers who prepare
at least 10 T1s or 10
T2s
Penalty is the total of:
$25 per paper-filed T1•
$100 per paper-filed T2•
Misrepresentations in
tax planning
arrangements
Penalty is the greater of:
$1,000•
100% of gross revenue derived by person from activity•
Participating in a
misrepresentation
Penalty is the greater of:
$1,000•
50% of tax sought to be avoided (to a maximum of
$100,000 plus the fee charged)
•
Chapter 3: Personal Administration - Section 1
June-04-18
7:39 PM
Document Summary
The individual has a taxable capital gain or disposes of taxable canadian property in the year; Lifelong learning plan balance at year end; or. A non-resident individual has a taxable capital gain. Tax is payable (or would be, in the absence of a treaty); At any time in the year, the corporation: a. b. c. d. June 15, if taxpayer or spouse carried on a business. Later of six months after the date of death and normal. Ling deadline, if the taxpayer passed away during the year. Three months after year end for certain canadian- controlled private corporations (ccpcs) corporations (ccpcs) 90 days after the date of the notice of reassessment. April 30, 20xx - one year after the due date for the. Ling of the return that is being assessed. Interest is charged on taxes owing at a rate equal to the prescribed interest rate + 4%* until the amount is paid in full.
