When preparing your tax return or when bringing your tax materials to your tax preparer it is absolutely crucial that you provide and report every single tax slip that you have received for the tax year.
If you forget to include an income T-Slip then you can be slapped with a BIG tax penalty from Canada Revenue Agency. CRA allows you to accidentally forget one every three years but if you get two “strikes” you are in trouble! If you forget to include an income T-Slip for 2012 tax year and you have also forgotten to include a T Slip in any of the prior three years you will have a 20% penalty on the amount of income reported on that second “forgotten” slip.
Here is an example. In 2010 tax year you forget to report a $50 T5 slip from the ABC Financial Institution. OK, no big deal; Canada Revenue picks up on it, reassesses you later and charges you about $15 tax on that $50 of income you forgot to report. But you have used up your “strike one”. Now in 2012 tax year (which you report in the spring of 2013) you have a $20,000 T5 slip that you forget to include. Canada Revenue will assess you the tax owing on that $20,000 which results in a surprise tax bill of about $6,000 plus interest. But on top of that they will assess you a 20% penalty of the amount of income you failed to report or an extra $4,000. So you pay the $6,000 tax you owe on that $20,000 plus a further $4,000 penalty !
The moral of the story is “Do Not Forget Your Tax Slips”.
For those investment clients for whom we also prepare their tax returns we do our best to double check to see if you have missed any slips. But we cannot assume responsibility for the tax slips that you may have forgotten to bring into us. It is ultimately your personal responsibility to go to your mail box, open all your envelopes and bring your T Slips into us or to you tax preparer.
If you receive a T-Slip after you have filed your tax return then you still have the responsibility of reporting this slip. You will have to file a T-1 Adjustment to your already filed tax return.
Oh, and one more thing……Don’t Forget Your Tax Slips !!.