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Taxing issues
April 18, 2022
9:01 pm
pcs
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I have encountered a couple of problems this year I haven't had previously, and wonder how common this sort of thing might be among readers of this forum. (I am not identifying the Financial Institutions (FIs) involved for semi-obvious reasons.)

1.  (Bogus) extra Cap Gain
* One of our FIs incorrectly filed a T5008 declaring a sizable capital gain for a transaction which was actually an in-kind admin transfer from one FI to another.  We saw the unexpected T5008 slip show up on CRA MyAccount in early Feb; within a week the sending FI had admitted the mistake and taken action to "fix the internal records" at both sending and receiving FIs.  However, filing a correction/withdrawal to CRA is only going to happen sometime this week or next (i.e. last two weeks of April), and after that who knows how long it'll take CRA to process that through to the MyAccount profile.
* I have been able to exclude the incorrect T5008 during the auto-fill but obviously that means omitting a chunk of Capital Gains which CRA's auto-checking will think should be included.  We'll see whether the inevitable query/review gets issued to us before the correction/withdrawal works it's way through the CRA system ... I (do not) look forward to trying to explain to the CRA agent that they need to look into their own system to find the justification for not declaring those Cap Gains.

2.  (Probably) reduced RRSP Deduction
* My partner had four payslips in Jan&Feb, each with the expected Group RRSP deductions.  Well into March, the RRSP FI issued the Jan-Feb receipt, with only 75% of the sum expected.  After much investigation by both the employer and the FI, it turns out that this issue affected all employees at my partner's employer (i.e. not just my partner, or a handful of people).
* For one of those four payperiods in Jan-Feb, the RRSP FI did not "pull" the total amount for the whole Group's RRSP contributions from the employer's bank ... and the employer's Finance dept apparently did not notice that sizable withdrawal had not happened on schedule (at least until we queried the reduced RRSP deduction several weeks later). sf-surprised
* Discussion is ongoing but, to my knowledge at present, the RRSP FI is saying that, even though it's their mistake, that because they did not receive the contributions before end of Feb, they cannot reissue the RRSP receipts with the full amount of the four contributions for TY2021. If it stays that way, the consequence will be that
- the fourth contribution amount, and corresponding contribution room, will carryover to TY2022.
- the reduced deduction for TY2021 means a slightly higher Balance Owing than we had planned.

It's a bit disappointing to find two such "finger fumbles" in the same tax year, but I guess it does justify the check, recheck, double- and triple-check efforts we go through when tax season comes around each year.

April 19, 2022
5:14 am
savemoresaveoften
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I do not think CRA assumes t5008 is 100% correct and use it as gospel.
There is clear disclaimer from the FIs on the t5008 that it’s provided based on best efforts. Unlike other forms like t3, t4 & t5 where you won’t see such a disclaimer.
It is simply not possible for the FI to track true ACB when positions were transferred from another FI, there has been merger / buy out type transactions etc that result in name change etc. in your case, they just assigned it as deemed disposition, which is wrong most of the time.
You should submit what is the true capital gain, CRA will take your numbers and they may / may not even compare to t5008 later on.

April 19, 2022
6:31 am
COIN
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savemoresaveoften said
I do not think CRA assumes t5008 is 100% correct and use it as gospel.
There is clear disclaimer from the FIs on the t5008 that it’s provided based on best efforts. Unlike other forms like t3, t4 & t5 where you won’t see such a disclaimer.
It is simply not possible for the FI to track true ACB when positions were transferred from another FI, there has been merger / buy out type transactions etc that result in name change etc. in your case, they just assigned it as deemed disposition, which is wrong most of the time.
You should submit what is the true capital gain, CRA will take your numbers and they may / may not even compare to t5008 later on.  

Agree. I think the CRA views the T5008 as simply an indication that a disposition has taken place and want to see it reported on the T2S(3).

April 19, 2022
7:21 am
Bill
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T2S(3) is for corporations, not individuals.

I'm not sure CRA checks My Account data with the return filed at this time, that's done later when they run their matching programs for everyone's returns. By then any amendments, corrections, refilings, etc should have been made.

April 19, 2022
7:59 am
savemoresaveoften
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Bill said
T2S(3) is for corporations, not individuals.

I'm not sure CRA checks My Account data with the return filed at this time, that's done later when they run their matching programs for everyone's returns. By then any amendments, corrections, refilings, etc should have been made.  

if CRA see T5008, they expect to see something in schedule 3 I believe. Gets a little tricky if there is only a phantom disposition for the year tho, like the deemed disposition which is wrongly reported by the FI.

I am not sure if they check everyone in their matching program. My guess is if your income and tax payable is similar YoY, they prob skip it. Cant imagine they check every single one. But then who knows.

April 19, 2022
8:29 am
Norman1
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It is quite easy for CRA to do a quick check of Schedule 3 against the T5008 slips.

If Box 21 (Proceeds of disposition) of the T5008 slips total $40,000 and Column 2 (Proceeds of disposition) of Schedule 3 only totals $10,000, then at least $30,000 of dispositions has not been reported.

April 19, 2022
8:44 am
AltaRed
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Still, the OP simply needs to put the correct data into his tax return. If CRA challenges Schedule 3 in a letter to the OP, there is a simple explanation for the OP to provide in written response, i.e. just what the OP said in post #1. Attaching a copy of the monthly statement from each FI that shows the transfer is all that is needed in support.

April 19, 2022
9:48 am
COIN
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Bill said
T2S(3) is for corporations, not individuals.  

Darn, I got my 3's mixed up. I meant Schedule 3.

April 19, 2022
11:32 am
pcs
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Thanks for the comments on the T5008 thing. To be clear, it's not the numbers on the T5008 which are wrong - it's that the slip should not have been submitted at all, because there was in fact no disposition. And yes, we have justification (statements, etc) for why that is so, but it's a pest to have to deal with it at all. However, as mentioned, all we can do is submit the correct information and let the CRA mills grind what they will in their own time ...

April 19, 2022
11:45 am
Bill
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As I said I doubt anything is matched at this point, for precisely the reasons stated above, i.e. people file as early as January and there are errors, late filings, amendments, etc from the FI side that will dissipate over the next few months. The computers later match all FI final reporting with everybody's SIN to see if the numbers pretty much match (yup, every T etc slip), if they don't then reassessments are issued later this year or next. That's my experience, I've never encountered anyone who has been assessed at the point of filing based on a mismatch with FI filed data early in the year, maybe others have - ?

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