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I have received from clients 4 - 5 letters suggesting the taxpayer over contributed to their RRSP. Upon further inspection of the CRA provided MULTIYEAR RRSP INFO, I discovered that an amount that was contributed in the first 60 days and partially deducted in the previous calendar year was leaving a balance carried forward. CRA now shows that carry forward amount as a new contribution in the following year and wants to tax it as an over contribution!!!!!
Any one else see this yet. Must be happening to thousands of taxpayers!
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T1OVP-TEAM CRA investigating RRSP over contributions
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#2
Joe 
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Posted 29 March 2007 - 11:27 PM
urtaxwiz2, on Mar 29 2007, 03:27 PM, said:
I have received from clients 4 - 5 letters suggesting the taxpayer over contributed to their RRSP. Upon further inspection of the CRA provided MULTIYEAR RRSP INFO, I discovered that an amount that was contributed in the first 60 days and partially deducted in the previous calendar year was leaving a balance carried forward. CRA now shows that carry forward amount as a new contribution in the following year and wants to tax it as an over contribution!!!!!
Any one else see this yet. Must be happening to thousands of taxpayers!
Any one else see this yet. Must be happening to thousands of taxpayers!
Could be more of a REDSCP* issue...
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* (Really Early Daylight Savings Computer Problem)..
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#3
JohnV
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Posted 29 March 2007 - 11:30 PM
Yeah...began receiving enquiries a month or three back actually...same letter.... you MAY have...
Checked things out but things quickly showed CRA seems to experiencing technical difficulties.
May have to do with the new form they introduced a year or two ago....don't know.... they could simply be experiencing the same difficulties as WSIB auditors :)
After making sure we were OK, I told those clients who'd received the "MAY have" letters to simply ignore them.
Not to say to you or anyone "ignore it"....check to make sure first....but its unlikely there's an issue if you know your client's history...cause really, you'd know yourself if there is a problem right??
Checked things out but things quickly showed CRA seems to experiencing technical difficulties.
May have to do with the new form they introduced a year or two ago....don't know.... they could simply be experiencing the same difficulties as WSIB auditors :)
After making sure we were OK, I told those clients who'd received the "MAY have" letters to simply ignore them.
Not to say to you or anyone "ignore it"....check to make sure first....but its unlikely there's an issue if you know your client's history...cause really, you'd know yourself if there is a problem right??
#4 Guest_snowplowguy_*
Posted 29 March 2007 - 11:39 PM
urtaxwiz2, on Mar 29 2007, 06:27 PM, said:
CRA now shows that carry forward amount as a new contribution in the following year and wants to tax it as an over contribution!!!!!
It's been a long day....... so forgive me for not being able to get my head around this... but.... are you saying CRA is giving the taxpayer credit for more RRSP contributions than what were actually made?
If so...... other than being a pain in the neck to you...... isn't the taxpayer going to somehow be better off no matter what?
ie..... he's going to be able to draw out (on a T1-ovp) funds that have already been or will be deducted from income...... or pay a penalty tax on monies that he never actually contributed but will be able to deduct at some future point in time when enough RRSP room is generated?
#5
urtaxwiz2
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Posted 30 March 2007 - 12:49 AM
Several scenarios are playing out. New client over last copule of years claims a carry forward from his NOA. Now we discover that two years earlier CRA duplicated the amount and included it on the NOA. So he has deducted a contribution he never had.
Depending on age and amount of alleged over contibution, taxpayer may pay a penalty on funds he never had, then withdraw funds that should have stayed in the plan.
And we all know how often CRA makes mistakes but the average taxpayer believes every word coming out of CRA's mouth. And the "MAY HAVE" portion of the two page letter gets over looked when the read the penalty threats contained therein.
Depending on age and amount of alleged over contibution, taxpayer may pay a penalty on funds he never had, then withdraw funds that should have stayed in the plan.
And we all know how often CRA makes mistakes but the average taxpayer believes every word coming out of CRA's mouth. And the "MAY HAVE" portion of the two page letter gets over looked when the read the penalty threats contained therein.
#9
JohnDearin
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Posted 31 March 2007 - 01:35 PM
Now that's interesting JohnV. I reposted on the other thread...guess I must have moved threads before this thought came to me.
John Dearin
John Dearin
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