Tax Matters: A Potpourri
By Michael L. Crawford, BA(Hons), CMA
Dear readers: This month I have been asked to come up with 600 words that are informative, and maybe even a little entertaining, about women’s issues and tax. It doesn’t matter if you’re a man or a women; in the eyes of the CRA you are a taxpayer. If you are interested in knowing what your rights as a taxpayer are (man or woman), check out the Taxpayer Bill of Rights Guide at the CRA website (www.cra-arc.gc.ca)
I did come across one item in my research that will most likely benefit women. If you are separated from your spouse and he refuses to change his marital status, you can still change your marital status by completing Form RC65, Marital Status Change or you may write a letter informing the Canada Revenue Agency of your new status and the effective date. In either manner the signature of the (ex) spouse is NOT required.
Why would a spouse not want to change his marital status? I can think of only two reasons: 1) To claim credits for which they are not eligible as a separated individual 2) To make life difficult for their former spouse. Over the years I have come across examples of both.
I say this is sort of about women because in my practice it has always been the man who wanted to make things difficult or defraud the government. In fact anybody who is separated and needs to complete Form RC65 may do so regardless of gender.
There are some myths that circulate in certain circles of society concerning the CRA. Some of them are simply unbelievable and others are dangerous. For your consideration:
Myth: The income tax system is based on voluntary compliance because the government knows tax laws are unconstitutional and cannot be enforced.
Fact: Our tax system is absolutely constitutional and non-compliance can result in fines, seizures and criminal prosecution. This myth is just silly and I can’t imagine anyone falling for it. Some individuals claim they have not filed a tax return in years, and don’t have to. This may be true. If the person has no taxes owing then they have no obligation to complete a tax return. However, if they are requested (or demanded) to file a tax return then they must do so. Even if the return results in no tax liability, it must be filed.
Myth: You can make tax free withdrawals from yourself directed RRSP.
Fact: Although you may use funds from a self directed RRSP to buy shares of certain qualified investments, there is no legitimate way to extract cash from your RRSP without some sort of tax consequence. This myth is dangerous and preys on the vulnerable and the greedy.
The Income Tax Act and other related legislation are large and complex laws that frustrate even the professionals at times. This article is intended to increase your awareness of issues that affect you and encourage you to look more closely at the ones that relate directly to your situation. You are encouraged to seek professional guidance specific to your unique situation.