Legal Fees (Assorted Topics)

buds where their is a wrong people will eventually fight it and eventually it will get changed someday.i may fight this myself with my retro.not sure yet.

propat

I quit fighting the CRA on this issue, but so glad that others stood up to the CRA. I feel better now that, others followed in my footsteps, untill you posted that i had no idea, I just wanted lock it away, and forget about it , but it all resurfaced in this case, Funny how that works. thx for finding that info , it makes me feel better.

call done and done.i also added the how was it suppose to work it has the old calculation in it.

propat

thx alot bro.

sure call will do.

propat

ya i found out even if its 2 years it doesnt help.call ive read this a few times in the past and many other thing.now it is brought up in this case that the old interest was the 90 day bond rate plus 2% now from other things i read i think its now avrage prime rate of the year plus 2%.im not putting this here to scare anyone im just trying to inform people how unfair these deemed taxes are.

teen if you are going back 12 years be prepared to take all in one year becouse i see no senarioes right now where the QRLSP calculation will even come anywhere close to helping you.i may have missed a senario ore two but i doubt it.

propat

Propat could you pleas cut and paste the human rights tribunal piece to the Deemed taxes QRLSP thread, I'd appreciate it.

this should really get into Judge Barnes Hands ASAP bro , it will add much needed credability to what we have been saying all along

Bingo if you read all my posts on QRLSPs this mirrors every thing I have been saying. Great work detective PROPAT Now all can see what lurks in the shadows of CRA. Deemed Taxes will kill you! thats the Interest portion thats added to the QRLSP. whats revealing news was i said after 5 years its usually not helpful, where Shiela Barnard, Who BTW i had many convos with back in the Day, states 6 years.

again it doesnt give you the exact calculation what is this a state secret.

propat

yes its great you trying help us with this tax issue Teen, much appreciated Bro. Squirrling away a bit extra, is always a good idea, when our in unknown territory.

just pulled this from the murphy case human rights tribunal.

V. How has the CRA administered the QRLSP?


[26] Ever since the QRLSP provisions came into force, taxpayers who have been in receipt of qualifying lump-sums have been able to apply to the CRA to learn if they can benefit from this tax relief. Sheila Barnard is the manager of the legislation section in the Individual Returns and Payments Processing Directorate of the CRA, which is responsible for establishing the processes involved in assessing personal income tax. She pointed out that the QRLSP provision enabled taxpayers to allocate their qualifying lump sums as far back as 1978. The CRA recognized that few people keep their tax records for so many years and that the agency, on the other hand, possessed that data in its computer system.


[27] The CRA was therefore in a position to perform the QRLSP calculation for taxpayers and established a process to achieve that result. It developed a special form (T1198), which taxpayers could attach to their tax returns. The form has usually been completed by their employer. If the taxpayers file electronically, the T1198 figures are keyed in. The name of the lump-sum recipient appears on the T1198 form as well as the year in which the lump-sum was received. The amount is broken down between principal and interest. There are then a series of blank spaces identified by year from 1978 (the earliest year to which the QRLSP mechanism's relief extends) to the current taxation year. The amount of principal relating to each year is entered into the appropriate blank spaces. In the case of the federal public service pay equity payments, the employer issued a Form T1198 to all recipients.


[28] Ms. Barnard testified that upon receipt of an income tax return with a T1198 form or an equivalent electronically filed return, the CRA assessing system automatically performs both the regular tax calculation and the special QRLSP tax calculation, provided the portion of the principal relating to prior years is $3,000 or more.


[29] Ms. Barnard explained that the special QRLSP tax calculation is performed as follows:


1) The amount of the qualifying retroactive lump-sum payment is deducted in computing the taxable income in the year in which the lump-sum was received (the "Current Year").


2) Basic federal tax is computed on the reduced taxable income of the Current Year using the tax rates and non-refundable tax credits applicable in the Current Year.





3) A tax adjustment (which is an addition to the basic federal tax) is calculated as a total of:


a. All amounts each of which would be the increase to the basic federal tax for each preceding year, calculated as if the relevant portion of the lump-sum had been received in the year to which it relates, and


b. Interest computed on the increase to basic federal tax for each preceding year, using the prescribed refund rate, from May 1 of the year following the year to which the portion of the lump-sum relates to the end of the year preceding the year in which the lump-sum is received.


4) The tax adjustment is added to the basic federal tax on the reduced taxable income for the Current Year.


[30] Once the CRA has completed this calculation, it then compares the results of the regular tax calculation (i.e., taxing the lump-sum in full in the Current Year) with the special QRLSP calculation to determine the method that is most advantageous to the taxpayer. If the QRLSP tax calculation is more advantageous, the CRA uses it to assess the return for the Current Year. If the QRLSP is of no benefit, the CRA assesses the return using the regular tax calculation. The CRA then issues a Notice of Assessment or Reassessment with an explanation indicating whether the QRLSP tax calculation was beneficial, followed by a letter to the taxpayer explaining the calculation and comparison in detail.


[31] Simply put, the exercise consists of recalculating the Current Year's federal income tax without the lump-sum, and then adding to that tax the amount of federal income tax that would have been payable had the lump-sum amounts been paid in the years to which they related. If the lump-sum has placed the taxpayer into a higher tax bracket in the Current Year, then logically, assessing the taxpayer at the lower marginal tax rates that he or she was paying in prior years would result in a reduction of tax payable. However, there is one other factor to be taken into account - the interest that also forms part of the calculation. When the compounded interest is added, the likely effect is that any benefit from calculating the income tax payable on retroactive payments at the lower marginal rates is negated to varying extents by the compound interest that is included in the calculation. For this reason, retroactive payments extending back six years or more are not likely to benefit from the QRLSP mechanism.

propat

That's a good question but I don't have the answer. Email it to Peter...

peter.driscoll@mcinnescooper.com

He could do it on the bench or do it soon after, we will see!

maybe teentitan can answer that question