Posted on: 28-03-07 11:04:15
Quote:
Originally posted by Pramod Chopra
Am I missing something here?
I think I did mention about the expenses (withdrawls) coming out of joint accounts and it is a bit difficult to keep track all the expenses (withdrawls) and that's why I suggested a practical solution of sharing 50-50 between spouses.
So, you are saying that when the software asks for the percetage you can allocate even 100% to the spouse with NIL income in the whole year and CRA would not care about it?
CRA might not come after you for these small amounts immediately, but once a return is picked up for audit couple of years after, the tax payer would find hard to answer CRA's objections. And who knows then CRA might question other deductions too?
Its your call.
No sirs, you are not missing anything - EXCEPT that I did not mention putting everything into one spouse's return (though I personally do it - simply because I have more than one interest bearing account and so I nominate each acount for one spouse).
What I said is that one can always put 60:40 or 70:30 or 75:25 or whatever and if the return has no other hanky panky thing, CRA will not come after you. And even if they decide to - one can always say that the higher income earner is the one who foots the bill of the family and the other spouse earns as only a supplement or hobby and so does not incur much for family expenses and therefore saves more than the higher income earner.
What DP is getting is clients who are audited for some other things and therefor caught in this interest reporting too - otherwise CRA is not foolish to come after you where the situation can easily be proved to be correct as reported.
Chandresh
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Chandresh
Advice is free – lessons I charge for!!
Quote:
Originally posted by chandresh
Quote:
Originally posted by Pramod Chopra
Am I missing something here?
I think I did mention about the expenses (withdrawals) coming out of joint accounts and it is a bit difficult to keep track all the expenses (withdrawals) and that's why I suggested a practical solution of sharing 50-50 between spouses.
So, you are saying that when the software asks for the percentage you can allocate even 100% to the spouse with NIL income in the whole year and CRA would not care about it?
CRA might not come after you for these small amounts immediately, but once a return is picked up for audit couple of years after, the tax payer would find hard to answer CRA's objections. And who knows then CRA might question other deductions too?
Its your call.
No sirs, you are not missing anything - EXCEPT that I did not mention putting everything into one spouse's return (though I personally do it - simply because I have more than one interest bearing account and so I nominate each account for one spouse).
What I said is that one can always put 60:40 or 70:30 or 75:25 or whatever and if the return has no other hanky panky thing, CRA will not come after you. And even if they decide to - one can always say that the higher income earner is the one who foots the bill of the family and the other spouse earns as only a supplement or hobby and so does not incur much for family expenses and therefore saves more than the higher income earner.
What DP is getting is clients who are audited for some other things and therefor caught in this interest reporting too - otherwise CRA is not foolish to come after you where the situation can easily be proved to be correct as reported.
Chandresh
No Sir,
You did not mention any percentages in your earlier post.
What you mentioned was that a taxpayer, if using a software is asked the percentage that belongs to each spouse. If one answers it there, it is good enough. This could be construed by some people as reporting the percentage as even 100-NIL where 100% is being reported for spouse with nil or very little income which would be totally wrong and this could be flagged by the CRA computers.
Every body is not as account savvy as you are and your case is different as you can handle CRA but not every body can.
Hence the practical solution was suggested for reporting 50-50 for general people.
And yes, CRA is not foolish to come after any one for small amounts but returns do get picked up for audit and the auditor may question this and other claims, if any and it may be difficult to answer his/her questions.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
My apologies sir.
Please pardon me!
(I genuinely thought I was simply talking common sense - not accounting)
but then common sense is not such a common thing after alll
Chandresh
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Chandresh
Advice is free – lessons I charge for!!
Quote:
Originally posted by chandresh
My apologies sir.
Please pardon me!
(I genuinely thought I was simply talking common sense - not accounting)
but then common sense is not such a common thing after alll
Chandresh
Chandresh ji,
Please do not misunderstand me and you certainly do not have to apologize.
I was also talking practical solution and not accounting.
The clarification was needed because the original poster was asking if he can show entire T5 interest income in his spouse's name. Like him there would be many new CD tax payers who may also be tempted to do that which could cause problem later.
Cheer up.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
I am not an accountant by education or practice. However I think I know a bit about taxes.
Sometimes common sense prevails professional sense. If I can give one of the examples couple of years ago - I had a joint account with my wife with approximately 70-30 contribution (withdrawals-deposits combined) ratio with 70% of my contribution. I had higher income in that particular year compared to my wife.
My wife had a private medical insurance from her employer which covered both of us. I had no such insurance from my work place.
A very professional (with some accounting degree in Canada) tax advisor told me to split income by 50/50 with the resoning that I will get some tax break because I had higher income.
Now here I am not talking about CRA rule; according to CRA rule (it is debatable however) I have to declare 70/30 ratio. My tax consultant told that I would get smaller refund with 70/30 ratio. However I decided to stick to 70/30 ratio and still I had more tax return dollars than 50/50 ratio suggested by my tax consultant....why?
This is because 50/50 ratio would make my wife's income higher. Now when we talk about medical expenses you get rebate on every dollar spent for medical exense that is more than 3% of your (or your spouse - whoever has lower income) income. Because 50/50 split took her total income to higher level (and 3% threshold) that medical expense claim became lower! In my case this medical expense rebate was higher than difference of our tax bracket.
I respect professional knowlege of accountants and tax preparers but I think every tax payer should also be prepared to make some research to clearly understand all implications of any given expense or income. If you do your own research and then consult tax professional that will give you better results.
Thank you. 
Not talking about a Joint Account , but I had read somewhere recently that amongst 02 partners earning income , invest from the lower earning partner's income and pay normal expenses as much as possible from the higher income earning spouse .
In this manner the lower earning partner , despite earning interest will stay in a lower tax bracket v/s if the investments were taken by the higher earning spouse .
The last line read ...... It generally happens in a reverse manner. 
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Fido.
