How Reasonable is CRA?

A while back I explained an unusual stock option-related situation where it is possible to buy and sell stock and end up owing more in taxes than the proceeds from the sale. The latest federal budget has remedied this situation by limiting the tax owed to the proceeds of the sale. However, this budget is not yet law.

This brings me to the question of how reasonable CRA plans to be about this. I’m in a situation where I owe a very large sum under the current tax rules, but once the budget becomes law, I can refile my 2009 taxes to owe a much smaller sum. As the transition of the budget into law is largely a formality, it makes little sense to send CRA a lot of money only to get it back soon.

After penetrating many levels into CRA’s help system, I was told that in fact I could just pay the lesser amount and my return would be held until the budget passes (as long as I file the return along with some special forms to ask for special treatment). This sounds very reasonable, but I have no assurance that things will actually work this way. It will be interesting to see whether my return will in fact be held or whether CRA’s collection system will be aimed at me.

There are many people in the same situation I’m in. I won’t be surprised if some have their returns held and others don’t. I’m hoping I’m part of the lucky group.

Comments

  1. DillonMay 3, 2010 at 12:13 AM

    The form(s) you filed to ask for special treatment - if this was a CRA prescribed form, I would be interested to know what the form was called. CRA has alphanumeric names for most of their forms, the name is usually printed in the bottom left-hand corner.

    ReplyDelete
  2. Michael JamesMay 3, 2010 at 5:15 AM

    @Dillon: The form is an RC4288 Request for Taxpayer Relief. However, my use of this form isn't one of the standard uses. This form seems to be used mainly to ask not to ever have to pay some taxes owing due to some extreme circumstances. In my case, I just want a delay of a few months to a time when the taxes will no longer be owing.

    ReplyDelete
  3. Big Cajun ManMay 3, 2010 at 9:54 AM

    Given you are not the only person in this boat, you are safe(r), it is always dangerous to be a lone wolf in these situations.

    ReplyDelete

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