Ken's case study: Back Taxes and Kenneth
by The Tax Doctors
The importance of filing your taxes on time and avoiding back tax problems with the CRA.
Ken was very behind in filing his tax returns – about 9 years behind for his corporate tax filing. He was behind in filing corporate tax, personal tax and Hst returns. Not a good situation to say the least. CRA started garnishing his wages and were going to put a lien on his house because Ken was behind in filing his personal tax returns. Ken was three years behind in filing his personal tax returns, and CRA needed the personal tax returns filed. CRA was in the process of applying a lien to the house. Tax Doctors Canada filed the personal income tax returns to keep the lien off the house.
CRA had started garnishing Ken’s wages because he was so late in filing the Hst returns. Ken was about 5 years behind in filing his Hst returns. It is very difficult to live when 40% of your wage is being sent to the government. Tax Doctors Canada filed the Hst returns and stopped the garnishment. After all the analysis, Ken was actually getting a refund. All the payments (garnishments) from Ken’s bank account were reconciled to Ken’s Hst account to ensure Ken received credit for his payments.
Ken’s payroll account was in error as well. When Tax Doctors Canada filed the last two years of corporate tax returns, a dividend had been paid. When a dividend is paid, no Canada Pension Plan payments are required. Tax Doctors Canada filed the appropriate form to have the excessive payroll remittances that were garnished refunded to Ken. CRA had garnished a few payments for overdue payroll remittance. However, the garnishment payment was in excess of the required amount. Tax Doctors Canada went the extra mile to file the appropriate paperwork to have the excess payroll remittance refunded to Ken – about $10,000 in Ken’s pocket.
The corporate tax returns were behind by nine years. After filing the returns, a $30,000 refund was due to Ken. Dividends were paid to Ken instead of a wage and saved Ken thousands of dollars. For the years filed, a lower tax rate applied to dividends paid; wages would have attracted a higher tax rate. It took a few months to prepare all the tax returns but the analysis was well worth it. Tax Doctors Canada found a $5,000 payment that had not been credited to his tax account - another positive find for Ken.
The professional tax accountants at Tax Doctors Canada were able to get Ken’s back tax problems in order and maximize his tax savings. They turned a potentially disastrous situation into a positive outcome for Ken, like they have done for thousands of clients in the same dire circumstances with their back taxes.
Ken has learned a hard and unnecessarily stressful lesson regarding filing tax returns late. He now understands the importance of correctly filing income tax returns yearly with professional tax accountants from Tax Doctors Canada. Ken has also adopted some tax and financial planning recommendations from Tax Doctors Canada, and associated company GTA Wealth Management Inc, to get his financial plan on track and reduce his future tax obligations.
Don't settle for less. Let Tax Doctors Canada expertly take care of your back tax requirements and positively solve your problems with the CRA. Contact Tax Doctors Canada for a free initial consultation or call toll free at 1 855 TAX DOCS (855 829 3627), toll free across North America. We have four convenient locations in the GTA to serve you.