Personal Finance

CRA bill unreasonable?

  • Last Updated:
  • Dec 10th, 2018 12:32 pm
Tags:
Member
May 16, 2017
453 posts
476 upvotes
It may go back to the unpaid experience/internship. There are very specific conditions under which the EMPLOYER is permitted to do this, depending upon Province. As you were finished school, and unless you were continuing the formal requirements for internship (or articling for law), you are excluded from 2 or 3 categories already for unpaid "interns". If the internship provided services that were generally replacing what a typical employee would do - you can be pretty sure the "internship" would not pass CRA muster. The tax implications of that are beyond my experience, but they will be complex because they'll cover employee and employer contributions to CPP/EI and knock-on effects of those.

An audit of the employer may have uncovered an issue that is now affecting you - or it may simply be a review of your returns.

Really, though, there must be some lines on the notice of re-assessment that would provide a clue and you could share the lines that have changed significantly without disclosing the actual amounts.

As for not having access to old turbotax - that is why these programs allow to save a PDF copy of the return and/or print it out - it is your responsibility to keep your tax records.
Sr. Member
User avatar
Dec 24, 2007
589 posts
501 upvotes
BC
robsaw wrote:
Dec 8th, 2018 12:50 pm

Really, though, there must be some lines on the notice of re-assessment that would provide a clue and you could share the lines that have changed significantly without disclosing the actual amounts.
The CRA provides a summary of the changes between what you filed and what they assessed, along with an explanation of what amounts were changed. What lines were changed will give you a clue as to what they have done.

All we are hearing from you is a rant about your situation with the CRA with very little information. Initially you said it was some change to tuition fees and now you are saying it is related to CPP. About all we know from you is that you were reassessed and you insist you were an "unpaid intern". And then you said that in a CPP/EI ruling you were found to be a "paid employee". Well, which is it??

Something doesn't add up as it appears that the CRA has reassessed for what probably is "unreported employment income" and nothing to do with tuition.

BTW, "unpaid internship" when you are not in school is illegal for employers and they probably claimed it was "paid" in order to get out of legal trouble. What's the employer's story about how you were compensated for your time? Are they lying about compensating you? If they didn't actually pay you as an "employee" and CRA has ruled that they are an employer, then the employer has an obligation to pay back wages, vacation pay and statutory holiday pay that you were entitled to.

I think there is a lot more to this story than what you have given. It looks like as far as the CRA is concerned, the facts they have from the Employer is that you were "paid" a certain amount for those years. Get that CPP/EI ruling that the reassessment officer has used and if you were never compensated then go back to the Employer with it and demand payment. Do you know whether any of the other "unpaid interns" are being reassessed? You will have more clout if all of you were to approach the employer with the demand for payment, especially if you have to resort to social media, news stations like CBC, or getting legal help.
Deal Fanatic
User avatar
Jan 27, 2007
5023 posts
899 upvotes
Peterborough
dutchca wrote:
Dec 8th, 2018 10:26 am
Your initial post states you did an experience/unpaid internship, but then got contacted by CRA in which you told them you were an employee.

Did you get paid or not?
If you werent paid, regardless of the legal status of your internship, you should not owe either taxes or CPP/EI.

If the company where you "worked" claimed that you were paid, then that would explain a reassessment.

You should be able to get this rectified. Im taking you at your word that you didnt get paid. The CRA is unlikely to reassess unless they are sure amounts were paid. If seen similar situations where people were paid in cash......
Deal Addict
Jan 2, 2015
1349 posts
380 upvotes
Toronto, ON
twitchyzero wrote:
Dec 6th, 2018 12:06 am
so earlier this year a place where i did an experience/unpaid internship when i was a fresh out of school several years back calls me out of the blue, tells me they want to update everyone's info...and so i did.

later I was contacted by CRA for a EI/CPP rulings dating back to 2016 and claimed i was a paid employee during my time there. I appealed with a short online questionnaire, then they sent a more detailed questionnaire to fill out. Sent that back, didn't hear anything.
If the CRA thinks you are an employee, either your employer filed a T4 (when they shouldn't), or the CRA forced them to file a T4. In either case, you can access your My Account and get that T4. Then issue an employee complaint (call the CRA and ask for that form).
2-3 months passed, and le tax man abruptly bills me $2000 interest inlucded with a re-assessment that has nothing to do with EI/CPP...and expect me to pay it in 2 weeks (fed/prov tuition and edu carryfwd amounts)
The CRA wouldn't reassess you without sending you a letter first. You probably missed the letter, as Canada Post is not perfect. Call the CRA and ask for a copy of that letter. Then answer it. I've gotten that letter, and just answered it. It took months to get a response, but I passed because "here's my official tuition receipt".
is it because CRA realized they had no grounds to reassess me based on the info i gave and they decided to try and muscle me into paying something else?
No.
i can do a formal dispute again, but I'm just wondering if people have run into bizzare situations like this before. Why are they even going after 2016 credits weeks away from 2019?
It doesn't sound like you know what you are disputing. It also won't work if you can't provide the information you want, so you'll need the letter about your tuition anyway.
[OP]
Deal Addict
User avatar
Sep 26, 2007
4149 posts
512 upvotes
i created this thread when i first only received the 2016 NoRe-assess, yes as a rant being frustrated at CRA's inconsistency and to see if anyone else experienced something similar

but after getting one for 2015 i understand it better but still unsure how they came about the reassessment details or the amount

summary so far:
2016 changes due to tuition carry forward
2015 changes due to owed CPP/EI, therefore impacting calculation on the carry forward, therefore affecting 2016 carry forward

now i'm learning where i interned things may not have been 100% following rules to the T. my line of work is a small closed-knit community, i do not plan on pursuing anything as i dont want to point fingers/ step on toes/burn bridges

it seems like they were audited, and CRA went in and reviewed everyone who was associated with them

i haven't reached out to CRA yet but I am thinking of disputing it

are there any grounds to stand on if I ask CRA to prove this place of internship was an employer? I've already done my part in the questionnaire to strongly point out they are not. CRA is saying they're.

in a potential dispute, is it a strong case if I ask the CRA to provide documents that I was a paid employee now that i'm assessed for owing CPP/EI deductions? (paystubs, income payment paper trails at the bank, etc.)
Russell wrote:
Sep 10th, 2011 12:29 pm
We come here looking for deals. We use the savings on the things we buy to justify buying more things, thus filling our homes with tons of unnecessary consumer products. Such is the key to happiness.

Member
May 16, 2017
453 posts
476 upvotes
twitchyzero wrote:
Dec 9th, 2018 4:10 am
i created this thread when i first only received the 2016 NoRe-assess, yes as a rant being frustrated at CRA's inconsistency and to see if anyone else experienced something similar

but after getting one for 2015 i understand it better but still unsure how they came about the reassessment details or the amount

summary so far:
2016 changes due to tuition carry forward
2015 changes due to owed CPP/EI, therefore impacting calculation on the carry forward, therefore affecting 2016 carry forward

now i'm learning where i interned things may not have been 100% following rules to the T. my line of work is a small closed-knit community, i do not plan on pursuing anything as i dont want to point fingers/ step on toes/burn bridges

it seems like they were audited, and CRA went in and reviewed everyone who was associated with them

i haven't reached out to CRA yet but I am thinking of disputing it

are there any grounds to stand on if I ask CRA to prove this place of internship was an employer? I've already done my part in the questionnaire to strongly point out they are not. CRA is saying they're.

in a potential dispute, is it a strong case if I ask the CRA to provide documents that I was a paid employee now that i'm assessed for owing CPP/EI deductions? (paystubs, income payment paper trails at the bank, etc.)
Sorry, but I don't get your argument.

What 2015 changes? If you aren't willing to share what line items were changed how can we provide any reasonable advice?

If the place where you worked wasn't following the rules, in particular, if they weren't following employment law with respect to "interns" then you don't have a leg to stand-on as to whether you were an employee or not. The only item is whether you were actually paid, and that includes in cash or in-kind, or any other taxable benefit trying to hide compensation. If you received anything like that you will owe your portion of CPP/EI.

You can't dispute based on what you'd like the law and regulations to be - you can only dispute based upon the law. If your "employer" is likely now being re-assessed for re-classified workers and owing all sorts of back payroll taxes that would impact you and it would appear there is an assumption you and other "interns" were compensated for work performed. Now you have to demonstrate you weren't. If you aren't willing to confront your place of work and you really weren't compensated for work then it would seem there is a problem of unresolvable contradictory evidence.
Sr. Member
User avatar
Dec 24, 2007
589 posts
501 upvotes
BC
twitchyzero wrote:
Dec 9th, 2018 4:10 am
i haven't reached out to CRA yet but I am thinking of disputing it

are there any grounds to stand on if I ask CRA to prove this place of internship was an employer? I've already done my part in the questionnaire to strongly point out they are not. CRA is saying they're.

in a potential dispute, is it a strong case if I ask the CRA to provide documents that I was a paid employee now that i'm assessed for owing CPP/EI deductions? (paystubs, income payment paper trails at the bank, etc.)
Certainly, if you disagree with the Ruling you can dispute it. It is within your rights to see the "facts" that support their decision on the CPP/EI matter and also the reassessment of your tax return. File your Notices of Objection/Appeal ASAP as you only have 90 days from the Date of the Reassessment to do so. You need to file 2 separate filings: one for the CPP/EI ruling and other for your income tax reassessment. For the CPP/EI Ruling the process is CRA How to dispute CPP/EI rulinge.... For the Income tax reassessment it is Income Tax Objections.

Once the Appeals officer contacts you, request copies of all the documents in your file as you have the right to your personal information they have on file under the Privacy Act. However, from the standpoint of the CRA: it is your word against the "employer" and whatever "facts" provided is what they use to rule.

The factors they will primarily use to determine whether you are an employee or an independent contractor are (these come from Court cases):
A worker can be classified as an employee if the following characters are present:

Works exclusively for the payer
Payer provides tools
Payer controls duties, whether that control is used or not
Payer sets working hours
Worker must perform services
Provision of pension, group benefits
Worker is paid vacation pay
Payer pays expenses
Paid salary or hourly wage
Reports to payer's workplace on regular basis

I would say "interns" will be classified as employees given the fact their work will very likely be "closely controlled by the "employer", you aren't freelancing, so highly unlikely the CPP/EI ruling will be overturned.

The second question is regarding what the employer said regarding "being paid". Yes, the CRA will have information on file that they used to reassess you. Right now it appears from what you say is "Yes, the employer is stating that you were paid". You are saying you weren't paid. Well, it's your word against the employers. And if you aren't going to dispute whatever the company said when what they did was illegal and you are entitled to be paid, it's going to cost you lots of $$$. And if the employer lied, how trustworthy are they?
Last edited by WetCoastGuy on Dec 9th, 2018 1:58 pm, edited 1 time in total.
[OP]
Deal Addict
User avatar
Sep 26, 2007
4149 posts
512 upvotes
CRA is claiming unreported income for 2015, which means CPP/EI owing and has impacted 2016 tuition amounts as a result

is there interest during an appeal period?
Last edited by twitchyzero on Dec 9th, 2018 2:02 pm, edited 1 time in total.
Russell wrote:
Sep 10th, 2011 12:29 pm
We come here looking for deals. We use the savings on the things we buy to justify buying more things, thus filling our homes with tons of unnecessary consumer products. Such is the key to happiness.

Sr. Member
User avatar
Dec 24, 2007
589 posts
501 upvotes
BC
twitchyzero wrote:
Dec 9th, 2018 1:58 pm
CRA is claiming unreported income for 2015, which means CPP/EI owing and has impacted 2016 tuition amounts as a result

i wish to dispute in a manner of innocent until proven guilty...CRA should provide documentation that I was paid through this internship if they want to claim that I underreported income almost 4 years ago
Sorry, that's not how income tax works as it is a self-reporting system, this is not criminal justice. Since you have all the information, the CRA goes with the "most likely" information it has to reassess (ie. it doesn't need a smoking gun") and it is up to you to prove otherwise with whatever information you might have. Right now, the employer probably said ('I'm guessing here") all sorts of stuff about how you were "paid" to get out of legal trouble and that's good enough for the CRA on the balance of probability. We don't know how you answered the questions from CRA but it is up to you to prove you were "unpaid". You're probably going to have to confront your employer for your "pay records" if they said you were paid since the CRA seems to have lots of information on how much you "earned" for each of the years. It is not some "pie in the sky" number they just put down.
Last edited by WetCoastGuy on Dec 9th, 2018 2:39 pm, edited 1 time in total.
Sr. Member
User avatar
Dec 24, 2007
589 posts
501 upvotes
BC
twitchyzero wrote:
Dec 9th, 2018 1:58 pm
is there interest during an appeal period?
Yes, arrears interest will run for the entire time it is not paid even during the appeal period. To stop the interest clock you have to pay the amount reassessed.

If you win your case, you get the taxes back plus interest.
Deal Addict
Nov 10, 2018
1139 posts
953 upvotes
WetCoastGuy wrote:
Dec 9th, 2018 2:09 pm
Yes, arrears interest will run for the entire time it is not paid even during the appeal period. To stop the interest clock you have to pay the amount reassessed.

If you win your case, you get the taxes back plus interest.
But if you lose your case you can apply to get the interest waived. If there has been an obscene amount of delays they'll usually waive it, because the delay isn't with the taxpayer, it's with the CRA.
For legal topics and discussions, the opinion, guidance, and thoughts provided are my own and are not considered to be legal advice, in any manner.
Member
May 16, 2017
453 posts
476 upvotes
angryaudifanatic wrote:
Dec 10th, 2018 10:50 am
But if you lose your case you can apply to get the interest waived. If there has been an obscene amount of delays they'll usually waive it, because the delay isn't with the taxpayer, it's with the CRA.
You also have to consider whether appealing may result in additional details being revealed that show the taxpayer was either willful or carelessly negligent in filing their tax returns and perhaps subject to penalties as well as interest.

Regardless, it is becoming apparent in this case that the employer has been caught-out and it is now impacting the OP and maybe others - the OP doesn't want to confront the employer, which may be essential in an appeal if there truly was no compensation for work done.

Top