Question about taxes in relation to unpaid wages.

[mbfraser]

Hey guys,
I've just got a quick question. I work a seasonal geophysics job. Approximately 6 months on followed by 6 months off (which I normally spend abroad). Between April and December of 2011 I logged about 2300 hours and I finished work on December 15, 2011. My boss hasn't been able to fully pay me out for 2011 yet. Something went awry and some of his clients haven't paid him for work I'd completed. He's been left with debt and unpaid bills. He currently owes me ~$35k but is good for it and will get me the money when he can...which will be when his clients manage to raise money through their stocks.

My question is: what do I do come tax time? What if I get a T4 saying that I earned such and such and have to file my taxes. Should I if I haven't been paid yet? My return from taxes is substantial and I wouldn't be keen on missing out. If I do file taxes for wages that haven't been paid for is there a chance that it could come back and bite me in the ***** ?

[Thunderburke]

Your T4 should only include the salary that has been physically paid to you in 2011 and should not include any accrued wages. See http://www.cra-arc.gc.ca/tx/bsnss/tp...s/whn-eng.html. Your 2012 T4 should include the amount that he owes you assuming that is when he pays it.

[rasadam]

As per above, you are taxed on a cash basis rather than accrued. So if you're being paid in 2012 for services performed in 2011, that income will be in your 2012 tax return.

Your T4 will reflect the employment income you actually received up to December 31, 2011.

[mbfraser]

Thanks for the info guys!

[mbfraser]

In the mail today I received a T4 from my employer for $60k. He hasn't paid me anywhere close to that yet. Sounds like he's gone ahead and declared that he has though? What you guys had expected to happen did not. Any ideas as to how I should approach this?

[wayne74]

In the mail today I received a T4 from my employer for $60k. He hasn't paid me anywhere close to that yet. Sounds like he's gone ahead and declared that he has though? What you guys had expected to happen did not. Any ideas as to how I should approach this?

ya report his ***** to CRA for filing false information. The guy sounds kinda shady to me.

[rasadam]

In the mail today I received a T4 from my employer for $60k. He hasn't paid me anywhere close to that yet. Sounds like he's gone ahead and declared that he has though? What you guys had expected to happen did not. Any ideas as to how I should approach this?

Talk to your employer first. Show them that they are calculating the T4 incorrectly. If they don't reissue your T4, you will need to give the CRA a call. If your employer ends up disputing it, be prepared to show all payments received from your employer (Cheque stubs, direct deposits on bank statements, etc.), if it comes to that.

The easiest solution would be for your employer to correct their mistake, so try to resolve it with him first.