Tax Tip: The More Obscure Medical Expenses

Are you claiming all the medical expenses you or your clients might be entitled to? 

The Government has launched an online budget consultation process. They are seeking your answers to these following questions: What steps should the Government take in Budget 2008 (and beyond) to ensure that Canada is prepared to deal with the implications of an aging population? Should the Government be implementing broad-based policies that will help all sectors of the economy to succeed or should it focus on developing policies to assist specific industries facing special challenges? In what areas should the Government focus its resources in Budget 2008 (and beyond)? If resources need to be redirected from other areas, what areas should these be? What steps should the Government take in Budget 2008 (and beyond) to ensure that the Canadian economy remains internationally competitive, continues to attract investment and creates high value-added jobs? What tax and other measures should the Government take to ensure that Canada keeps its best and brightest, attracts highly skilled immigrants, encourages as many people as possible to enter the workforce, and rewards Canadians for their hard work, while respecting the Government s fiscal goals? What other issues would you like to address? You may participate in this consultation by February 11, 2008 at: www.fin.gc.ca/activty/consult/prebud08_e.html.

You cannot avoid paying the taxes you owe by not filing a tax return, or by not reporting all of your income. The Canada Revenue Agency (CRA) uses a variety of tools to identify non-compliance and take action to address tax cheating or mistakes. The CRA has a number of compliance activities that it has committed to promoting the integrity of the tax system. In 2006-2007, the CRA: Recovered $9.7 billion through its collection activities; Identified a total dollar value of non-compliance of about $12.7 billion, including almost $4.9 billion for international and large businesses; Obtained more than 800,000 returns from taxpayers who had not filed their returns; Reviewed more than 6,400 businesses to ensure they were maintaining proper records; Made almost 820,000 adjustments to individual tax returns after comparing the information reported by taxpayers with data filed by third parties, such as employers; Conducted over 393,000 audit and review actions; Conducted 20,635 underground economy audits, and more than 1,300 investigations of taxpayers suspected of earning income from illegal activities; Undertook legal action that resulted in the conviction of 1,266 taxpayers who had not filed tax returns or not registered for goods and services tax/harmonized sales tax (GST/HST); Referred 259 income tax and GST/HST criminal investigations for prosecution. Of the prosecution cases completed in the past year, 98% resulted in convictions. More information on the compliance activities the CRA undertook in the past year can be found in the 2006-2007 Annual Report to Parliament, available at www.cra.gc.ca/annualreport.

Did you fail to file an accurate tax return or not file at all, but should have? The Canada Revenue Agency's (CRA) Voluntary Disclosures Program allows people to come forward and correct their tax information and avoid being penalized, criminally investigated and prosecuted. By encouraging taxpayers to come forward and correct the information they filed with the CRA, this Program helps protect the tax base and makes tax administration fair for all Canadians. If you make a full disclosure before we start any action or investigation, you may only have to pay the taxes owing, plus interest. If we come to you with compliance action first, you could end up paying penalties and fines, and even face jail time. Last year the CRA processed 8,244 disclosures for taxpayers who used the Voluntary Disclosures Program and got a second chance to comply with their tax obligations. Coming clean saved these taxpayers from an audit or a criminal investigation, which can result in penalties, fines, and even jail time. Their valid disclosures involved more than $525 million in taxes. For more information about the Voluntary Disclosures Program, visit www.cra.gc.ca/voluntarydisclosures.

NEW RRSP MAXIMUMS FOR 2009 Plan now to make your RRSP maximum contribution in 2009ó18% of earned income to a maximum of $21,000 (this is possible when earned income in 2008 was $116,667). MEAL AND VEHICLE RATES FOR 2008 CRA has released the new rates for meal and vehicle expenses. For meal expenses, the simplified rate is unchanged from 2007, a flat rate of $17 a meal or $51 per day, per person is allowed without receipts. For the simplified method of claiming vehicle expenses, the number of kilometres driven during the year may be multiplied by the appropriate cents/km rate below for the province in which travel begins. Province or territory Cents/kilometre Alberta 53.0 British Columbia 54.0 Manitoba 50.5 New Brunswick 52.0 Newfoundland and Labrador 55.5 Northwest Territories 64.0 Nova Scotia 52.5 Nunavut 64.0 Ontario 55.5 Prince Edward Island 52.5 Quebec 58.0 Saskatchewan 49.5 Yukon 66.0