Fight CRA: Jamie Golombek shares his combat with Taxman

Golombek was gearing up for a day in court docket over a dispute over the price of working from dwelling, however it by no means got here

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I by no means bought my day on the court docket, however I got here fairly shut.

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i’ve been Battling taxpayer for greater than a 12 months In an effort to permit the Canada Income Company to cowl my work-from-home bills for the 2020 tax 12 months. That battle ended final week, once I obtained a reassessment permitting for nearly all of my home-office bills, a refund of my overpaid tax, a refund of the beforehand owed curiosity, and even a refund of my overpaid tax. that pay me some refundable curiosity (albeit, taxable).

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I’m sharing my full story in order that you already know what’s going to occur in the event you additionally determine to take up CRA.

The origin of my tax dispute will be traced again to March 12, 2020. I had Toronto Maple Leafs tickets to that evening’s sport in opposition to the Nashville Predators, and my son was supposed to satisfy me on the town after work for the sport. However issues would change dramatically: that afternoon, NHL suspends all video games On account of COVID-19 and our places of work had been closed that night, which might be a number of months.

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Beginning March 13, I began working from dwelling full time, utilizing a spare bed room as my new workplace. After I filed my 2020 tax return, I deducted a number of the home-office bills for the primary time in my profession.

Workers who’re working from dwelling because of the pandemic have two methods to say work-from-home bills: the short-term flat fee methodology ($2 per day, as much as $500 in 2022) and the prolonged methodology, the place workers Reconcile precise bills incurred and allotted on a “cheap foundation” to find out the portion associated to employment use. That is often achieved by dividing the workspace space by the entire completed sq. meters of the house (together with hallways, loos, kitchens, and so on.).

Bills embody utilities, dwelling Web, hire, upkeep and minor restore prices, and workplace provides. You can’t deduct mortgage funds, capital expenditures or depreciation (capital value allowance), and solely commission-based workers can deduct their property taxes and residential insurance coverage.

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In my case, the detailed methodology proved to be the higher choice, however it meant that the CRA needed to “evaluate” my return, which is strictly what occurred.

In August 2021, I bought a CRA. From “Evaluation Sheet” Asking for extra info on varied gadgets on my return, together with my declare for the digital information subscription tax credit score, proof that I made a small political contribution and, most significantly, my work-from-home Help for dwelling employment expense declare.

The CRA needed a replica of my signed T2200, a Declaration of Phrases of Employment, and a “Detailed Assertion of the Quantity Claimed and Supporting Paperwork”. It additionally requested for a replica of my T777, an announcement of employment bills, and the way I calculated the proportion of bills I might deduct, and a replica of the “flooring plan of the residence with dwelling workplace.”

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I did not have a replica of my dwelling’s flooring plan, however I used to be pretty conservative with my estimate, claiming lower than 10 p.c of my whole family bills for using my dwelling workplace. I used info downloaded from my on-line banking to generate an in depth schedule of my month-to-month hydro, fuel and web bills, full with dates and quantities.

Sadly, this was not sufficient to justify my declare. My $75 digital information credit score and political donations had been allowed, however my home-office bills had been denied outright as a result of I clearly did not ship sufficient detailed info to substantiate my declare. This was ratified within the formal reappraisal of January 2022.

I paid revaluation tax for 2020 to forestall day by day compounding of non-deductible, excellent curiosity and in February 2022, filed a proper discover of objection. I despatched CRA PDF copies of all my month-to-month 2020 statements from every utility supplier, totaling 89 pages of documentation, to justify my declare. After which I waited. and waited.

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Once in a while, I used to go surfing My account of CRA To see if any motion was taken, web page below Progress Tracker and examine. Lastly, after a number of months, the standing was up to date on-line: my objection was initially reviewed, and it was decided that “medium complexity,

Medium complexity revenue tax objections resolved in August 2022 had been accomplished in a mean of 283 days from the date of submission of objection. It was too lengthy for me to attend, so I exercised my proper to enchantment on to the Tax Courtroom, which will be achieved 90 days after submitting the discover of objection if the CRA has not responded by then.

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In late Could 2022, I filed my enchantment and was informed that my case could be heard in Toronto “on the first accessible alternative”. I used to be excited and assured. However other than just a few parking tickets within the Nineteen Nineties, I had by no means been to court docket earlier than so I needed to put together. I re-watched 12 Indignant Males and My Cousin Vinny. I used to be prepared for court docket now.

However I did not need to have a day in court docket. Shortly after I filed my enchantment, I bought a name from a pleasant CRA litigation officer who mentioned he had reviewed my file and was prepared to permit for all my work-from-home bills, save $99. I rapidly agreed.

Per week later, he signed a consent to judgment from me, which was later licensed by a tax court docket decide. On September 14th, I obtained my new discover of revaluation, together with my direct deposit of my tax refund and curiosity.

I actually was Eagerly ready for my day in court docket. maybe one other time.

Jamie Golombek, CPA, CA, CFP, CLU, TEP, is the Managing Director of Tax and Property Planning with CIBC Personal Wealth in Toronto.


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