I have a client who receives T3 slips from the Public Guardian and Trustee. Every year there are 2 slips - one which is taxable immediately (settlement due to death of the client’s father - killed by a drunk driver), and one which is not taxable until the beneficiary turns 21 (settlement due to injury - client was in the car when it happened). The PGT office provides a notice every year explaining the distinction, and quoting ITA 81(1)(g.1). For years, the taxes have been filed this way, reporting only the T3 from settlement due to death. However, a few days ago my client received a NORA for 2020 - CRA decided to include the “non-taxable” slip.
How do tax practitioners normally respond to this on behalf of clients? File a NOO?
What supporting documents might be needed? The original court order? The notice from the PGT office?
I’d submit a paper filed T1Adjust along with the 2 T3’s and a copy of the letter from the PGT office along with my own cover letter explaining what happened. The original court order wouldn’t hurt too. A NOO is not needed at this point unless they reject the information you submit. At this point the Tslip matching process has added in the extra T3 automatically. You just need to point out their error. I’d check the 2019 and 2020 T3’s to see if they are exactly the same - there may have been a code or something on the 2019 T3 that the 2020 didn’t have which was why the 2019 matching program didn’t add it in but the 2020 did - in which case you might need to get the 2020 T3 amended to include it.
Thanks @laurie , that’s what I’m thinking, of course. But I’d like to know if anyone has dealt with this before. I have had several cases where CRA did not accept a T1-ADJ, even when I included the T slips to support the adjustment. So, I don’t want to waste time doing that if it’s going to be another 2+ year fight, which ends up being resolved by the slip issuer proving to CRA (directly) that the information is correct.
I had a similar situation with a client’s children who were getting income from the PGT. CRA had made a similar adjustment. We got a letter from the PGT and CRA reversed the reassessment. It took a while to get the PGT in action but it worked.