I just had a T1 client reassessed for a T5 issued in 2019. We had entered it as $60,000 and it came up with the automatic taxable amount of $69,000. CRA just reassessed the taxable amount at $69,500.
Just wondering if others have seen that and whether I set up something wrong to have it gross up the the wrong taxable dividend amount?
I would first go on RAC and review the slips that are filed, my first guess would be an additional slip that was missed.
No just the one t5, when I look at the slips filed on cra website it shows the amount that they changed it to. It appears that the automatic gross up was incorrect on the t1
Jim,
I am curious what $60,000 actual dividend would show on your version for 2019 as the taxable amount?
Which dividends are you talking about?
Box 10 (15%) or Box 24 (38%)?
Do both Box 10 and Box 24 have non-zero numbers in them?
Do you have all (and all Amended) T5s issued directly from the slip issuer?
What does the slip issuer have in Boxes 25 and 11 ?
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“when I look at the slips filed on cra website it shows the amount that they changed it to”
That sounds like it involves an amended slip?
If box 10 is $60,000 then box 11 should be $69,000. If the slip on file on rep a client is different then likely it was filed incorrectly and the issuer may need to amend.
But it’s only tax on $500 dividend, your fees probably past that already,
I had the same situation a few years ago, but with a much larger amount. CRA randomly calculated the gross-up, even though the T5 slip was e-filed. After a call to CRA, they admitted they had no idea what happened. I just submitted an amended T5 slip to correct the problem. If this wasn’t a T5 you prepared, its probably not worth the time to figure out how to fix the problem for such a small amount.
If you have exhausted your research and it appears that the CRA some how has the wrong gross up amount (it does appear that they do), Ask the client if they want it corrected. Tell them how much extra tax they are paying and how much it is going to correct.
This is important as a professional. First it lets your client know that you are very diligent with their file. Also, it informs them you want them to make informed decisions. Some clients will say no, the tax is less then your bill to fix it. And that is fine. And other clients will say yes and see the premium of paying a few dollars more to you as being more valuable in the long run.