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Letters: Tax laws affect German-Canadians
n blatant defiance of established tax laws, the Canadian government is harassing and penalizing Canadian seniors receiving pension income from Germany. In 2005, a tax treaty was concluded between the two countries with the purpose of avoiding double taxation. Consequently, the Canadian government issued guidelines for the tax returns of 2005, instructing Canadian taxpayers how to declare their previously untaxed social security pension income from Germany. As of 2005, a portion of the total yearly German pension income was tax exempt and was to be reported on the T1 form. The rules for the calculation of the exempt portion were published at the same time, with a table for each of the following tax years, indicating the slowly declining percentage of the tax-exempt portion. Those who were receiving their pension before 2005 or as of 2005 were tax exempt for 50 per cent of the yearly pension income and this same fixed amount would be non-taxable until the year of death.
However, in September 2012 unsuspecting Canadian-German taxpayers received a letter from the CRA questioning the amount on line 256. The information submitted was never acknowledged. Instead another letter was sent mid-January 2013, stating the tax-exempt amount was now reduced to zero, further substantiating documents were required and a re-assessment would be issued. The re-assessment arrived before anybody had a chance to substantiate their status. Not only was the tax-exempt amount now taxed and at a much higher rate, interest charges for “arrears” were being claimed as of the date the re-assessment was issued with a deadline for payment 10 days later. Failure to comply would be penalized with a daily rate thereafter.
The time lines in this matter are most remarkable, namely CRA clamping down on unsuspecting taxpayers having to prove their innocence some eight years after the fact and the speed in which they are being re-assessed for arrears they never owed! How can most individuals present proof eight years later?
Canadian taxpayers in their late 70s and 80s are being bullied and harassed by a government ignoring treaty tights and rules established eight years ago in 2005. The amount of stress this issue has caused unsuspecting, innocent seniors is considerable.