Tax Error? What to do when you have to refile

Taxes aren’t fun to deal with at the best of times, but you may find yourself even more irked if you get a T4 amendment in the mail.

The good news is that it’s not uncommon to receive such a notice.

“Amended T4s are generally sent out to correct errors,” says James Bell, director of Tax Solutions Canada, who worked at the Canada Revenue Agency for 22 years before starting his company in 2013. Those errors are on behalf of the employer, which means there’s nothing you can do to prevent getting one.

“T4s get amended because of an oversight on the part of the employer,” Bell says. “It’s a routine occurrence,” he adds. “It happens all the time.”

Reasons a “Statement of Remuneration Paid” could be amended are wide-ranging; examples include improper classification of an amount (such as the under- or over-reporting of income), improper calculation of benefits to employees who participate in a stock-purchase plan, or the lack of inclusion of other taxable benefits or an incorrect tally of those benefits.

While amendments are common, they can still make people nervous.

“Amendments are straightforward, and it’s very routine for people to receive these things, but it can cause a lot of confusion and upset and misunderstanding,” Bell says. “Most people are puzzled about why they would get an amended T4.”

Caroline Battista, a senior tax analyst at H&R Block, says that it helps to understand what your taxable benefits are should you ever be faced with an amendment.

“I would hazard a guess that at least 50 percent of the time if you ask people what their taxable benefits are, they don’t know,” Battista says. “Know what your taxable benefits are, especially when you’re getting a new job.”

Here are some examples: let’s say you win a $10,000 trip or NHL playoff tickets through work. “You’re still paying tax on the value of that trip or those tickets,” Battista says.

The parking spot that’s you get as a perk? You have to pay tax on the value of that, too.

Battista notes that if you’ve already filed your taxes but then receive an amended T4, you need to submit an adjustment with that new slip. She says it’s easy to do electronically via the CRA’s My Account. Those forms can be mailed in too.

If you don’t understand or disagree with the amendment, Bell suggests talking to your office’s payroll or HR department first.

If you still don’t agree with the amendment, then you can file a notice of objection to dispute it.

“The CRA has a formal dispute mechanism in place for you,” Bell says. “It’s important to make sure that, if there is a dispute and you don’t understand it or disagree with what employer has done, you protect yourself by filing that notice of objection. It’s the only formal way to protect your rights, and that’s what you should do. You do have a formal legislative process to go through to make your case with the CRA.”

Whatever you do, if you receive an amendment, make sure you get it sorted out.

There’s no need to panic at all,” Bell says. “However, it’s something that shouldn’t be ignored; they really do have to deal with it.”

The sooner the better: “Deal with it right away,” Battista says. “An amendment doesn’t mean it’s been done or that the CRA has refiled for you. Don’t just think the CRA will process it; deal with it because you will be charged interest from the time you get that slip. Once you get an amended slip it’s considered your responsibility.”