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No income, no taxes, right?

Last November, I received a request from Revenue Canada to file a tax return for 2004-07.

Q. Last November, I received a request from Revenue Canada to file a tax return for 2004-07. In 2003, I was laid off from work; the payout was generous and I decided to start my own business. Currently, my income is derived from investment dividends and interest. Profits from the business are insignificant. My total income is less than the basic personal exemption. Therefore, I would owe no taxes. Many of my colleagues agree: I do not have to file a tax return, unless I owe taxes! How do I get them off my back?
– Ali

A. Your age or marriage status isn’t very clear, but it must be a challenge to live on income that you describe. You’re partially right: Individuals must file a tax return if taxes are owed.

However, there are many other circumstances that obligate you to file:

• CRA has made a request. This obligates you to file.

• An individual has disposed of property. Although you receive investment income less than the basic personal exemption, if you sold real estate, stocks, or owned mutual funds, gains may exist.

• If your profits from the business exceed $3,500, you may have a CPP obligation.

• Repayments of RRSP HBPs or LLPs.

• Repayments of OAS or employment.

– Reach Henry Choo Chong, CGA, at choochonghcga@yahoo.ca or 416-489-7800, ext. 227.

 
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