Phoenix and taxes: Practical tips for public servants filing returns
With over- and underpayments a big issue, declaring accurate income is tricky
April 30 is fast approaching. Your T4 is a mess. So is your revised T4. In public service terms, you’ve been “Phoenixed.” What do you do now?
DON’T MISS DEADLINE
“The first piece of advice is try to make sure you file on time with as accurate information as you can have at the time,” said Steve Hindle, vice-president of the Professional Institute of the Public Service of Canada. “It’s in your interest to avoid any late-filing penalties. Whatever you do, your life is already complicated. There’s no need to add late-filing penalties with arguments about whether they should apply or not apply to all that confusion.”
WHO YOU GONNA CALL?
CRA has a hotline for public servants affected by Phoenix who need assistance. If you need help (it’s not a complaint line), call 1-888-556-5083. Answers to some frequently-asked questions are available on the CRA website.
USE THE SLIPS YOU HAVE
If your T4 is wrong, it’s important to let your employer know right away so it can be reviewed and amended, if necessary.
In an email to the Citizen, CRA said, “If an individual is expecting an amended T4 with their correct annual earnings but has not received it by the April 30, 2018 tax filing deadline, the CRA will not consider them to have filed a false return if they file using the most recent 2017 T4 received from their employer. The CRA will reassess the individual’s return when an amended T4 is issued by the employer at a later time.”
MY T4 IS WRONG, AND THE REVISED T4 IS WRONG
Johanna Jenkins, a fishery officer based in Nanaimo, B.C., whose Phoenix problems were described in an earlier Citizen story, knew her 2016 T4 was wrong and stayed wrong even after several attempts to have it fixed. Jenkins put all her pay stubs in a spreadsheet and calculated and wrote up her own T4. It’s “pretty basic math,” she said.
“Pay Centre issued me a T4 which over-reported my income and under-reported the taxes they had deducted from my pay. I was lucky ( because) I could prove it since my pay stubs for the year all appeared to be based on actual numbers. I was paid wrong, but at least what I did get paid was reflected on my biweekly pay stubs.”
Jenkins said CRA did appear to use the numbers she provided for its 2016 assessment and she plans to do the same this year.
CRA’s answer: “The CRA recognizes that some federal public servants affected by Phoenix payroll system errors may not want to file using the most recent T4 available if the T4 does not reflect the amount of income they were paid. In these cases, they can file by the filing deadline using estimated amounts based on their own calculations from their pay stubs. The CRA will correct the tax return, if required, and reassess the return, once it receives the amended T4 from the employer.”
STUMPED? GET PROFESSIONAL HELP
Treasury Board Secretariat announced earlier this year that it will kick in up to $200 for public servants who use a professional to prepare their taxes.
“To ensure that employees are treated fairly, and that they understand the tax implications caused by errors in their pay, the Government of Canada will reimburse expenses related to obtaining tax advice,” it said, adding, reassuringly: “Filing a claim will not impact your pay, since claims are not processed through the Phoenix pay system.”
Rosa Iuliano, a certified professional accountant and a partner in Collins Barrow in Ottawa, said even a professional can have little luck fixing Phoenix problems.
“We’ve had a lot of people reach out. I can’t say we’ve been able to help a lot of people because it’s not an easy thing to deal with. CRA is really just a big computer that
matches to another computer that has wrong data,” she said.
“Most people who’ve called, I’ve been honest and said, ‘I’m happy to help you. You’ve got your own numbers. Fine. I’m happy to use those. But I’ll tell you, you’re going to get reassessed and (CRA) will say you didn’t match your T4s.’ You have to prepared to have that happen.” E-FILE OR PAPER FILE?
When filing electronically, you can’t submit your return without first clicking a box to attest that everything in the return is accurate. That’s a problem if you know your T4 slip is wrong.
This year, Johanna Jenkins, the fishery officer who says she’s a “stickler for detail,” is again using paper and pencil and sending in her tax return the snail-mail way.
“Had I just Netfiled with the incorrect 2016 T4s I kept getting issued, I would have eventually been forced by CRA to pay taxes I do not owe,” she said. She didn’t sign the first page of her return, the one detailing her income, and included a note of explanation to the tax man.
Though she notes she’s not a tax expert, Jenkins wrote a guide for do-it-yourselfers that she shared with the 6,500 members of a Facebook page for public service workers with Phoenix trouble.
Jenkins’ Point No. 3: “Trust yourself. You have the math skills for this — a lot of finding the errors is not proving what wonky formula pay centre used to get things wrong, but are really about knowing what your salary is, what entitlements you get, how much overtime you make at what rate, rates of Actings you did and knowing how to add and subtract.”
OVERPAID, UNDERPAID OR JUST BAD SLIPS?
The easiest problem is if the T4 issued doesn’t match the information on your pay slips. In that case, Jenkins’ DIY T4 is an option. But what if your slips match what you were paid, but the amount you were paid was incorrect?
“I think there’s even more cases of people being overpaid or underpaid,” Iuliano said. “That’s where it gets difficult. CRA will say, ‘Did you receive these funds?’ and if you did, in theory you’re supposed to pay taxes on it. You can say, ‘I wasn’t supposed to be paid this and I’m going to have to pay it back.’ Well, do you have anything that says you have to pay it back? It’s not an easy answer.”
IS THERE LIGHT AT THE END OF THE TUNNEL?
This is Year 2 for Phoenix and tax returns. Are things improving ?
“The problems faced by government employees as a result of the Phoenix pay system are unacceptable, and the Government of Canada is doing everything it can to resolve pay issues as quickly as possible,” CRA said in an email.
“I think it’s worse this year,” said Hindle of PIPSC. “People are more aware that they might have a problem. Plus, the passage of time — 2016 and 2017 — without a resolution to the problem has just added to the number of people who are affected. We probably now have people who had incorrect information for 2016 and for 2017. How long that takes to get reconciled remains to be seen. I think this is going to go on for a while yet.”