When Paul and Holly Miller saw their 2012 tax assessment, the Waterloo couple thought they’d hit the jackpot.
“It said we got … about a thousand dollars back,” recalls Holly.
Although their bookkeeper was unable to explain the surprise windfall and warned the Millers against spending it too quickly, the couple decided to put it to use.
Son Emmitt had been born only a few weeks earlier, and the Millers paid for clothes, toys and other typical newborn needs with their unexpected baby bonus.
But not long after the money was spent came word from the Canada Revenue Agency that the refund that seemed too good to be true was in fact just that.
“We received a letter in the mail saying ‘You’ve been reassessed and you owe us $560,” says Holly.
The couple was never told why they were being reassessed.
The Canada Revenue Agency says only that they typically reassess those who have an irregularity in their returns, as well as some Canadians chosen at random.
“Definitely there are some random selections, but we also look at what are some of the common areas where people tend to exaggerate the claim,” says agency spokesperson Sam Popadopoulos.
The Millers say they’ll pay the bill reluctantly, and if they find themselves in a similar situation in the future, won’t cash any unexpected tax bonuses.
“That way they can’t take it from us later,” says Holly.
Accountants and financial journalists offer several suggestions for avoiding reassessment. They include:
- Ensuring only one parent is claiming a child in a shared custody situation as a dependent
- Not claiming any health expenses paid for by insurance
- Only claiming moving expenses if moving at least 40 kilometres closer to workplace
