Tax Credits and Pay system

[iæfai]

I have recently tried to make use of tuition credits I previously obtained (before I joined the CF). The way it would normally work is you would claim the tuition credits on your tax return and you would get a taxes paid back.

What I am trying to do is claim the tuition credits immediately so the taxes are not taken off. The way I would normally do this would be using a form like this: http://www.cra-arc.gc.ca/E/pbg/tf/td1/td1-10e.pdf  (TD1, and TD1ON). The way I would have to do it using this form at a regular job (in this case it would be a second job because I already claimed it earlier this year) would be to check the box under "Total income less than total claim amount" on the second page.

When I brought the information (incl. notice of assessment) to my ULO Clerk he had never heard of it before, neither had the person that did the pay. There are two references I have to look up that are references on the notice of assessment, but what I was wondering — has anyone ever successfully done this before in the CF?

I need ideas on how to proceed to make this as easy as it can be for the people receiving this information.

 

[George Wallace]

I have recently tried to make use of tuition credits I previously obtained (before I joined the CF). The way it would normally work is you would claim the tuition credits on your tax return and you would get a taxes paid back.

What I am trying to do is claim the tuition credits immediately so the taxes are not taken off. The way I would normally do this would be using a form like this: http://www.cra-arc.gc.ca/E/pbg/tf/td1/td1-10e.pdf  (TD1, and TD1ON). The way I would have to do it using this form at a regular job (in this case it would be a second job because I already claimed it earlier this year) would be to check the box under "Total income less than total claim amount" on the second page.

When I brought the information (incl. notice of assessment) to my ULO Clerk he had never heard of it before, neither had the person that did the pay. There are two references I have to look up that are references on the notice of assessment, but what I was wondering — has anyone ever successfully done this before in the CF?

I need ideas on how to proceed to make this as easy as it can be for the people receiving this information.

Let me see if I am getting this right; you are trying to claim your tuition on your taxes, when in fact you haven't paid any tuition (Because the Government has paid it for you through a CF program, you being in ROTP.).    Did I get that correct?

That is illegal.

 

[2010newbie]

I don't think you did get it correct. The OP stated in the first line that the tuition was from prior to joining the CF.

I have recently tried to make use of tuition credits I previously obtained (before I joined the CF).

OP:

I would suggest just waiting until your tax return next year. I know some people that have used the TD1 and TD1ON forms to minimize the tax paid during the year and the majority of the time it ended up with them owing money or complications when it came time to do their taxes. It is much better to get a surprise of a return than a surprise of owing money.....

 

[dapaterson]

My recollection of the TD1 is that it is for current year items, not past year credits.  So, you may be able to have your taxes reduced at source because you'll get the $400/mo credit as a full-time student, but the amounts you're carrying forward are not "tuition fees you will pay" (note the tense).

 

[George Wallace]

I don't think you did get it correct. The OP stated in the first line that the tuition was from prior to joining the CF.

OP:

I would suggest just waiting until your tax return next year. I know some people that have used the TD1 and TD1ON forms to minimize the tax paid during the year and the majority of the time it ended up with them owing money or complications when it came time to do their taxes. It is much better to get a surprise of a return than a surprise of owing money.....

If it is for previous years, it may be best to go to an Accountant, or someone well versed in Tax Regulations, and have them do it properly.  Unfortunately, it will cost you, but you will get the full amount sorted out and in the end be much less worries on your part.

 

[TimBit]

iaefei:

I just finished using my tax credits for tuition from my long time on uni benches  :'( (crying over both the long time and the end of credits).

Those will stick with you forever, until you deplete them. I am 100% with 2010newbie. Keep 'em until the end of the year, then use only as little as you need. Remember, those are the "reducing the taxable amount" kind, not the "reducing the amount to pay" kind. Therefore, the more you make, the more these credits allow you to save, i.e. 5000 credit over a 60 000 salary will save you about 2000-2500 whereas over 20 000 it might save you 1000. Your call.

 

[Blackadder1916]

Those will stick with you forever, until you deplete them. I am 100% with 2010newbie. Keep 'em until the end of the year, then use only as little as you need. Remember, those are the "reducing the taxable amount" kind, not the "reducing the amount to pay" kind. Therefore, the more you make, the more these credits allow you to save, i.e. 5000 credit over a 60 000 salary will save you about 2000-2500 whereas over 20 000 it might save you 1000. Your call.

Incorrect!  Tuition and education amounts are "non-refundable tax credits". Therefore, they reduce the amount of tax payable not the taxable income.  As such, like all (most) non-refundable credits are roughly equivalent to the lowest rate of tax regardless of the amount of taxable income.  They "shall" be used if an individual has any tax payable in the year.  If the amounts are more than needed to reduce tax payable to zero they will be carried forward (or may transferred to certain indivs).  Any tuition and education amounts that are carried forward "shall" be used to reduce tax payable whenever there is tax payable.

 

[Pusser]

I have recently tried to make use of tuition credits I previously obtained (before I joined the CF). The way it would normally work is you would claim the tuition credits on your tax return and you would get a taxes paid back.

What I am trying to do is claim the tuition credits immediately so the taxes are not taken off. The way I would normally do this would be using a form like this: http://www.cra-arc.gc.ca/E/pbg/tf/td1/td1-10e.pdf  (TD1, and TD1ON). The way I would have to do it using this form at a regular job (in this case it would be a second job because I already claimed it earlier this year) would be to check the box under "Total income less than total claim amount" on the second page.

When I brought the information (incl. notice of assessment) to my ULO Clerk he had never heard of it before, neither had the person that did the pay. There are two references I have to look up that are references on the notice of assessment, but what I was wondering — has anyone ever successfully done this before in the CF?

I need ideas on how to proceed to make this as easy as it can be for the people receiving this information.

Can you do this with a TD1 at the Pay Office?  Yes.  I'm surprised your pay clerk didn't know about it.  I'm even more suprised if he didn't immediately tell you that he would ask his boss and get back to you.

Is it worth the effort to this?  Probably not.  Your tuition credits will certainly get picked up when you do your tax return, so there should be no worries about getting them at all.  However, you've already stated that you had another job where they did take this into account.  This means that you already have income this year that has been adjusted for these credits.  Consider also that a TD1 does not just account for a single thing, it is an overall forecast of your taxable income in a given year.  When you do a TD1 with an employer, it has to take ALL sources of income into account in order to be accurate.  Did you take your CF income into account when you filled out the first TD1?  If not, things can get very complicated.  Multiple employers do not talk to each other and Revenue Canada does not go back to employers and tell them to adjust deductions at source based on subsequent TD1s.  The more TD1s that you submit, the more room for error that is created.  Although it is true that money is better in your pocket than in the government's coffers, I would argue that unless we are talking about thousands of dollars in taxes, the risk of underpaying your taxes (and thus getting a large bill at the end of the year) is greater than the benefit of having the money now.  At this point, I would recommend letting it ride and wait for your taxes to run the normal cycle.  The most you're going to lose will be some interest, but you will likely save yourself some grief as well.

 

[kratz]

I have only seen one member apply for 'deduction at source', and that was 13 years ago.

It is not a common method and not taught on an RMS QL course. That being said, I agree that at minimum the clerk should have offered to look into your query.

My understanding of this method, applies best to investments vice keeping small amounts in your pocket (ie: university credits).

Generally speaking, Pusser's suggestion above for a course of action is sound.

 

[Rheostatic]

It is much better to get a surprise of a return than a surprise of owing money.....

A "surprise return" is simply the government repaying the interest-free loan you decided to give them by overpaying your taxes.  Ideally one should owe a small amount at the end of the year.

 

[Pusser]

A "surprise return" is simply the government repaying the interest-free loan you decided to give them by overpaying your taxes.  Ideally one should owe a small amount at the end of the year.

True, but the Income Tax Act is designed otherwise.  Mandatory deductions at source are specifically intended to ensure that the Government is not chasing you for money at the end of the year.  Frankly, the vast majority of us do not have the financial discipline to tuck away enough money over the course of the year to ensure we have enough left over to pay our taxes.  This means that the vast majority receive refunds.

 

[TimBit]

Incorrect!  Tuition and education amounts are "non-refundable tax credits". Therefore, they reduce the amount of tax payable not the taxable income.  As such, like all (most) non-refundable credits are roughly equivalent to the lowest rate of tax regardless of the amount of taxable income.  They "shall" be used if an individual has any tax payable in the year.  If the amounts are more than needed to reduce tax payable to zero they will be carried forward (or may transferred to certain indivs).  Any tuition and education amounts that are carried forward "shall" be used to reduce tax payable whenever there is tax payable.

You are absolutely correct! My bad! However, I have in the past used extra credits to force a larger through the interprovincial transfer, i.e. owed Quebec xxx amount transferred from taxes paid to Canada, used extra credits to reduce xxx further before transfer. It worked and I didn`t hear about it.

Again, apologies for the mistake.

 

[CountDC]

The best thing to do is to claim it on your taxes and forget the TD1. It is not going to make a large difference over a three month period.  It also saves you the hassle of remembering to submit a new TD1 when you no longer qualify for tuition and education amounts. Most people complete it once and never think of them again - until they get the tax bill and come crying to the pay office.  Of course somehow it's always the clerks fault that the member now owes money as their taxes were underpaid based on the info they provided on the last TD1.

Save the hassle and claim it on your taxes.