Nothing is Certain, Except…

Canadian-MOneyI long ago gave up trying to do taxes myself.  Even when they were simple, it wasn’t easy. Now that I have addresses in two countries, it’s ridiculous. Adding to the confusion and the abundance of acronyms, last year I had rental income from each address as well.

Recently, I wrote about my difficulty in completing a form that tried to spell out my legal residency status, but I was stymied by questions which referred to treaties about which I know nothing. I thought that was as bad as it could get, but I was foolishly optimistic.

Since then, my friendly tax accountant has been figuring out my tax returns for Canada, the US, California, and Alberta, and yesterday I went to sign them and pay the bill.

OK, a little back story here. I have been getting a small pension from the UK, which amounts to less than $350 a month, but they never send any tax documentation. I had assumed—wrongly as it turned out—that there was some sort of agreement between Canada and the UK, and so I didn’t declare it on my tax returns.

Last spring I was reading a magazine and learned that I was supposed to include this income. Accordingly, like the good honest citizen that I am, I sent in a voluntary declaration explaining my mistake and advising Revenue Canada of the amounts I had received since 2009. They wrote back and said that because I was such a good honest citizen (well, not actually; I inferred that part) they would not charge me a penalty.

“Awesome,” I thought. “I’m in the clear.” Imagine my surprise, then, when I got a letter in March of this year telling me that I owed $4661 in interest on this UK pension that I had failed to declare. Not a penalty, you understand. Interest. It’s a fine distinction.

So, here we are in April and all my taxes have been duly figured out by people who understand them, and I’ve been told I owe another $4860 in Canadian taxes. Remember that I am a little old lady living on my teacher’s pension and my Canada pension.  How they have failed to take these taxes from me already, I don’t know. Maybe it is because I took $5000 out of my retirement savings to tide me over a difficult patch last year.

The only conclusion I can draw from all this is that it isn’t worth renting out your spare room, and it is a really bad idea to take some money out of your retirement savings plan. That money is not to be spent, ever. Even when you have retired, it just has to sit in your bank account (or wherever) so that bankers can play around with it.

If you want to avoid tax day surprises, stay home and clip coupons.  That’s all you are allowed to do.


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