Taxman gets the last laugh

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Back on Sept. 27, 2011, a story ran in The Telegram of the successful court case for fishermen against the Canada Revenue Agency to get the taxes refunded to them that they paid on their fisheries buyouts.

The opening paragraph read: “Eli Baker was channelling Danny Williams when he reacted to the news that more than 700 retired fishermen from this province have won their battle against the taxman.”

Apparently, the story doesn’t end there and they

didn’t really win.

Just last week, many of those retired fisherman, my parents included, got an unpleasant surprise in the mail.

The federal notice that all senior citizens receive each July that states the monthly amount they will get for Old Age Security (OAS) and the supplement for the next 12 months arrived.

When my mother did the calculations, she found it to be significantly less than they got in the previous year. It was discovered that they owed over $4,000 and that it would be taken back as a cut in their monthly pension and supplement. To quoted my mother, “It was like a kick in the guts.”

To clarify, of the money legally awarded to Dad from the courts, just over $7,500 was interest on the taxes which were unfairly calculated and paid in 1998 on the buyout.

They were required to report this interest as income on their tax return for 2012. Pensioners are only permitted to make $3,500 income per year to keep their full pension.

Because of the interest, which I reiterate, was owed to them by the Canada Revenue Agency, they were over the maximum allowable earnings by more than $4,000.

My parents, like many pensioners, use every single dollar of their monthly pension.

They live modestly in a small, three-

bedroom bungalow. Dad, at 73, still cuts his own wood for the winter to keep the electricity bill down. Mom still grows vegetables in her garden to supplement the groceries. They take advantage of what they can to cut costs.

Now, I’m not sure how other people will see this, but the view from here is that it looks like they are being punished for getting the money. My parents receive less than $1,800 a month from Canada Pension.

Can you live comfortably on $1,800 a month? I think not.

Now, for the next year, they will lose $340 a month and have to find a way to stretch their dollars even more.

Yes, there’s money left from what was awarded, but as my mother put it, “I was hoping to save it in case one of us got sick or died.”

Seriously, is this something people who worked as productive citizens all their lives should have to worry about after they retire?

To me, this is the government, once again, preying on the most vulnerable in society.  No better than a schoolyard bully taking the smaller kids’ lunch money. They do it because they can and there’s nothing we can do about it.

Ellen Hodder

St. John’s

Organizations: Canada Revenue Agency, Old Age Security

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Recent comments

  • just some info
    August 12, 2013 - 20:46

    the oas would be reduced in case the income is the same this year as last year. If your parent's income is not going to be the same this year as it was last year (they won't have that interest income, so it won't be) they can send in a form to have that tax withholding stopped, and have their oas reinstated to the full amount for the year. The oas is calculated for the year based on previous year income, and the withholding is based on what they would have to pay in taxes if their income remains the same as the previous year. Get them to call revenue canada to find out what the forms are, and get them to send cra those forms. if they don't want to do that (and some people don't), when they do their taxes next year, they would get most, if not all of it back. I am just letting you know so that your parents, and others who are in the same situation as them, know that there is another option to having extra oas withheld for the rest of the year. for more information, or give them a call to explain what needs to be done.

    • Pokerman
      August 13, 2013 - 08:06

      Too bad our conservative senators are more concerned with exterminating moose than helping streamline the tax process for seniors.

  • Ruling Elite
    August 12, 2013 - 10:50

    We won, your parents lost. Fishing is over. Keep quiet and obey. Keep talking and the food fishery will end. Dissent will only make things worse. You should not write anymore letters. Resistance is futile. All your base belong to us.

  • Don II
    August 12, 2013 - 09:25

    The fact is that Canadians are over taxed by all levels of Government which imposes sales tax, income tax, property tax and in some cases such as gasoline and electronic device disposal fees requires the people to pay tax on tax. Why? The reason is that Government needs a constant stream of money coming in to fund all of the pork barrel and vote buying projects that have become part of the political power culture. Fund raising and vote buying for political parties requires and allows the political party in power to use the coercive power of Government taxation to keep the political party in power by milking the tax payer to feed the pork barrel project funding machine! It appears that the political pork barrel project machine that feeds preferred contractors and well connected not for profit corporations and well connected businesses is totally out of control and is draining the tax payer dry. If the pork barrel projects, vote buying projects and fraud were eliminated from the system and Government was required to strictly justify its spending, the cost of running the Government and the taxation machine required to support it would diminish by 25%. The way it works now, when Government wastes money and exceeds its budget, it just increases taxation or fees and the people are forced to pay. What is needed in the future are politicians who are willing to change the system for the benefit of the people and not for the benefit of political parties and their pork barrel project cronies. Tax money should be spent to maintain social services, health care, police and fire protection, public safety, transportation and roads, a reasonably sized Government and military and not on pork barrel and vote buying projects. I recently read through files on the approvals for projects funded by ACOA between 2008-2012 and found that the approvals went on for pages and pages and pages and the cost to the tax payer was in the hundreds of millions of dollars or more with not one financial feasibility report or value for dollar spent study on these projects was to be found!

  • Only fair
    August 12, 2013 - 07:29

    Ellen, as frustrating as it may seem, your parents are not being treated any different than any other Canadian. All interest income, no matter what the source, is taxable. If you won the lottery, although that money is tax-free in Canada, as soon as you put it in a bank or any kind of investment and start earning interest on it, that interest has to be reported and is taxable. That is also the way OAS works...if you are over a certain income level, part of your OAS is clawed back. To look on the bright side, your parents did win their fight and they did get money from it that they may not have otherwise had. Also, they are very lucky to be earning CPP. $1800 may seem like nothing but many seniors in Nfld are not lucky enough to get CPP and are dependant on their OAS only. Some things stink, but its best to just "suck it up" as they say, because they could be a lot worse. Like before Nfld joined Canada and there was no OAS or CPP! Most Nfld seniors did not have a dime to their names in those days, no matter how hard they had worked all their lives.