T4 info - Probation period

[evanstp9]

Hi.

Does anyone know what happens when you are on probation and then after a couple of months into the payroll?

My wife has been working since September 2013, but she was on probation till November 15, and then into regural payroll, which is reflected into the T4 and NOA she has.

While on probation, she was paid through cheques.

My question is that how are we supposed to show that, because the T4 only show the amount she was getting paid after November 15, but we are claiming work from September.


Should I include any explanation letter?

Mention that on the reference letter maybe?

Copies of the cheques she was getting till regural payroll-paystubs started?

 

[jes_ON]

That depends entirely on the reason that the "probation" income was not included in the T4 - did the "employer" consider her to be self-employed while on probation? Did you report the income and pay taxes on it? If she was an employee, I can't think of any legitimate reason that the probation period would be excluded from the T4.

So your wife needs to find out why it was excluded, and if it was an error, her employer needs to correct it and give her a corrected T4. If she was self-employed, then the experience is not eligible under CEC.

 

[Dr_Midnite]

Hi

I agree.

Payment under a probation period or as a permanent employee is the same. She has earned money which tax is due to be paid. As such the T4 should reflect ALL earnings.

If she was self-employed then she should have filed a tax return.

Thx

A

 

[canvan14]

My situation is different from the above posts. I got paid through cheques and tax wasn't deducted during my probation period. So I treated it as self-employed pay and added it to the income when filling for tax.
For the application I included photocopies of my cheques along with a short note explaining the probation period.
Good luck!

 

[evanstp9]

Thank you for your responses.

Definetely not self-employed, she had her regular working hours at the company's office.
She was getting paid through cheques, and they told her that tax was not deducted during her probation period, as the previous example, so that was the reason of not being included in T4 form.

But we did not know anything about filling that 2 months when we had our taxes done...

We just got the T4 they issued her and that was what we filled, and the NOA was based on that.


What would you advise me to do at that stage?

Go ahead and apply with the invoices and cheques included for that 2 month period, along with an explanation?

If I do not file now, and exclude the probation period from the 1 year experience, she will be eligible at December 1st under CEC.

 

[Dr_Midnite]

Hi

Has the employer agreed to provide a reference letter? If so are they showing the length of service including the phrobation or have they started the employment after the phrobation ended. This will really drive when you can apply.

The employer should have deducted tax during the phrobation period unless it was made clear she would be on a self employed basis.

Who is the principle applicant?

Thx

A

 

[evanstp9]

Hi,

1. Yes, the reference letter they will provide will state job from September, when she actually started, so included probation.

2. They did not deduct tax probably, but it was their fault, right? No self employment, 100% on that one, never mentioned sth like that.

The only thing they told her was that while on probation, they do not deduct taxes,
and after the probation, she would be included in the payroll.

During the probation, we have invoices and cheques that they used to pay her wage, no cash or "under the table" staff.

3. My wife is the PA

 

[jes_ON]

1. Yes, the reference letter they will provide will state job from September, when she actually started, so included probation.

But since your tax documents don't match, the letter won't be credible...

2. They did not deduct tax probably, but it was their fault, right? No self employment, 100% on that one, never mentioned sth like that.

The only thing they told her was that while on probation, they do not deduct taxes,
and after the probation, she would be included in the payroll.
During the probation, we have invoices and cheques that they used to pay her wage, no cash or "under the table" staff.

Invoices is the giveaway. If your wife had to submit invoices, they definitely considered her to be self-employed (independent contractor) for that time period, and she is responsible for reporting the income and paying the taxes. Her "employer" should have issued a T4A for the payments. She should inquire about this . . . Again, if she were employed, they would have had to make statutory deductions.

Fortunately in your case, it's not the end of the world. Wait until December to apply. This will also give you a little time to submit a revised tax return ...

 

[evanstp9]

Hi,

The reference letter can state that she started working in November as well, so that it matches the T4 they issued to her, they are willing to assist on that one.


When I mentioned invoices, they issued to her invoices along with the cheques for her paument, she did not submit any invoices.

Revised tax return? Could you elaborate on that a bit more?

Takes time? Might it create any issues? We did not know that we should report that income, since it was not included on her T4, I don't know if this will "look" ok, puts extra stress on the whole procedure...

Also you mentioned a T4A form, is that another form, on top of the T4?


Thank you!

 

[caththisking]

My 2 cents....
I would say ask them to enter the start date of the employment, annual income, number of hours etc.
IN addition you can include the invoice or checks and also bank statement of those months as you would have dropped the checks in bank (obviously unless its other check we can simply exchange for money)

 

[evanstp9]

We still have the other half part of the cheques, which states the amount she was getting paid biweekly, cause she was receiving those cheques every 2 weeks, as well as a printed statement that has all those payments included, with amounts and dates.

What I do not understand is whether what we did while filling out taxes is violation of any laws, and if so, whether it is better to file revised tax (no idea) or just state the date after probation in reference letter, we have that option.


Thanks for the input.

 

[jes_ON]

We still have the other half part of the cheques, which states the amount she was getting paid biweekly, cause she was receiving those cheques every 2 weeks, as well as a printed statement that has all those payments included, with amounts and dates.

What I do not understand is whether what we did while filling out taxes is violation of any laws, and if so, whether it is better to file revised tax (no idea) or just state the date after probation in reference letter, we have that option.

You seem to think that "probation period" is a special type of employment - it is not. It is not uncommon for companies to have probation periods, but in most cases that means you are employed just like everyone else, you just don't get certain benefits right away, and they reserve the option to not extend the contract if things are not working out. But the employment income still needs to be reported on the T4.

Some employers, on the other hand, make it more extreme - they hire you as a "consultant" (self-employed) to try you out before putting you on the books as an employee.

It's kind of pointless to debate it here, your wife needs to ask her employer about this, get clarity. If she was employed for that period, the employer needs to correct the T4. If she wasn't, the letter will need to be corrected.

* Of course * not reporting income is a violation of tax law. You are responsible for reporting all income, whether or not you get a T4. But the CRA is rather forgiving and will help you figure out what you need to do to report the extra income. People file late returns, amended returns, all the time. It's a PITA but no need to stress about it. Would the CRA ever catch you if you don't report it? Who knows, but if they do, you can be sure THAT would be stressful. Stay on the good side of the CRA, if you plan to stay in Canada.

 

[jes_ON]

When I mentioned invoices, they issued to her invoices along with the cheques for her paument, she did not submit any invoices.

Well, if they invoiced her, she would be paying them. It sounds like they made the invoices from her on her behalf. Is the company on the sketchy side? It sounds like they went to some trouble to hide the fact that she was initially hired as an independent contractor.

Revised tax return? Could you elaborate on that a bit more?
Takes time? Might it create any issues? We did not know that we should report that income, since it was not included on her T4, I don't know if this will "look" ok, puts extra stress on the whole procedure...

It will look like you made a mistake. Happens all the time... As far as CIC goes, you can give them the current T4 / Notice of Assessment, and write a brief explanation that you are working on filing an amended return and can send the revised documents later if CIC wants them (it will take several months). Chances are, CIC won't need them.


Also you mentioned a T4A form, is that another form, on top of the T4?

Yes, they are different forms. T4s are issued for employment income, T4As for other types of non-employment income, including payments to self-employed workers. http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/rtrns/t4a/slps/whn-eng.html

BTW - there's another forum on this board where you can ask questions about taxes -
http://www.canadavisa.com/canada-immigration-discussion-board/canadian-finance-and-taxation-b25.0/

 

[evanstp9]

Jes_ON

Thanks you.

The company is more than legit, actually it is the first result on google once you type their name, which I find odd given all you mentioned above.
They are in business more than 25 years, developing,managing and leasing many-many properties in the GTA, even high-end ones.

Anyway, a friend told me that I could leave it as is for now, apply for PR after 2 months when she will be eligible without counting that "probation" time and add to next year's taxes the income we did not include for those 2 months, he told me that happens and it's usual here (no idea if true or not)

I saw that failure to report income, gets a penalty of 20% of that income, plus any possible taxes and interest...
Is that the case with the mistake we made? If so, I really cannot afford to pay anything right now.
Unless that does applies only when CRA finds out, and not you voluntary file and amended tax return (which I did not find clear on CRA website).

I plan to visit the guy who did our taxes, see what he says (I also think he should mention sth because we told him exactly what I mentioned here when we filed our taxes and he did not say anything).

Thanks for the advice!

 

[jes_ON]

I saw that failure to report income, gets a penalty of 20% of that income, plus any possible taxes and interest...
Is that the case with the mistake we made? If so, I really cannot afford to pay anything right now.
Unless that does applies only when CRA finds out, and not you voluntary file and amended tax return (which I did not find clear on CRA website).

Yes, there is a difference in penalties for "failure to report income" and "late reporting." You will pay a small late penalty for reporting that income late, BUT it won't be a lot. Your wife WILL have to pay (self-employment) taxes on that amount tho, and that might be substantial. CRA will work with you to set up a payment plan. Like I said, they're willing to work with you as long as you're showing that you're trying to fix your mistake.

I plan to visit the guy who did our taxes, see what he says (I also think he should mention sth because we told him exactly what I mentioned here when we filed our taxes and he did not say anything).

Goot luck! It's frustrating, no doubt...