Tax Literacy Project

Earn Deputy TaxDetective® status

Here's how you can learn about tax, it's easy, fun and free!

  1. Sample tax returns. TurboTax® Online can be accessed for free, anonymously, by students. Students can use it in the computer lab at school, save their work to finish it at home or in the library. Students can use a fake SIN#. To encourage students to learn more about tax by using the more complex modules, note that it isn't necessary to pay until (or if) you choose to file the return, which of course, you won't be doing with a fake SIN#, so when it asks you if you'll be prepared to pay, just say yes, because you'll never complete the sale with a fake SIN #.

  2. Case studies. Stories are a wonderful way to learn anything. Tax is no different. To see what happens 'if'' and how the tax payable or refundable changes as a result, use the Student Workbook I've created for high school students. It's possible to create up to 20 free samples allowable when using TurboTax Online for free. There are five case studies to get you started.

  3. Real life tax stories. CANLII is an organization that has made it their mission to make those stories (or call them judgements if you must) available at www.canlii.org

All you need is a computer with an internet connection and some imagination or a story to work on.

Save your work, finish it later.

Go straight to the WorkBook for the Case Studies to get started by clicking this link

or Click on the purple tab found on the left side of this website "TurboTax Online WorkBook" 

  

Why would teachers want to teach tax? 

Tax and taxation are found in the BC curriculum, in 7 places in the IRP. What is covered is really, really basic included in Math 10 and 11 Applications, Business Education 11 and 12, Accounting courses, Civic Studies 11, and Math Essentials 10 to 12. Topics include basic payroll, preparing a basic T4, and a basic T1 like the first case study for a student who works at McDonalds, found in my new Student WorkBook.

Is that enough to prepare students for life?  No, it's not.  

Do you see any tax in this BC Ministry of Education catalogue of learning resources?  Apparently the BC Securities Commission provides Planning 10 teachers with some basic information, enough to satisfy their most basic requirements, but they don't actually do a tax return online like I'm showing you how to do.

Are parents responsible for tax education? It seems that's the case.

School is responsible for sex education, but not tax education? 

I'm having difficulty with this one...and you probably are too.

I believe that learning about taxation is an essential life skill, not something to just mention in passing as an aside.  Some teachers told me they only include the tax module if there's time left at the end of the year because there just isn't any priority placed on learning about tax.   

Not only is tax a skill, we're all required by law to self-assess tax, and CRA has the attitude that they have absolutely no responsibility to 'mother' us when it comes to tax education, even on complex topics like how much and when to pay instalments when you start a self-employed business. 

Far too often not knowing enough about tax catching someone just starting out in business so far behind, it takes them the rest of their life to catch up.

CRA has made it pretty clear, we're on our own. It's taxpayer beware. We need to know about tax and how it works the minute we start earning income and that's enough reason to include more taxation in the BC (and every province/territory) Education and at the high school curriculum level.

The interesting thing about tax is that it can satisfy curiosity about how other people earn their income.

Knowing about tax might lead students consider a broader selection of life choices.  If for example, a student knew how much income they could expect from various occupations, and how much after tax income would result, students might make very different life choices. 

That's where these Case Studies come in really handy.  I'm just starting to create them, and already have ideas for more.

Students should learn how taxation relates to income, and what's deductible, not just for employees who are provided with a T4, but for real life situations, for all those transitions where tax plays a huge role in our lives. 

Transitions like when we go to college/university, have a child, get married, buy a house, save for retirement, invest in stocks and bonds, become landlords or self-employed, entrepreneurs, seniors, persons with medical expenses and infirmity or disability and even when we die.

It's no wonder many of my clients had no clue they need to file estate returns for a parent or that on death, all assets are deemed to be disposed of at fair market value and tax must be paid.

How did we learn about tax? 

Most taxpayers learn about tax after high school, either through the school of hard knocks, or from a college course on personal tax, 10 lessons with about fifteen minutes on tax credits. How many of us found a tax return in the corner on the floor in a post office and picked it up? Now that's just sad.

The advanced course about corporations, tax free rollovers, shareholder loans and benefits, partnerships, trusts and death, 10 more lessons. 

After that, you're an expert (ha)! Really? It takes me four hours just to explain personal tax credits. Another four hours to explain self-employment. Those introductory courses cover those topics in about 10 minutes each.

CRA did a survey to learn about young adults and their knowledge about tax: CRA: YA and taxes (prepare to be depressed).
 

After reading that survey, I decided to create a curriculum about learning about tax.

 
My criteria was that it had to be hands on, and based on real life stories; and it had to be fun.

To my surprise, my husband, who teaches high school math in Vancouver informed me he is responsible to teach tax as a part of the math curriculum. There's a scary thought, someone who has never done his own return in the 27 years we've been married teaches the only tax those kids will learn about.

What's included in his curriculum is basic.

There's a module on preparing a paycheque, a T4Slip and a T1 personal tax return.  If you're lucky, it will fill a 90 minute lesson, if other curriculum doesn't take priority. 

I offered to take his Math 11 Essentials class through an online discovery in a computer lab with Intuit's TurboTax® and UFile® software both free and online.
 
Word spread. Other students, Grade 12's and staff from the admin office appeared in the doorway, asking to join. Soon every computer in the lab was in use. 
 
It turned out tax was a hot topic for kids who work after school and tax was being taken off their paycheques. We were able to help by introducing TD1's and how to complete a TD1 so the students could keep their money.  My tax class was a huge hit! They kept asking when was I coming back because they felt they could learn more. Sadly, there wasn't time.
 

Here's what happened in the 90 minute lab

Registering each student for access took about 10 minutes.  Each student registers, which requires access to an email address (they can all use the same one), sets up their unique User ID and password, chooses and answers a skill testing question.
 
Then they set up their fake tax return with a fake SIN#.
 
You can use the basic exercise from the textbook T4 if you want. After that, it was an easy step to playing 'what-if'. Imagination took over as they made up stories to create tax returns.
 
The 90 minute class was over almost before it started. 
 

What happened next?

Late spring, an invitation in my husband's mail box, October PD day for Business Education teachers in BC, financial literacy theme.  Mention of a tax speaker on TurboTax, but no speaker assigned.  I contacted the person in charge, the Business Ed Dept head at my high school in Vancouver. What fun!
 
To present this idea of how to teach tax, my husband suggested I create a Student WorkBook, some case studies, and videos to walk students and their teachers through the process, step by step, to introduce this idea to teachers.  He said that's what he would want to see, the teacher's who attended loved the idea. Several immediately purchased a subscription.
 
But they only wanted one or two case studies, and more about history of tax. That's when I went back to the IRP's to discover why. Only 7 learning outcomes, relating to tax, and that included something on consumer problems about wages, property taxation, GST, Excise tax, municipal taxes, then the bare basics about payroll, T4's and a simple single, employed, no dependant tax return. Oh yes, key provisions of Canadian social safety net, and impact on society, you guessed it, Employment Insurance.

The first Student WorkBook in the TaxDetective Series has five Introductory Case Studies: 

  1. Student, works at MacDonalds as a cashier
  2. Student, paper route, mom drives on rainy mornings, sister helps out
  3. Student, works as server in pizza parlor, tips, no tax taken at source
  4. Student: away at University, moves home for summer job, moves back to go to school
  5. Young Adult: first full time job

 The Student WorkBook also includes:

An introductory 11 minute video explaining how to register for TurboTax, with step by step instructions for the teacher to get the students registered when they don't have an email address, or teacher's may want to protect the student's privacy by providing an email address, and a fake SIN # for them to use.

A video of each case study (I've done two so far, the rest are on my ToDo list..) walk the teacher and the students through the case study. Teachers could show the videos or allow the students to work independently.  The videos are accessible to the students any time to play again.

Links are provided in the WorkBook via access to this website to useful resources found on government websites like the Canada Revenue Agency website, the Justice Minister's website, and the Finance Minister's website.

Questions & Answers to ensure the student is accessing the resources.

Can students work on their tax case studies independently?

Yes. And they will probably have to rely on parents to guide them, because the BC Education curriculum only covers the first case, so teachers may only have time for one or maybe two cases.

Students will be able to access the videos to learn about tax and access TurboTax software at their school computer lab or on their library or home computer.  Students can create up to 20 sample returns under one fake name.  If they wanted to, they could create a second fake name and prepare another 20 sample returns.

Here are examples of case studies you'll find in future editions of the TaxDetective Series:

  1. Teacher, single parent with child & mother lives with them
  2. Teacher, married with spouse/partner in University, student loans
  3. Inventor earns a million dollars, has open heart surgery $100,000, while away on a convention
  4. Dad works full time, Mom runs a daycare, family has tenant in the basement suite
  5.  Senior, single, pensions & dividends, can't walk, lives in retirement home
  6. Speech Language Pathologist, first year as sole proprietor
  7. Drywaller
  8. Renovator
  9. Accountant
  10. Bookkeeper
  11. Lawyer
  12. ?? (send requests to eileen.reppenhagen@gmail.com)

What are some other ways to learn about preparing taxes?

Teachers can register their school at www.intuiteducation.ca
Intuit Canada provides a class set of educational software and everything needed to set up a lab, including special installation key codes for the computer lab. This approach requires lab preparation time. 
 
The Intuit education package utilizes older software versions. If internet connection speeds from your internet provider are slow and causing the students frustration, this may be an excellent alternative.
 
Note: My Student WorkBook accesses TurboTax Online instead and can be implemented with 11 minutes of preparation time. Just open up a lab and have the students sign in after watching the 11 minute video for how to do this efficiently
 
UFIle® also provides free student access and a sample SIN #.  It's a great idea to compare and contract how the two software work to determine which suits you best.
 
CRA also provides programs for learning which I found frustrating to access. 
 
CRA educator products are found at this link. Once you complete the questionaire, This page appears with the three programs 
 
I found that it kept bumping me out and I kept having to sign back up, providing my name and the reason for attending, over and over. After about three tries, I got frustrated and several teachers have told me that this program accesses information about Ontario, and they found that extremely annoying as they felt the need to convert everything to BC, which took valuable time away from other activities. I know teachers spend many hours preparing to teach and something like this would be enough to put them off using the product.
 
 

Several teachers asked me for an expanded curriculum to learn about how tax works to...

1. Explore how various government Ministries interact to create and administer tax
2. Explore the Income Tax Act and Regulations
3. Review the authorization process, My Account and Represent a Client 
 

Below is an indepth look at how tax works and where to find information on the gov't websites about creation and administration of tax law.

Access to Income Tax Act and Regulations

The Income Tax Act is found on the Minister of Justice's website.

First, review the Table of Contents to find a section, or change the address right at the end of the link, to go directly to the section you are looking for (there are 248 sections). 

Here's how it works. The link to section-1 is found at the end of the link.

All that's required is to click the link, and then edit the section number, for example, edit the -1 and make it -2 or -69 or -118.2 (medical expenses)

http://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-1.html 

The Act comes with ancillary Regulations found here and note that it's by page, so changing the page # will move you through, as will the Table of Contents

 http://laws-lois.justice.gc.ca/eng/regulations/C.R.C.,_c._945/page-1.html 

Page 121 is where you'll find Regulation 5700 with a listing of the medical devices and equipment referenced by S. 118.2(2)(m)

Page 122 is where you'll find Retention of Books and Records in Regulation 5800

Supreme Court in Canada Trustco case, explained that the Income Tax Act should be read in such as way as to concern ourselves with content, context and purpose. That requires knowledge about how the Act is constructed in total, how each part relates to the other and why it was set down as law in the first place.  That's a tall order. 

You could think of the Income Tax Act as an algebraic formula written in prose.  The same formulas appear over and over again.  Reading it out loud helps, and it's important to always look for the mathematical connecting words

Those little connectors, like "Or", "And", "Less" and "the Sum of" help us determine the formula to use.

  

Tax Research Education

The rest of this page is for teachers who want more than just an hour in the computer lab to learn how the software works and to play what-if.

What follows is my curriculum outline for learning about our taxation system and how we communicate about tax. 

The following activities engage students in planning, mathematics, law and internet research while exploring taxation in Canada.

 
Target age range is 16-18 (grades 10 to 12)
These activities allow for creative exploration of government websites, and can be used individually or sequentially.
These activities may be assessed using the provided evaluation tools. Where possible, suggestions for modifications are provided.

Learning Outcomes

  1. Explore how Finance, Justice and Canada Revenue Agency interact
  2. Explore the Income Tax Act and Regulations
  3. Explore how tax law is applied to real people in Tax and Supreme Court cases
  4. Open your own tax history using "My Account"
  5. Learn how to research tax questions
     

Curriculum Connections

  • Planning 10
  • Law 11
  • Math 10 Essentials
  • Math 11 Essentials
  • Business Information Management 12
  • Entrepreneurship 12
     

Course Content

  • Finance
  • Parliament
  • Justice
  • FINTRAC
  • Courts
  • Canada Revenue Agency
  • Tax compliance software
  • Researching tax questions
  • Non compliance = convictions
  • Voluntary disclosures, penalties and interest, civil penalties
     

Activities:

How laws are made:
 
(Let's follow the TFSA through the process)

Once the Bill is passed and the Senate approves the Bill, Justice amends Income Tax Act and adds Regulation 5000 and 5001 to describe Prohibited investments to TFSA's

Long before the Bill is passed, CRA acts like the law is already in place in order to create the forms, guides, publications, and systems to administer the TFSA as if it is law already

Where to find information about income tax on the CRA website:

Where to find information about court cases:  

 

Assessment

Knowledge / Understanding
Does student demonstrate
  • awareness of major concepts?
  • understanding of major concepts?
 
Thinking and Research
Does student
  • use major tax concepts in an insightful manner?
  • make links between major tax concepts that are strong and relevant?
  • understand how to use the CRA search engine and site map?
 
Communication
Can student organize and present major tax concepts effectively?
Does student use "tax language" to research queries?
Can student determine when they require more information and contact CRA help to ask for more information?
 
Application
Does student complete and document appropriately:
  • TD1 for employee with T4 income, a spouse, one child or a parent over 65 who lives with them
  • A T4, T4 Summary and ROE for an employee
  • Self-employed income schedule including asset acquisitions, vehicle and home office cost claims
  • Rental income schedule
  • Capital gains Schedule
  • Investment Income Schedule
  • Medical expense claim form
  • Donation tax credit claim form  
  • Tuition and education claim and S11, BC S11 transfers to spouse, parent, grandparent
  • Child care expenses
  • Child fitness tax credit claim
 

Course introduction

Who plays a role in the establishment of our laws?
  • Politicians
  • Finance Department
  • Parliament
  • Senate
 
What are the laws?
  • Federal Statutes
  • Provincial / territorial Statutes
  • Municipal By-Laws
 
Where do we find information?
 
Who enforces the law?
  • Auditors
  • Officers of the Courts
  • Courts Administration Service
  • RCMP, provincial or local Police
  • Attorney General
  • Judges via the Court system
  • Jail, fines, penalties
Why do we need law?
  • Social order
  • Public programs
  • Services, infrastructure
  • Protection from harm
 
How do social policies and federal tax laws define acceptable financial behavior?
  • Self-assessing system in Canada
  • Ignorance is no defence,
  • Guilty until proven innocent
  • Expected to know and comply with law

 

Activities to engage in to protect ourselves from harm:
  • Education
  • Keeping records
  • Planning to minimize taxes
 
but only if our planning does not step over GAAR General Anti-Avoidance Rule (since 1995)
 
Decided cases to search for on www.canlii.org
  • Kaulius (loss transfer - SCC)
  • Desmarais (surplus strip)
  • CECO (partnership / disguised proceeds)
  • OGT Holdings (QCA - Quebec shuffle)
  • MacKay (avoidance loss transfers - FCA March 2008) leave to appeal to SCC sought, decision delayed until after Lipson
  • Landrus (non arms length loss realization - TCC May 2008) under appeal to FCA
  • Remai (charitable donation - TCC August 2008) under appeal
  • Lipson (attribution - SCC January 2009)

Watch for decisions on:

  • MacKay (SCC)
  • OGT Holdings (QCA)
  • Garron Family Trust et al (TCC)
  • Collins & Aikman (TCC)
  • Lehigh Cement (TCC)
 

INCOME TAX ACT AND REGULATIONS

Part 1

  • Division A - Liability for tax S. 2
  • Division B – Computation of Income S. 3-108
  • Division C – Computation of Taxable Income S. 110-114
  • Division D – Taxable income earned in Canada by Non Residents S. 115-116
  • Division E – Computation of tax S. 117-127
  • Division F – Special rules S. 128-143
  • Division G – Deferred and other special income arrangements S. 144-148
  • Division H – Exemptions S. 149
  • Division I – Returns, assessments, payments and appeals S. 150-168
  • Division J – Appeals S. 169-180

Part 1.1 to XIV Other Taxes included in S. 180.2 – 219

Part XV - Administration and Enforcement S. 220-244

Part XVI - Tax Avoidance S. 245, 246

Part XVI.1 - Transfer pricing S. 247

Part XVII – Interpretation S. 248-262

Regulations

RESEARCH TAX TOPICS:

21.Support
27.Seniors
28.Death
 

RESEARCH: ADMINISTRATION OF TAX 

(some links provided, but the idea is that students should learn how to utilize the search engine on the CRA website)

 Keeping Records

Tax Returns (some major categories)
T1 (Personal)
T1Adj
T2 (Corporate)
T3 (Trusts & Estates)
T4 (Payroll)
T5 (Interest and dividends)
 
 
 

Forms and publications: 

 Representation

Security of Taxpayer Information

epass Enabled Services

CRA's electronic services overview

Individual: T1013

  • Level 1 allows CRA to disclose information to the representative
  • Level 2 allows the representative to request changes to your tax returns

Note Level 2 authorization does not permit changes to your basic information such as your address, identification, marital status, direct deposit or 8 digit code

Who should you give authorization to?

Consider carefully whether to provide Level 2 authorization

Adjusting your tax return may be accomplished by letter, Form T1-ADJ or online in My Account using a change request.

Business: Contact person/representative 

  • Form RC1 Request for a Business Number - provides for Contact Person only - must complete an RC59 to authorize a representative
  • Pamphlet RC2 - The Business Number and your CanRev Accounts
  • Form RC59 Business Consent Form
    • Level 1 review information
    • Level 2 allows the authorized person to make changes
  • Note:  Unlike Individual representative, if you don't choose a Level for Business the default is to Level 2!

Adjusting your corporate tax return

GST/HST Rebates

CPT139 CPP/EI - Authorizing or Cancelling a Representative

Internet Security Tools

 

Canadian Legal Information Institute

CanLII is a non-profit organization managed by the Federation of Law Societies of Canada. 
CanLII’s goal is to make Canadian law accessible for free on the internet
CanLII is testing a Beta version that will enhance the delivery of legislative material, currently Federal statutes and regulations and some provinces are available with more coming online shortly.
 

 

Financial Literacy and Education Summits 

(sponsored by Visa)

April 20, 2009

April 19, 2010

April 4, 2011

More useful links:

CRA study on youth and taxes

Financial Consumer Agency of Canada 

AICPA Financial Literacy website

BC Education – IRP Resources

University of the Fraser Valley

BC Securities Commission

Canadian Banker’s Association

Industry Canada Youth Initiatives

Employment standards – school corner (BC)

Links to other TaxDetective webpages:

Financial Literacy Tool Kit

What's New 2009

What's New 2010

What's New 2011

 




 

 

 

 
 
 
 
 
 
 
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