Haven’t started your taxes yet? Don’t panic
With three weeks to go, here are tips to help you get going — and finish in plenty of time
More than a quarter of Canadians — 28 per cent — find the tax-filing process stressful, confusing and even intimidating, according to a recent TD survey.
But don’t sweat it, says Tarsem Basraon, senior manager, wealth advisory services at TD Wealth Management. With the deadline just three weeks away, it’s time to buckle down and get the chore completed for another year.
In fact, you technically have an extra day this year, because April 30 falls on a Sunday, so your return will be considered filed on time if it is postmarked on or before May 1, 2017.
That being said, here are Basraon’s tips for lastminute tax filers: File on time, even if you don’t owe a penny While late penalties are only applicable if you file past the deadline and owe money, it is strongly recommended that you file on time — even if you think you’ll be getting money back — in case anything unexpected arises.
Many Canadians make the mistake of assuming that filing their return after the deadline won’t result in any penalties/interest as long as they have a reasonable explanation.
But the Canada Revenue Agency has strict rules related to the filing deadline and will only waive the late-filing penalty and interest in certain extraordinary circumstances. And the decision is at their discretion.
So don’t assume that being on vacation will be a valid extraordinary circumstance.
Don’t miss out Even if you don’t owe money, late filers could miss out on, or experience interruptions to, government benefits and credits such as the Canada child benefit and GST/HST credits. It’s also important to remember that if you’re expecting money back, the earlier you file, the sooner you’ll receive your refund, which can be immediately put toward paying down high-interest debt or contributing to an RRSP or TFSA.
Plus, Canada Revenue does not owe you any interest on a tax refund balance unless you have filed your tax return and the applicable minimum time period has passed without you receiving your money back. Forgotten claims Do your research to determine what expenses you can claim. Many Canadians don’t maximize their returns to their fullest potential because they don’t know the credits and deductions that are available to them.
For example, many of the following are overlooked: charitable donations, child-care expenses, disability credits, medical expenses, travel medical insurance and moving expenses. Think ahead and always hold on to the necessary receipts. New for the 2016 tax year Tax rules often change from year to year, so keep up to date. For the 2016 tax year, there are several new rules. You now need to report the sale of a principal residence; the incomesplitting family tax cut has been eliminated; and there are lower federal tax rates on income between $45,282 and $90,563 (from 22 per cent to 20.5 per cent). For a full list of changes, visit the CRA website. Avoid common mistakes A large number of Canadians don’t file their tax returns correctly.
Not only could they miss out on refunds, they could also be subject to costly penalties and/or interest. The most common mistakes are a failure to report investment income or foreign income; incorrectly transferring claims like education or medical expenses between family members; failure to file required forms (e.g., T1135 for foreign assets over $100,000); and failure to keep adequate records and receipts to back up expenses. Don’t be afraid to seek help An accountant or tax adviser can help you file your taxes and ensure you are taking advantage of the appropriate deductions.
Also, ask how to accelerate or defer income, depending on your tax bracket. Tax rules are complicated, but the Canada Revenue Agency has consistently taken the position that “ignorance of the law is no excuse.” You don’t need a computer or cash to file While the number of Canadians filing paper-based tax returns continues to decline, some still prefer to use this method. You can obtain paperbased tax returns and a return envelope from a post office or Service Canada office.