Saskatoon StarPhoenix

Taxes are filed, so what happens now?

- TERRY MCBRIDE

What will you do with your tax refund? Will you pay off credit card debt? Will you make an RRSP contributi­on for 2017? Will you use your refund to pay for your summer vacation?

Preliminar­y data shows that the average amount refunded so far is $1,629. Only 15 per cent of filers owe tax. Many people rejoice at receiving an income tax refund. But often a tax refund means you are just getting back your own money that you loaned interest-free to the government.

Employees are most likely to get significan­t refunds. A tax refund typically arises when tax owing on your return is less than tax deducted from paycheques.

Planning ahead for 2017, you may avoid getting a tax refund by updating form TD1 (personal tax credits return). Alternativ­ely request a reduction in source deductions using form T1213, especially if you make regular RRSP contributi­ons.

NOTICE OF ASSESSMENT

Along with your refund, the Canada Revenue Agency (CRA) will send you a notice of assessment to confirm that your tax return calculatio­ns were correct. If you made a mistake, the notice would show corrected calculatio­ns with some explanatio­n. Or maybe you owe tax. If you are charged arrears interest for making insufficie­nt quarterly instalment­s make a resolution to pay on time for 2017, or else look into ways to have more tax deducted at source if possible.

Your tax notice also tells you how much RRSP contributi­on room you have available for 2017. If you’re carrying forward tuition credits or alternate minimum tax, for example, such carryforwa­rd amounts are usually mentioned in your tax notice.

MATCHING PROGRAM

The CRA has a matching program to make sure that you have reported all your tax slips. The CRA systematic­ally reviews the electronic informatio­n obtained from employers and financial institutio­ns that issue tax slips. Using your Social Insurance Number, the CRA matches amounts on tax slips to what you reported on your tax return.

Early next year, the CRA may let you know you if you forgot to report certain 2016 tax slips or if you missed entering amounts from the boxes on your tax slips.

MY ACCOUNT

Why not apply for ‘My Account’ online access to your personal tax informatio­n? Through the My Account portal you can find out which day your tax refund will be deposited to your bank account. Visit My Account to see your TFSA history and contributi­on room.

PAYMENT NOT LOST

A common scenario occurs around this time every year. Let’s say you electronic­ally file your income tax return at the end of April. You owe tax. You write a cheque to pay the tax due by April 30 and you make your payment at the bank.

When you receive your notice of assessment in early May, you see that the CRA is asking you to pay the tax owing — as if you had not made your payment. Don’t be alarmed.

To solve the mystery of the missing payment, you can phone the CRA general inquiry line at 1-800-959-8281 or visit ‘My Account’ online. Most likely you will discover that your tax payment has been parked temporaril­y in a 2017 instalment account before being applied towards your 2016 tax owing.

It doesn’t take long before your payment is automatica­lly moved to the 2016 account where it belongs.

Terry McBride, a member of Advocis, works with Raymond James Ltd. The views of the author do not necessaril­y reflect those of Raymond James Ltd. Informatio­n is from sources believed reliable but cannot be guaranteed. This is provided for informatio­n only. We recommend that clients seek independen­t advice from a profession­al adviser on tax-related matters. Securities offered through Raymond James Ltd., member of the Canadian Investor Protection Fund. Insurance services offered through Raymond James Financial Planning Ltd., not a member of the Canadian Investor Protection Fund.

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