Category Archives for "Personal Income Tax"

Have You Not Filed Your Tax Return Yet?

By Randall Orser | Business Income Taxes , Personal Income Tax

Have You Not Filed Your Income Tax Yet?

Every year in Canada we must file a personal income tax return by April 30th(June 15thfor those who are self-employed). As with anything in our busy, hectic lives, we do forget; however, what if it’s your tax filing that you forgot? That can have serious consequences depending on what you owe, and for what benefit programs you are qualified.  

The first thing is Don’t Panic! Okay you will but calm down. If you’ve realized you haven’t filed your taxes, and it’s not too late in the year, you’ll be okay. Yes, if you owe money, you’ll have a penalty and interest, however, catch it soon enough and it won’t be that much. Of course, if you are getting a refund, then you won’t be charged any penalty. And, getting benefit payments will definitely be delayed, as you haven’t filed, though you will get a catch-up payment. 

Canada Revenue Agency (CRA) has now allowed the electronic filing of tax returns until January of the following year, so for the 2017 filing year you can electronically file until January 16th. Eventually, I believe, we’ll be able to file electronically for any tax year any time. 

Many people end up not filing for fear that they will owe or owe way more than they can pay at the moment. It’s much better to file and owe than not file and owe, as CRA tends to get a bit anxious when they realize you owe but haven’t filed and paid yet. Of course, these same people think they’re going to owe tons of money, and, in the end, don’t owe near as much as they thought, or, hilariously, get a refund. I love the expression on peoples’ faces when I tell them they owe $X, and they were thinking $XXX. 

What are the penalties for filing late? If you owe tax for 2017 and do not file your return on time, CRA will charge you a late-filing penalty. The penalty is 5%of your 2017 balance owing, plus 1%of your balance owing for each full month your return is late, to a maximum of 12 months.  

For example, you owe $3,200 and don’t file until November 15th2017. In this case you owe $583.91 in penalties plus 5% interest compounded daily (approximately $194). That’s a total balance owing of $3,977.91. Your penalties/interest are 24.3% of the original balance owing. 

If you failed to report an amount on your return for 2017,andyou also failed to report an amount on your return for 2014, 2015, or 2016, you may have to pay a federal and provincial/territorial repeated failure to report income penalty. The federal and provincial/territorial penalties are each 10%of the amount that you failed to report on your return for 2017. Your late-filing penalty for 2017 may be 10%of your 2017 balance owing, plus 2%of your 2017 balance owing for each full month your return is late, to a maximum of 20 months. That can get quite steep depending on how much you owe. 

Using our example above of owing $3,200, and this is another year of filing late your penalty would be $764.09 for a total of $3,964.09, and interest would be $203 for a total of $4,167.09 (30.2% of the original amount owing). 

From our examples above it is much better to pay upon filing (or pay by installments when you believe you have a big balance owing). If you know you’re going to owe, but don’t have the funds at filing, file anyway and work out some kind of payment arrangement with CRA.  

Do you have multiple years to file? Can’t find your slips? If your slips are normally filed with CRA (such as T4s, T5s, etc.) then you can request copies and use those to file your returns. Your tax preparer can do an auto-fill return for 2015 and 2016, and if you gave them consent, could grab the other years too. CRA no longer worries about returns that are more than 10 years old, unless you ended up owing in those years. You will have to paper file for 2012 and prior. If you believe you will owe for these prior years, you may also want to look into the Voluntary Disclosures Program.  

With the Voluntary Disclosures Program, you may file a disclosure to correct inaccurate or incomplete information, or to provide information you may have omitted in your previous dealings with the CRA. More specifically, this includes information you have previously reported that was not complete, information you have reported incorrectly, or information you did not provide previously to the CRA.

Canada has a high compliance rate (94.5%) of people who file their taxes on time. If you find you’re not one of those, you may need to look into why you’re always late filing. Are you using a tax preparer now? Maybe you should. I hound my clients to get me their stuff, and most appreciate that. Of course, once you’re caught up always ensure you file on time after that so you avoid higher penalties.

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How Secure is Your Information as a Taxpayer?

By Randall Orser | Personal Income Tax

The big thing today is online security, or cyber security, and you need to know whether or not your data online with Canada Revenue Agency (CRA). For the most part it is, but there is always a chance. Just remember that the hackers aren’t someone sitting in their mom’s basement in their underwear hacking away on their laptops. It’s criminal organizations as well as government organizations, such as Russia’s FSB or China’s MSS, that are doing the hacking in what’s called ‘hacking farms’ that are the real problem. So, how is CRA taking care of your data?

The Canada Revenue Agency (CRA) takes the security of all taxpayer information very seriously. The CRA keeps a close watch on internal processes to prevent unlawful attempts to obtain tax information and to make sure that taxpayers’ rights are protected.

Safeguards

For the security of taxpayer information, the following policies and procedures are in place:

  • Personnel screening – All prospective CRA employees are screened for security before employment.
  • Employee awareness of their responsibilities – New employees are trained on their security obligations and security awareness information is regularly communicated to all employees. All CRA employees are subject to strict standards of conduct as defined in the CRA's Code of Ethics and Conduct.
  • All taxpayer information is protected – Taxpayer information must be kept physically secure. Employees may not send taxpayer information by email or leave voice messages containing taxpayer information. Employees have to make sure information is shared only with the taxpayer concerned or with a third party only after the taxpayer has given written consent, except where the disclosure is authorized by law.
  • Security markings on forms and documents – All CRA forms and documents containing taxpayer information are marked Protected. These markings help CRA employees make sure sensitive information is handled securely.
  • Access to taxpayer information is on a need-to-know basis – CRA employees, such as taxpayer services personnel, auditors, investigators, and those handling income tax files, have only the levels of access to taxpayer information required to do their jobs.
  • Regular risk assessment – The CRA performs regular risk assessments and internal audits to ensure its internal processes are secure.
  • Suspected breaches of confidentiality of taxpayer information – If a taxpayer tells the CRA about a suspected breach of confidentiality of his or her personal information, the Agency can protect that taxpayer's account by disabling all online access whether it is My Account for Individuals, My Business Account, Represent a Client, NETFILE, or EFILE. Online access can later be restored at the taxpayer's request by calling the e-Services Helpdesk at 1-800-959-8281.
  • Investigating possible breaches – CRA officers immediately and thoroughly investigate any security breach or allegation of unauthorized access or disclosure of taxpayer information. Any employee found to have acted inappropriately is subject to disciplinary action, up to and including the end of employment. Potential criminal acts are referred to the RCMP for investigation.

Legislative framework

The CRA’s legal obligation to safeguard the confidentiality and integrity of taxpayer information for which the CRA is responsible is stated in the following legislation:

Under the Income Tax Act, the Excise Tax Act, and the Excise Act, 2001, an employee may disclose taxpayer or confidential information to the person about whom the information relates. However, no employee can give that information to a third party without the written consent of the taxpayer, except where authorized by law to do so. Similarly, both the Privacy Act and the Access to Information Act do not allow the disclosure of personal information, except under circumstances as stated in the legislation.

The CRA's controls to protect information from external threats

Protecting the Canada Revenue Agency's (CRA) integrity includes ensuring that we have the proper systems and technologies in place to safeguard the sensitive information that we hold from external threats.

The CRA adheres to the Policy on Government Security and direction provided by lead security agencies like the Communications Security Establishment Canada (CSEC) and Public Safety Canada (PSC). Additionally, the CRA publishes, promotes and monitors its own security policies that guide and support the CRA's culture of integrity.

Ongoing improvements

The CRA's team of highly qualified information technology professionals works in conjunction with other departments such as Shared Services Canada and the Treasury Board Secretariat to identify and mitigate cyber threats and risks to privacy and the security of the data we hold. The CRA follows a continuous improvement security program where the effectiveness of the security tools are continuously evaluated and improved.

As part of our commitment to continual improvement and as a result of the CRA's experience in addressing vulnerabilities to caused by the Heartbleed bug, our security controls and policies are being reinforced and updated to ensure that this or similar types of incidents do not re-occur. The CRA is working closely with Shared Services Canada and the Treasury Board Secretariat to ensure our response to security threats and software vulnerabilities is timely. In addition, more monitoring has been put in place to identify potential vulnerabilities in our environment. With these enhancements the CRA is able to respond even more swiftly in the unlikely event of another incident.

A layered approach to security

As threats to security can occur prior to, during, or after the receipt of electronic data, the CRA employs a layered approach to security.

All communications and transactions with the CRA are protected and are conducted on secure platforms. As phishing scams become more frequent, the CRA is proactive in warning the public about fraudulent communications claiming to be from the CRA.

External services are protected by firewalls and intrusion prevention tools to detect and prevent unauthorized access to CRA systems and block malware. During online transactions we ensure that all sensitive information is encrypted —or scrambled—when it is transmitted between your computer and our Web servers. Controls in place to protect our data from external threats include network and host security systems like corporate firewalls, anti-virus software, intrusion detection and prevention measures, and identity and access management controls.

CRA employees must use approved levels of encryption on all removable devices (such as USB storage media) and when transmitting private information externally to authorized recipients. Personal storage devices are not authorized to be connected to the Agency's network and are not permitted on CRA equipment.

Network components such as servers and routers are stored in secured and locked rooms or cabinets, accessible only to authorized personnel. Agency networks and workstations are equipped with malware and virus detection and removal software which are updated daily and protect the CRA environment from increasing threat of malicious code and viruses. At the CRA employee level, computers are secured with a suite of security products ranging from anti-virus software to host intrusion software. Malicious or potentially malicious internet sites, email (e.g. spam) and email attachments are blocked to ensure the CRA's environment remains secure. All software used by the CRA undergoes a rigorous certification process which must meet our strict standards for security.

For more information about the controls in place at the CRA to protect data from external threats, go to Access online services safely.

Internal controls to ensure privacy and security

The Canada Revenue Agency (CRA) is proud of its reputation as a leading-edge organization committed to excellence in administering Canada's tax system. However, inappropriate or fraudulent activity can occur in the workplace. The CRA has incorporated a broad array of checks and balances to ensure that those who access your information are strictly limited to employees required to do so as part of their job, and to detect misconduct in the rare instances when it occurs.

Monitoring of employees' access to taxpayer information is centralized, ensuring an independent process that enables the CRA to detect and address any suspect transactions in our systems. This provides assurance that authorized users are accessing only the applications and data they are allowed to access based on our business rules

The CRA's Internal Fraud Control Program uses a strategic approach to managing the risk of internal fraud by preventing fraud where possible, detecting fraud when it occurs, and fostering a heightened level of deterrence in the CRA. The program is an important component of the CRA's Integrity Framework and contributes to the range of compliance-based activities that detect and deter fraudulent and unethical behaviour.

The CRA has also strengthened its internal audit processes for small and medium-sized enterprises by creating, in 2013, Business Intelligence and Quality Assurance units. This measure further strengthens the integrity of the CRA's internal processes by segregating the duties of auditors during the audit process to ensure strong independent oversight and review of actions taken on a file, and quality control of the files audited. No one auditor can carry an audit file from start to finish. Similar processes are already in place for audit processes pertaining to large corporations.

In addition to the current personnel screening for appropriate security clearance, additional verifications are also conducted for individuals who hold or apply for positions that require a high degree of public trust.

As you can see CRA is doing everything it can to ensure the safety of your data online, and that only yourself, or those you authorize, have access to that information. While nothing can be 100% secure online, it’s good to know our government agency that controls our tax information is doing everything it can to protect that data.

Large Refund, You’ve Just Paid Too Much

By Randall Orser | Personal Income Tax

Another tax year’s been filed, and you’re excited as you’re getting a huge refund again this year. That’s great! Or, is it? A large refund is really saying you’re not managing your money as well as you probably could. Financially, getting a refund every year may be doing more harm than good. Wouldn’t you rather get that money on each pay cheque, rather than in one lump sum? Hopefully, after you read this you’ll talk to your human resources department, tax preparer, and your financial planner.

What Does That Large Refund Mean?

What you’ve basically done when you get a large refund is loan the government your funds for a whole year without any interest. Why would you do that? You probably wouldn’t loan a friend or family member money without interest, but you give it to the government. Just think of the ways you could use that large refund, even if it’s only $2,000, you could put that money into an RRSP, or TFSA. Or, invest it into non-registered investments to make some additional cash. 

What Should You Do Instead?

If you’re finding that large refunds are a way of life, then you need to figure out what to do so you don’t get those large refunds. The first thing to do is talk to whomever is in charge of payroll at your work: boss, payroll preparer, human resources, etc. 

Get a copy of Form TD1, Personal Tax Credits Return, and go through each section and fill in amounts that apply to you. The TD1 form used to determine the amount of tax to be deducted from your employment income or other income, such as pension income. The payroll person, or your tax preparer, can help you figure out the amount of tax exemptions for which you qualify, and fill out the form. You should do a new TD1 each year.

If you find that your tax situation has changed during the year, you can update the TD1 at any time. Many things could change during the year, such as a marriage, divorce, children aging out of credits or going off to college, which could cause either a balance owing or a large refund.

Now What?

You’ve talked to your payroll department, and made the changes to your TD1. You will start to see an increase in your pay cheque as less tax is coming off. The amount won’t be huge; however, you need to look at the overall view. This is where things can get interesting. Figure out how much extra you’re getting on each pay cheque, and setup a new direct deposit with work for that much to go into a savings account (or even a TFSA). If you can’t do that through work, then an automatic transfer into a savings (or TFSA) account will work too. Whether the amount is $20 or $100, do this each pay, and watch your savings grow.

Getting that large refund at tax time, is not necessarily a good thing, especially if you’re using to pay certain bills that come due at that time, such as property taxes. You’re much better off taking that money for yourself each pay cheque, rather than giving it to the government interest free.

Be Better Prepared for Tax Season 2019

By Randall Orser | Personal Income Tax

I know what you’re thinking, didn’t we just do our taxes, well, yes, but it’s never too late to start planning now for the 2019 season. Maybe you weren’t as organized as you’d like to be, maybe you weren’t able to take advantage of certain deductions, such as RRSPs or employment expenses. Now is the time to think about these things rather than next April.

Get Organized

Start by having a specific drawer, or area of your desk that you keep all your tax receipts you get during the year and use an envelope in which to keep them. This is the best way to ensure you always have the receipts you need to file your taxes. As something comes in, put it in the envelope, and it’ll always be there when you go to do your taxes.

What Did You Miss Last Year

What deductions did you miss out on last year? Did you not make enough RRSPs? Maybe you could deduct your automobile for work but didn’t have all the receipts; or kept track of your mileage. Now is the time to look at where you are as far as RRSPs go and start contributing more. It’s much better to start contributing now rather than one lump sum come February as your money starts earning income right away. 

For your automobile, start keeping your mileage now, and ensure you keep track of all work-related mileage. Every time you get gas make sure you get a receipt, same with any repairs you do to the car, and keep your insurance papers with the amount. If you haven’t kept your mileage until now, do the best you can to backtrack up to January 1st, that includes the beginning mileage for the vehicle.

What Couldn’t You Use Last Year

You may have had capital losses, from the sale of shares, etc., or non-capital losses that you just couldn’t use. If you feel there are shares you wish to get rid of this year, think about doing so to create a gain that you can offset with those losses (the opposite goes here to so if you have some lame-duck stocks and you know you’re going to have gains it may be time to get rid of them). If you had non-capital losses last year, you can carry them forward, to a year you have income. There are limitations so make sure you check them out.

Another thing you may not have used last year were moving expenses. If you moved later in the year or didn’t earn income from your new job or business before December 31st, you can carry forward these to the next year that you are actually earning income. CRA likes to see these expenses deducted from income you earned because of the move and in the year that the income was earned (as long as it’s the following tax year).

Donations can also be carried forward for five years. Donations are one deduction that are best done with a high value. $20 here or $20 there really doesn’t do much for your taxes. Donations work as a non-refundable credit and on the 1st$200 you get 15% of that or $30; over $200 you get a 29% credit. Therefore, it makes much more sense to accumulate your donations until you have over $200 (as long as it doesn’t take more than 5 years). If you are feeling philanthropic then your best bet is to give bigger donations to fewer organizations to take advantage of the tax deduction.

Medical expenses are another deduction that you can carry over to another year. For medical expenses, the end date must fall within the tax year you are filing for; for example, if you’re filing for 2018, then you can have March 2017 to February 2018. For 2019, you don’t have to carry on those dates, however, you would have to use March 2019 to December 2019. 

Doing this split works well when you have a lot of expenses in one part of the year that fall into the next year. Let’s say you’re having a bunch of dental work that starts in November but won’t end until January of the next year at a cost of $10,000. You may be better off claiming it in the following tax year rather than the previous tax year.

The reason for a successful tax year is organization. The better organized you are and have everything ready to go, the faster your return gets done. It also makes your tax preparers life much easier too.

Why Is My Tax Notice of Assessment (NOA) Different Than What Was Filed?

By Randall Orser | Personal Income Tax

Every year after you file your personal income taxes, Canada Revenue Agency (CRA) sends you a Notice of Assessment (NOA). On this NOA, CRA will state any information that relates to changes made during their processing of your return, what any carry forwards for non-capital and net capital losses will be, information on your current TFSA, and what is your next year RRSP contribution limit.

Occasionally, you find that something has been changed by CRA due to information they received that you perhaps didn’t get, such as an additional slip, or carry forwards you may have forgotten about. It could also have been a mistake during the preparation of your return.

The most common mistake we find is the missing slip. You had more than one job in the tax year, or non-registered investments that send out a slip you don’t get or that slip comes after you’ve done your taxes. Even with the new auto-fill return feature, not all slips will who up, as they may not get processed by February 28th, and can show up on CRA’s system much later in March.

If you do have non-registered investments, allow enough time for those slips to come before you file your taxes. T3 Statement of Trust Income Allocations and Designations slips are the last slips you’ll usually receive. I find it best to wait until Mid-March or later to do your taxes, if you get any kind of slip for non-registered investments. Those slips usually come on a T3, T5, T5008.

Another slip that is commonly forgot about is the T4RSP, which is a slip you receive when you take money out of your RRSP during the year. It is amazing how many people forget they did this, do their taxes, and then get a NOA very different from what they thought it would be. This can be a major difference depending on how much you withdrew, and what was your income for that year.

For those of you that still paper file, yes there are still people using paper, addition errors are the biggest mistake. Double, and triple, check your addition and subtraction. Make sure that you have the correct figures before you send in your return. A good idea is to do it in pencil (never file your return in pencil) first then do it over in pen. If you’ve paid based on what you’ve filed, and you file too close to the deadline, you may be charged penalties and interest if the balance owing goes above what you already paid, and CRA processes your return after April 30th.

Your installment payments are another item that can make your NOA different from what you filed. Sometime in February you get a statement of installments paid that apply to the prior tax year. It’s best to make sure you get this statement before filing, and call CRA if you don’t have it by March. Always ensure exactly what you paid for installments for the prior tax year before filing your taxes.

When you do get your NOA check it and compare it to what was filed. If you used a tax preparer, send it to them, so they can see what happened after your return was filed. It’s important to check your NOA so next year you know for what to look when you go to prepare your next year’s taxes. Today, your tax preparer can get your NOA almost as soon as they file, which is pretty cool.

What You Need to Know About Tax Reviews

By Randall Orser | Personal Income Tax

Today, Canada Revenue Agency (CRA) is doing more “reviews” than audits these days, though, let’s face it, it’s just a fancy new name for audit. CRA would have you believe that these reviews are just them ensuring that you’re paying your fair share of taxes, though that doesn’t make it any less stressful for you. Most taxpayers won’t have to worry about a tax review, however, if you are one of those worrying about such a review, here are some tips to make it a smoother process.

Tax Preparation

If you maintain accurate records over the year, your tax review should run smoothly, or you may avoid one completely. By keeping good records, you have ready access to the information you need to complete your tax return. Rather than putting it off until the end of the year, or worse, when you’re doing your taxes, keep pertinent receipts and documents in some kind of file, envelope, etc. By keeping them handy and in the same place, you won’t forget items that should go on your tax return.

Red Flags for Audit

There’s certain things that are more than likely to trigger a review than others; CRA also has years where it looks at certain things over others. By paying attention to what you are doing, you should be able to avoid some of these things:

  • Incomplete tax forms
  • Incorrect SIN for yourself or a dependent
  • Information that doesn’t match your T-slips (T4, T5, T3, etc.).
  • Large amounts for deductions in comparison to your income
  • Consistent large business losses year over year
  • Using non-standard deductions
  • Unusual deductions that you’ve not taken before
  • Listing dependents other than children, parents or grandparents
  • Large amount of medical expenses or donations

You probably won’t have to go through a tax review every year, it can happen. Sometimes it can be as straightforward as remembering to follow the guidelines for completing your tax return, schedules, or to include certain types of expenditures or income. If you want to avoid a review then just complete your return as accurately as possible and keep your documents.

How to Use Your Tax Refund

By Randall Orser | Personal Income Tax

The height of tax season is here, and many Canadian taxpayers are preparing to get large refund cheques. The average Canadian tax refund is about $1,400. Have you filed your tax return yet? Here’s eleven best uses in order to maximize that tax refund.

Pay Off Debt

If you’re finding yourself in debt for credit cards or student loans, it can make your life miserable. If you’re debt load has gotten out of hand, that’s especially true. You can wipe out financial stress and anxiety by using your tax refund to pay down this onerous debt.

Save Your Money

Do you have enough set aside for emergencies? Canadians barely have $1,000 set aside for such expenses. Use your tax refund to start your saving for a rainy-day fund, particularly if you have a difficult time saving.

Take a Vacation

Have you been thinking about that dream vacation, such as a cruise or a European trip? Your tax refund can make that a reality. Your tax refund may not be enough to pay for the whole trip, however, you can probably make a sizable down payment on that dream vacation.

Investing

It’s never been easier than today to start investing. The best part is that you don’t have to pay a broker. You can learn about investing online and create a self-managed account that will allow you to buy and sell stocks any time. 

Put Money into Your RRSP

The perfect time to start your RRSP is now. Even if you’re young, you should make decisions today that will benefit your future. Funding your retirement account takes discipline and consistency. When it comes to your retirement, you’ll be very happy you made the effort now.

Spruce Up Your Home

Does your home need a bit of a makeover? There are economical things you can do to your home to improve it. You can paint, plant a garden, or buy new furniture. With small improvements you can enhance the look and feel of your home.

Start a Business

A smart way to use your money is to start a business. You could quite possible make your dreams a reality, but also create an additional stream of revenue for your family.

Fund Home or Auto Repairs

Have you been putting off any home or auto repairs? That tax refund could go to new brakes, a tune up, broken window, or replace missing roof shingles.

Update Your Work Wardrobe

You’re not Steve Jobs so you probably can’t get away with wearing the same thing every day. Nor do you have to look like a fashion model. You should have clothes that are professional, if you want to advance in your company, you should be paying attention to your professional image. You can use your refund to buy new shoes, dresses, suits, and business casual attire.

Start a College Fund for Your Kids

College is expensive, and the average college student ends up with tens of thousands of student loans. For someone who’s just entering the workforce, that’s a lot of debt. You can make your kids’ graduation a happier time, if you save a portion of your tax refund for them.

Treat Yourself

While it’s important to pay off debt or start a savings account, you should maybe enjoy some of the finer things in life your money can buy. Treat yourself to something special you’ve always wanted with your tax refund. Be it a new fragrance or handbag, buy something that’ll put a smile on your face.

Your tax refund could change your financial picture. It’s crucial that you spend it wisely.

Before You File Yourself, Here’s Some Tips

By Randall Orser | Personal Income Tax

It’s tax time, and that dreaded chore of filing your taxes is weighing on your mind. Do you do it again this year yourself? Filing your taxes is more than just about your T4 or RRSP, there are other deductions you should think about, and some depending on the Province you live in. And, do you file online (preferable) or via paper (takes weeks to get processed and to get your refund)?

Online or Paper Filing

In 2017, 22 million or 90% of income tax filers used online filing and will probably grow to closer to 100% within a couple of years. Even returns for deceased people can now be filed online. Online filing is fast and secure, and generally your return is processed within 8 business days, and you’re refund sent within that time. For faster refunds, use direct deposit.

There usually is no requirement to paper file your taxes anymore, except maybe for someone who’s deceased or a non-resident. If you choose to file via paper, then you need to realize it can take up to 6 weeks to process your return and get your refund cheque.

It makes absolutely no sense to file via paper anymore.

Slips and Receipts

You need to gather up all your T-slips (T3, T4, T4A, T5, etc.), RRSPs, donations, medical expenses, etc. 

Here are some other things to consider:

  • Do you have kids? 
  • Did they go to post-secondary school?
  • Do you have the T2202A?
  • You can only claim the tuition
  • For BC, did they do arts or sports?
  • Do you have the official receipts from the organization?
  • Did you go to school?
  • If you did, then you need a T2202A from the post-secondary institution
  • Did you sell your home?
  • Gather all your documents for your original purchase and the sale of the home.
  • Do you have foreign income?
  • This could be investments you have outside Canada that aren’t on a T-slip.
  • Do you get a pension from a foreign government? US? UK?
  • Do you have investments outside retirement accounts?
  • Did you get a T5008 show shares you disposed of during the year?
  • You need to find out the cost of those shares; talk to your financial planner.
  • Are you or a child disable?
  • Did you file for the Disability Tax Credit (T2201A)?
  • You must have a T2201A on file with CRA in order to claim the disability tax credit.
  • your Social Insurance Number, as well as your spouse’s and children’s.
  • your birthdate, as well as your spouse’s and children’s. 
  • If you’re carrying forward from last year, ensure your address and email are correct.

You may want to:

  • Sign up for direct deposit to receive your refund faster and any benefit or credit payments owed to you, deposited directly into your bank account. Go to www.cra.gc.ca/directdeposit to learn how to sign up for direct deposit.
  • Make sure the Canada Revenue Agency (CRA) has your updated address and direct deposit information before you file. The fastest way to update both is by using My Account. To register for My Account, go to www.cra.gc.ca/myaccount. You can also use this service later to view your tax slip information, look up your RRSP deduction limit, and check the status of your refund or your Canada child tax benefit or GST/HST credit payments.
  • To file online, you need to complete your return using certified software or a certified web application. This may even help you identify benefits and credits that you may have missed if you filed on paper! The CRA has a list of software options-some that you have to buy and some that you can use for free-at www.netfile.gc.ca/software.

Paying Your 2017 Taxes Owing

By Randall Orser | Personal Income Tax

Tax time is once again upon us, and the chore of preparing and paying your taxes is nigh. Remember that the due date for paying your taxes is April 30th. If you don’t file by then, you will get a penalty of 5% plus 1% per month (up to 12 months) you don’t file. Sadly, many people don’t pay because they think they are going to owe, and that’s a big mistake. You’re much better to file your taxes and then work out a payment plan with Canada Revenue Agency (CRA). When filing your return, you may have a balance owing on line 485. Generally, if this amount is $2 or less for 2017, you do not have to make a payment.

Ways to Pay Your Taxes

You can pay in various ways to CRA: 

  • You can wait for your notice of assessment and then pay at your bank. 
  • You can pay using online banking (your SIN is your account number). Note many banks date the payment for the next day if it’s after 3 pm EST).
    • You can also post-date your payment to April 30th or any other date before that.
  • You can us My Account and pay that way and date the payment for anytime before April 30th.
  • You can pay at a Canada Post outlet, though payment make take a couple of days to be processed.
  • If you’re using a tax preparer, they can setup auto withdrawal and you pick the date (before April 30th) for the payment to come out.

What If I Can’t Pay in Full

If you cannot pay the full amount you owe now, take action by contacting the Canada Revenue Agency (CRA) right away. Ignoring your debt does not make it go away. In fact, waiting may make any financial or legal consequences more serious. The CRA may also charge interest compounded daily at the prescribed rate on any amount owing until your balance is paid in full. The CRA will work with you to resolve your tax debt or other government programs debt, though they could change their minds and demand payment in full at any time. 

A payment arrangement is an agreement you make with the CRA. It allows you to make smaller payments over time until you have paid your entire debt including applicable interest. Before you make a payment arrangement, you may need to show that you have tried to pay your debt in full by borrowing money or reducing your expenses. To figure out your ability to pay, we may ask you to provide proof of your income, expenses, assets, and liabilities. You may have to do this by telephone or by completing a financial questionnaire. The Payment Arrangement Calculator lets you calculate payment options and it includes the prescribed Canada Revenue Agency interest rates. The Income and Expense Worksheet will help you to calculate your available net income to pay your debt.

Financial hardship provisions

If your debt repayment makes it difficult for you to pay for housing, food, utilities and other necessities of life, you may qualify for help under the financial hardship provisions.

It is your responsibility to contact the CRA if repaying your debt is causing you financial hardship. The CRA will take your situation into account when reviewing your request.

For more information and to see if you qualify, call 1-866-864-5823

Insolvency or bankruptcy

If you feel you are insolvent or are considering bankruptcy, visit the Office of the Superintendent of Bankruptcy for more information.

Taxpayer relief provisions for individuals

In some circumstances, you may be able to ask for relief from penalties and interest charges and reduce the overall amount you or your business owes. For more information, and to see if your situation qualifies, see Taxpayer relief provisions.


In the end, you need to file your taxes and ensure you pay in full by April 30th. If you find yourself unable to make a full payment, file your taxes and then contact CRA to make a payment arrangement. 

Your First Tax Return

By Randall Orser | Personal Income Tax

Filing a tax return for many people can be overwhelming, however it can feel especially difficult when you’re young filing your first return. You must file a tax return if you’ve earned income during the year, or are entitled to any credits, such as the GST/HST credit, or may be getting a refund. The following tips will help make your transition into adulthood much less stressful.

Collect Your Tax Documents

Any company you worked for during the year should send you a T4 stating the income you earned, and the income tax, CPP and EI deducted. Whether you worked one day or the entire year, if you didn’t get a T4 by mid-March then you need to go back to your employers and find out why. Did you move during the year? If so, you should’ve let all employers know. If you were self-employed, you may or may not get a T4A, so keep track of any self-employed income you made during the year.

Ensure that you have all your financial documents for the year in one folder and keep those safe until you’re ready to prepare your tax return.

Dependent College Students

You tax situation could get a bit harder if you’re a college student, and your parents support you as well. Your parents can claim you as an independent and claim part of your tuition on their taxes, they’re paying for it anyway. You can claim what you need to on your taxes, however, you can transfer (up to $5,000) to them as a deduction on their taxes. Your parents more than likely have the higher income, so it makes sense for them to get the deduction. You need to talk to your parents about your intentions before anyone files their taxes.

File Electronically and use Direct Deposit

Canada Revenue Agency prefers you to file electronically (Efile®) and use direct deposit. Returns that use Efile® get processed much faster than via paper, and direct deposit is way faster than getting a cheque. If you Efile® and use direct deposit you can have your refund within 10 business days as opposed to paper and cheque which can take up to 8 weeks. Depending on the complexity of your tax return, you may have to buy tax software to do this or hire someone to do it; the investment is usually worth the time savings. The advantage to using software or a tax preparer is that they may uncover deductions you didn’t realize were possible.

There really is no reason to file a paper return anymore, unless you’re required by CRA.

File by April 30th.

You need to file and pay by April 30th for the preceding tax year. If you Efile® ensure you file by midnight on April 30th to avoid a penalty. For paper filing, the postmark must be for April 30th, otherwise, it’s considered late. If April 30th falls on the weekend then the due date becomes the following business date, usually Monday. CRA does not give extensions for filing, other than for self-employed individuals of June 15th; if you owe then it must be paid by April 30th. You should file your return on time even if you can’t pay the balance owing right away. CRA charges a penalty of 5% plus 1% per month up to 12 months that a return is past due.

Filing your taxes is not the most enjoyable process, but don’t rush it as you could make careless mistakes. This could cost you in missed refund opportunities, penalties, or other attention from CRA you don’t want. As this is your first time filing, you may want to have a parent or other older adult look over your return, especially if you’re not using software or a tax preparer.

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