Winnipeg Free Press - PRINT EDITION
Posted: 02/28/2014 1:00 AM | Comments: 0
As you can tell by the balmy weather, spring is almost here. (Yeah, right).
Nevertheless, the time to prepare your tax return is upon us. Most Canadians use professional tax preparers for their returns, and this is a very good idea, especially if you have any complicated filing issues. However, I strongly encourage you to personally become more knowledgeable about your return, and how each line or filing decision (if you have any) affects your bottom line.
As you know, the deadline for filing is midnight on April 30. If you have self-employment income, you can delay filing until June 15, but you still have to pay any taxes owing by April 30. Interest on unpaid balances is compounded daily at the prescribed rate.
There are also penalties for filing late if you owe money on your return. The penalty for late filing is five per cent of your 2013 balance owing, plus one per cent of your balance for each full month your return is late, to a maximum of 12 months or 12 per cent.
If you are a repeat offender (meaning the Canada Revenue Agency charged you a late filing penalty in any of the previous three years), the penalties double.
Don't miss slips!
The CRA frowns on missed reporting T-slips. Remember all slips and trading summaries are copied to CRA. They know all, and will eventually match them up. The first omission costs you interest; subsequent misses cost you penalties of 10 per cent as well. It can get expensive.
T5 slips are issued by financial institutions and investment dealers to summarize the taxable amounts for a particular account, but usually only if more than $50 of income has been earned on that account. You must still calculate and report smaller amounts. (RRSPs, RRIFs and other registered accounts do not issue income slips, but do issue slips for withdrawals.) T5s have to be mailed to you by the end of February.
To report your capital gains in an investment account, the institution is required to issue a Trading Summary, reporting all dispositions and redemptions. This information is entered on Schedule 3. Don't miss it.
T3s (reporting investment income from trusts) can be mailed as late as March 31, and they are often mailed at the deadline by mutual funds that hold income trusts, which drives tax preparers nuts.
So, once you have claimed all income, let's make sure you also have claimed all credits and deductions you have coming. Here is a partial list of the more common credits and deductions available.
Everyone who is employed is entitled to the Canada Employment Credit, which basically cancels the federal tax on the first $1,117 of employment income. If you own a corporation, consider paying yourself and eligible family members at least $1,117 of salary each.
Deduct costs for investment expenses, like portfolio management fees on non-registered investments, interest on investment loans, accounting fees that apply to investment income and safety deposit box fees, if needed to hold investment certificates.
If you have made RRSP contributions in 2013 or the first 60 days of 2014, or if you have undeducted contributions carried forward, you will almost certainly want to deduct those. The exception would be if you expect your income to be significantly higher in 2014. In that case, carrying the deduction forward and using it in 2014 may be worthwhile.
The Family Caregiver Tax Credit is a 15 per cent federal credit (with corresponding provincial credit) on up to $2,040 of income, for people who provide care to eligible dependent relatives.
Taxpayers with children have a number of credits available, such as the Children's Fitness Tax Credit and the Children's Art Tax Credit, which apply on the first $500 per child spent on eligible programs.
Students can claim a tuition credit, education and textbook amounts. The student must claim these amounts until the student's tax is reduced to zero, then they can transfer unused amounts to a supporting parent, grandparent, spouse or common-law partner.
Less commonly used are things like the Home Buyers' amount, which helps cover the legal and related costs of a "first time" home purchase.
Make sure your tax preparer is aware of all aspects your situation and any of these creditable amounts you have paid.
David Christianson, BA, CFP, R.F.P., TEP, CIM is a financial planner and adviser with Christianson Wealth Advisors, a vice-president with National Bank Financial Wealth Management, and author of the book Managing the Bull, A No-Nonsense Guide to Personal Finance.
Republished from the Winnipeg Free Press print edition February 28, 2014 B8
Have you found an error, or know of something we’ve missed in one of our stories? Please use the form below and let us know.
Having problems with the form?Contact Us Directly
U.K. firm to design this year's pop-up eatery
Regulators close small Illinois bank
Academic brings forceful pro-GMO argument to city
Capital Power post $45M net loss in Q3
Income splitting reduces tax burden
News outlets seek access in football hazing case
Border and water issues top agenda of new U.S. consul to Manitoba
Shipping company pleads guilty in molasses spill
Mixed reviews on Facebook CEO's Mandarin
Most actively traded companies on the TSX
FCC: Phone companies posted private info online
Questions, answers about Takata air bag recalls
Manufacturer halts sales of highway guardrails
Cliffs Natural Resources out of Wabush Mine
Google exec sets records with leap from near-space
Market jolt is reality check for investors
Greeks get 8 years to clear austerity tax bill
US rig count up 9 to 1,927
Hacker gets prison for cyberattack stealing $9.4M
US Chamber on sidelines in close Georgia race
China, 20 other countries initiate new Asian bank
Venezuelans brace for slump in oil prices
Judge halts New Jersey's sports betting plan
France OKs extradition of dissident Kazakh banker
Italian court acquits Dolce&Gabbana in tax case
US halal food supplier indicted over beef exports
S&P upgrades Cyprus on commitment to bailout deal
U.S. fund discloses 5.7 per cent Agrium stake
Initial public offerings scheduled to debut next week
'Growler bars' for draft beer now in Manitoba
More earnings gains send US stocks higher
Space for rent: Postmedia hunts for ads
Grain mixed, livestock mostly higher
US new-home sales close to flat in September
Spain challenges Canary Island poll on oil plans
Evenflo recalls infant seats to fix sticky buckles
Chiquita holders reject plans to merge with Fyffes
Workers at Goldcorp operation ratify contract
UPS expects double-digit surge in Dec shipments