I'm truly sorry. I did not want to do this, but I fear I must.
Since it is April 19, and somewhere between 50 per cent and 80 per cent of the Canadians who prepare their own tax returns will finally get to that task during the next two weekends, it is my sworn obligation as your trusty personal finance scribe to review the rules, and remind you of some ways you can reduce your taxes and make the task of filing as easy as possible.
(That is officially the longest sentence I've ever used in my 19-plus years writing this column.)
(And speaking of history, I happen to come across that headline this morning from my coverage of the 2000 Manitoba budget. The headline read, Manitoba budget reduces tax. Ah, those were the days.)
The income tax filing deadline is midnight, April 30, which is a Tuesday. If you owe income taxes on your filing, then you must file your return with CRA by that deadline and pay the amount owing.
Even being a day late will incur a penalty of five per cent of the outstanding balance owing, plus one per cent of the balance for each full month that the return is late, to a maximum of 12 months.
On top of that, CRA charges compound daily interest at its prescribed rate of five per cent on the penalties, until paid.
If you cannot pay the outstanding balance, you can still avoid that five per cent penalty by filing your form without the payment.
The really bad news is reserved for people who relate in any of the last three taxation years. For that recalcitrant bunch, CRA doubles the penalties, to 10 per cent of the outstanding balance, plus two per cent interest per full month outstanding, to a maximum of 20 months. Ouch.
Let's get to the better news. If you have a legitimate argument that circumstances beyond your control caused you to file late, then obtain CRA form RC 4288 -- Request for Taxpayer Relief, and mail it to your CRA intake centre.
Successful examples of this in the past included the floods of 1997 and 2011, where people had to leave their homes or had their records destroyed.
Let's hope for no repeat of that this year.
If you are expecting a refund, then you can be late without impunity, except for the fact you leave your money with the government.
People who report self-employment income have until June 15 to file the return. However, in a twist that I always love, you still have to pay by April 30 any taxes that will be owing when you prepare your return. Some would argue that, since you have to calculate that amount now anyway, you might as well get the whole foul business behind you.
For a person who passed away in 2012, the filing date is April 30, if the person died prior to Oct. 30, 2012. If the person passed away between Nov. 1 and Dec. 31, 2012, the due date is six months after the date of death.
To prepare your return, I recommend you use tax-preparation software. This saves a tremendous amount of time (especially when you find still another slip, make a mistake or want to look at different filing options). Software also suggests credits and deductions, and catches things you might miss. The calculations are also fairly accurate, which I can't always say about my own.
To get a full list of software that allows you to file CRA electronically -- most of which are available free -- go to the CRA website at www.netfile.GC.ca.
Next week, we'll talk about how to most effectively deal with your refund. Now get out the pencil and calculator and have fun!
Dollars and Sense is meant as an introduction to this topic and should not in any way be construed as a replacement for personalized professional advice.
David Christianson, BA, CFP, R.F.P., TEP, is a financial planner, adviser and vice president with National Bank Financial Wealth Management, and author of the book Managing the Bull, A No-Nonsense Guide to Personal Finance.