News

Check out market updates

A Procrastinator’s Guide to Tax Time – Mar/Apr2016

A Procrastinator’s Guide to Tax Time - Mar/Apr2016

Tax season is here and the deadline to file your return is fast approaching. This year your individual 2015 tax return is due by April 30, at midnight. If you owe money to the Canada Revenue Agency (CRA) you must file by that date to avoid any penalties. Even if you don’t owe, it’s a good idea to file on time so there’s no delay receiving any government benefits like the guaranteed income supplement, old age security and the GST/HST credit. If you’ve been putting it off, here are some tips to get you started.

If you owe money

Get it done. The CRA starts charging you interest on that money the day after the deadline expires. The CRA website states, “If you have a balance owing for 2015, we charge compound daily interest starting May 1, 2016, on any unpaid amounts owing for 2015.” Right now the penalty on overdue taxes is 5 percent of the balance owing, plus 1 percent of your balance owing for each full month your return is late, to a maximum of 12 months.

File no matter what

In 2015, every worker in Canada paid no tax on the first $11,327 earned. This is referred to as a basic personal amount. But if you earned more you have to pay some income tax. The CRA says, “Even if you cannot pay your full balance owing on or before April 30, 2016, you can avoid the latefiling penalty by filing your return on time.” So even if you have to pay interest, you can avoid the heftier late-penalty charge by just getting your paperwork in to the CRA. This applies for anyone with zero income as well; file your return in order to take advantage of all government tax credits due to you.

Tax incentives

There were a number of tax incentives, or what some call “tax breaks,” that were available for the 2015 tax year. If you have children under the age of 18, you can take advantage of income splitting, where the higher-earning spouse can transfer up to $50,000 in income to the lower earner, resulting in a maximum credit of $2,000. Pensionsplitting is still available to seniors as well.

Also, Ontarians can take advantage of the Healthy Homes Renovation Tax Credit where you could get back up to $1,500 if you renovated your home to make it more accessible in 2015.

Medical expenses

If you have specific medical needs and part of your ongoing care is not covered by your government health insurance, you may be able to claim it as a medical expense on your 2015 return. The Canada Revenue Agency (CRA) has a list of expenses that are eligible: everything from therapy to vitamins to air purifiers. If it’s medically required, you may be able to claim the expense. Refer to the CRA website for the complete list and talk to your tax professional.

Don’t stress over receipts

It is now free and (in my opinion) much easier to file your tax return online. This means there is no need to attach receipts to your return. But that doesn’t mean you can discard them. For up to six years, the CRA can ask for receipts, supporting documents, income tax records and tax forms, to prove the information you put on your return is correct. Make sure you keep the original copy of any receipt or document you are using to reduce your total income tax paid.

Lots of help available

Don’t panic: there is still plenty of time to get your tax return filed on time. The CRA is a great resource to answer any of your questions. In addition, at this time of year, most banks and tax preparation firms are holding extended hours in order to deal with the tax filing procrastinators.

As finance editor for HOMES Publishing Group, Rubina Ahmed-Haq also shares her expertise in our sister publication Condo Life. In addition, she is a regular contributor on CBC Radio, blogger at RateSupermarket.ca and has her own website alwayssavemoney.ca