“In this world, nothing can be said to be certain, except death and taxes.” Benjamin Franklin’s words perhaps betray a blasé attitude towards a fledgeling nations’ newly minted constitution but it’s a pragmatic attitude that still resonates with us today.
As predictable as the seasons, in recent years even more so, tax season is upon us. The April 30th deadline is closer than you think so we have some reminders for you.
Consider your Contributions
Your 2018 tax returns cover all income, investments, and costs from January 1st to December 31st, 2018. One notable exception is your RRSP or Registered Retirement Savings Plan contribution. The deadline for RRSP contributions is March 1st, 2019.
You are eligible to place 18% of your earned income to a maximum of $26,030 for 2018. These contributions qualify for a deduction on your taxes so it can be a valuable tool when filing your taxes. You can place certain qualified Investments in an RRSP including cash, GICs, mutual funds, equities, and more.
If you are a sole proprietor or freelancer you may want to review the CRA’s guidelines on business income and deductions. There are plenty of opportunities for deductions around business expenses such as supplies and marketing and in some cases, you may even qualify to deduct some maintenance or mortgage interest of your home.
If you want to avoid issues with the CRA, however, we would advise being reasonable with your deductions and keeping good records of your expenses. Deducting 100% of your personal expenses, for instance, is sure to get you flagged by the CRA and without a solid body of receipts and records, they may disavow large portions of your return leaving you with a steep tax bill.
Keep your records
When your taxes are successfully filed you can expect a response from the CRA in between four to six weeks. Don’t assume you are done just because you receive a receipt or even a refund. Auditors can review records and issue Notice of Reassessment with a balance owing. up to three years after your filing. And that balance owing will have interest charges dating back to the year the taxes were due initially, which can add up quickly.
Tools for Filing
Taxes may be a little more complicated since Benjamin Franklin filed but they are also easier to file than ever. Many individuals are filing online through the CRAs free online service NETFILE.
If your taxes are more complicated you may want to consider hiring a tax professional or investing in software. There are a number of programs designed to optimize your refund such as TurboTax, TaxTron, or Ufile.
Don’t Leave it Until the Last minute
April 30th is not just the deadline for filing your taxes it is also the deadline for paying them. If you find yourself in the unfortunate position of owing the government money, any sum owed will begin to accrue interest after April 30th.
In 2017 the CRA began accepting returns on February 26th, which likely be similar this year. That provides a two-month window to get your taxes filed. Typically it can take between four to six weeks for returns to be processed and the CRA, so if you want to get your refund sooner it will be worth it to file as soon as possible.