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The Top Five Canadian Tax Return Questions Answered
When should you file your Canadian tax return? How do you get missing tax forms from the Canada Revenue Agency? These are just a couple of the common questions that arise at tax time. This article gives you the answers you need to eliminate tax-time stress and worry.
Where do I file?
If you choose to paper-file your return, the address where you send your tax return depends on where you live. The Canada Revenue Agency (CRA) sends you mailing labels in your tax package each year, but if you’ve misplaced them you can visit the CRA Web site to obtain the address of the tax office where you should send your return. You can also call 1-800-959-8281 to request this information.
When is my return due?
Your income tax return is due on April 30 each year, or June 15 if you or your spouse ran a business in the year, although if you owe tax your payment is due on or before April 30). If you owe taxes, make sure your return is transmitted or postmarked before midnight on the due date to avoid late-filing penalties and interest.
What happens if I file late?
If you file your return late and you owe taxes, you’ll automatically be charged a penalty of 5 percent of your balance owing. On top of that, you’ll face a penalty of 1 percent of the balance owing for each month your return remains outstanding, to a maximum of 12 months. And don’t forget the interest: the CRA charges interest, compounded daily, on outstanding balances and penalties. At the time of writing, the interest rate on overdue taxes was 5 percent, but this could change quarterly.
Can I change my return if I find a mistake?
Yes, you can file a T1 Adjustment using form T1-ADJ, “T1 Adjustment Request,” to amend your return for any mistakes you may find after the fact. You can also request changes online under the “My Account” option on the CRA Web site.
Where can I get missing forms?
The majority of the CRA forms are available for download from the CRA Web site. To order forms by phone, call 1-800-959-2221. If you’re missing the package and guide sent to you by the CRA, you can pick up a copy at your local post office.
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Where to Find Help with Your Canadian Tax Return
Questions about deciphering the Canada Revenue Agency’s forms? Wondering when you will get your income tax refund or your GST credit? Here is the contact information you need, including toll-free phone numbers and the Web site address, to get the answers you want.
Have an income tax question? Call 1-800-959-8281.
Wondering where your refund is? Call 1-800-959-1956.
Waiting for your GST credit? Call 1-800-959-1953.
Waiting for your Canada Child Tax Benefit or Universal Child Care Benefit? Call 1-800-387-1193.
Save in tax-efficient accounts.
When you have extra cash to invest, make sure you invest it in a way that allows you to pay the least amount of tax possible. When you are working, that means contributing to your RRSP every year since you get a tax deduction for the contribution made. In addition, all investment income earned is free from tax. You don’t pay tax until withdrawals are made. And everyone in Canada over the age of 18 should set up a TFSA to their maximum ability. Why? You pay no tax on investment earnings and all withdrawals are tax free. Why pay tax on investment earnings if you don’t have to?
Income split for family tax savings.
There are many ways to share your tax burden with others in your family. For seniors receiving pension or Registered Retirement Income Fund (RRIF) payments, pension income splitting between spouses means you can now cut your tax bill and potentially reduce the impact of the Old Age Security (OAS) clawback! You can also share your Canada Pension Plan (CPP) benefits for more tax savings. For those with investment assets, and family members taxed at lower rates there are many strategies such as a prescribed rate loan that can help share the tax burden. The key is to know when income splitting is legally possible.
File your tax return on time.
While filing your return on time won’t technically reduce your tax liability, it will help you avoid costly penalties and interest. If you don’t file on time, and you owe money, penalties are charged. In addition, if you don’t ante up on your tax bill, the interest payments can be huge. You might be better off taking out a bank loan to pay the tax if you can secure a lower rate than the CRA will charge you. File and pay by April 30 to avoid these costs.
Take advantage of tax-free perks at work.
Employees often think there is nothing they can do to reduce their tax burden; however, there may be many perks offered at work that you can take advantage of and not pay any additional tax. Some items to ask for include RRSP or pension contributions paid by your employer, employment related moving costs, personal counselling, up to $10,000 of death benefits, education costs, in-house fitness facilities, in house daycare services and merchandise discounts, among others.
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Top Tax Reduction Tips for Canadians
Just about every Canadian wants to pay less in taxes. This article spells out the best ways to reduce what you owe the Canada Revenue Agency (CRA), from Registered Retirement Savings Plan (RRSP) and Tax Free Savings Account (TFSA) contributions to pension income splitting. Follow these four tips and you will lower your taxes!
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Source:http://www.dummies.com/how-to/content/78-tax-tips-for-canadians-for-dummies-cheat-sheet.html
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