Get Your Tax Season Off To A Smooth Start 0

Posted On March 7, 2024, by Trevor Buttle

Tax season in Canada is upon us once again and being proactive is crucial. It is essential to review your situation and ensure compliance with Canadian tax laws. In this article, we will share key reminders and prompts to help you navigate this tax season efficiently.

Assessing Changes since Last Tax Season:

Life events can have a significant impact on your tax obligations, so as you prepare for this year’s tax season, it is crucial to consider and note any changes that may have occurred since last year. Whether you have moved, experienced changes in marital status, welcomed a new addition to the family, altered the usage of your properties, or are receiving a new source of income, these events can have implications for your taxes.

Physical Move
If you have moved to a new residence within the last year, it is essential to update your address with the Canada Revenue Agency (CRA) to ensure that your tax returns and related correspondences are sent to your new address. Depending on your circumstances, you may be eligible to claim moving expenses on your taxes. For instance, if you relocate for work or to run a business and your new residence is more than 20 km closer than your old residence was, you may be able to deduct eligible moving expenses from your employment income earned from your new job. These expenses can include transportation and storage costs, travel expenses, and fees associated with changing your address.

Marital Status
If you have recently tied the knot, separated, experienced a divorce or become widowed, it is essential to notify the CRA of your change in marital status. This is particularly important if you are entitled to any benefits such as the Canada Child Tax Benefit (CCTB), GST/HST credit, or Working Income Tax Benefit (WITB) payments. Failure to update your marital status with the CRA could result in delays or incorrect benefits being issued, which may result in a balance owing to CRA.

Having a Child
Similarly, if you have had a baby or are expecting one, there are numerous credits and benefits you may be eligible to claim. It is essential to familiarize yourself with these benefits and take advantage of available resources, such as the Automated Benefits Application (ABA), which can streamline the process of applying for child tax benefits.

Property Usage
If you convert a property from personal use to income-generating use (e.g., rental property) or vice versa, this may result in tax implications, or at the very least, tax reporting requirements. The CRA requires you to report the change in use, and there may be tax implications for example, deemed dispositions or recapture of capital cost allowance (CCA).

Health Changes
If you or a family member have declining health you may be able to claim medical expenses as a tax credit. This could include expenses such as prescription medications, dental expenses, medical devices, home care or support workers and certain treatments not covered by insurance. If the declining health meets certain criteria and significantly impacts your ability to perform daily activities, you may be eligible for the Disability Tax Credit (DTC). This credit can provide tax relief to individuals or their supporting persons.

New Source of Income
There are many different types of income from Canadian, as well as, international sources, which are required to be reported on your tax return, including employment income, investment income (such as interest, dividends, and capital gains), rental income, business income, pension income, and more. Each type of income may be taxed differently based on various factors such as your total income level, deductions, credits, and tax treaties. It is crucial to accurately report all sources of income to ensure compliance with Canadian tax laws and to avoid penalties or audits.

By proactively assessing any changes since last tax season, you can ensure that your tax filings are accurate and compliant with Canadian tax laws. Take the time to review your circumstances and seek professional advice if needed to navigate any complex tax situations effectively.

Early Preparation for Tax Filing:

Starting your tax preparations early can help alleviate stress, work efficiently with your tax professional and ensure accuracy in your filings. As the first step of the process, gather all relevant documents, including:

  • Medical receipts.
  • Charitable donation slips.
  • Investment statements.
  • RRSP contributions.
  • Detailed summary of home office expenses with T2200.
  • Employment expenses if claimed/allowed per the T2200.
  • Auto expenses (i.e. mileage log).

By staying organized and collecting necessary paperwork ahead of time, you will be better prepared to complete your taxes promptly and efficiently. It is also essential to review your financial records and ensure they are up-to-date

Common Q&A and Reminders:

Q: I received another tax slip after I filed, now what?

A: You may need to amend your tax return to include new information. You can do this by filing a T1 Adjustment Request with the CRA. Make sure to include the updated information from the next tax slip to ensure accuracy in your filings.

Q: What are the deadlines and how do I avoid penalties?

A: The deadline for filing your taxes in Canada vary depending on your situation. Generally, the deadline for individuals is April 30th, while self-employed individuals have until June 15th to file, or the first business day after the deadline if the deadline falls on a weekend or holiday. However, it is essential to familiarize yourself with the specific deadlines that apply to your circumstances to avoid penalties. To avoid penalties, make sure to keep track of important deadlines or consider seeking professional assistance.

Q: How can I protect myself from scams and fraud during tax reason?

A: Stay informed about how the CRA contacts taxpayers and be cautious of suspicious communication. For example, CRA will always address you by name on telephone calls. If they do not use your name, but ask for your social insurance number, this may be a scam. Visit the CRA’s Scams and Fraud page for tips on recognizing scams.

Q: I am an existing client and I am ready to get started. What should I do first?

A: You can begin by preparing your documents and deciding how you would like to submit them. When you share them with us, please indicate if you have everything submitted or if you are still waiting for any slips or key information.

 

“Before anything else, preparation is the key to success” – Alexander Graham Bell

 

Join us at GBA LLP on LinkedIn for the upcoming segments of this series. Our dedication to guiding the entrepreneurial heart across Canada remains unparalleled. Dive deeper at GBA-LLP.ca.

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This blog is not meant to provide specific advice or opinions regarding the topic(s) discussed above. Should you have a question about your specific situation, please discuss it with your GBA advisor.

GBA LLP is a full-service accounting firm in the Greater Toronto Area, but we primarily service all of Ontario as well as the rest of Canada virtually, except Quebec. Our team of over 30, provides Audits and Reviews of financial statements, and Compilations of financial information, as well as corporate tax returns. We provide specialized corporate tax and succession planning for small and medium businesses, in addition to general advisory services.

If you would like to schedule a call to discuss your accounting or tax needs with one of our team members, please complete the free no obligation meeting request on this page.

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