Talking Tax with BDO Canada's Justin Mastrangelo: Don't miss out on these tax deductible credits
The Canada Revenue Agency (CRA) says its ongoing labour dispute with federal government workers is not expected to delay the May 1 filing deadline.
In a statement, the national tax collector said returns should be processed automatically and refunds will be issued on schedule if they are filed digitally.
That’s good news for those who filed their returns early and bad news for last-minute tax filers hoping for a reprieve.
If the CRA owes you money it could take longer to receive your refund regardless of the labour disruption. If you owe them, the meter starts running. The penalty is five per cent of any balance owing, plus one per cent of the balance owing for each full month the return is late. After a year, the penalties increase.
A recent survey from Turbo Tax Canada found that over 32 per cent of Canadians who file their taxes do it within the last two weeks of tax season and six per cent leave it to the last three days. Here are some key last minute tax tips for procrastinators:
FILE ON TIME
The rules say May 1 is the deadline regardless of who owes who what. The CRA wants to know what you’re up to and it tells them you are aware of the situation.
There are many reasons why you must file a tax return but benefits like the Canada Child Benefit, Guaranteed Income Supplement (GIS) and the GST/HST tax credit, are based on your tax return and you can only qualify if you file a return. Also, you might have a refund coming your way if your earnings were such that you overpaid with your tax withholdings from your pay cheque. This often happens with students, especially with tuition tax credits.
Make sure that you are maximizing all of the allowable deductions and tax credits available to you based on your personal situation. This includes registered retirement savings plan (RRSP) contributions and childcare deductions, or medical and tuition non-refundable tax credits.
Medical expenses, for example, can span any 12-month period as long as it ends in the tax year. Depending ON upon your situation in 2022, or even the current year, you can plan your claim accordingly to maximize your return.
If your kids are attending an eligible education institution, such as college or university, remind them to log into their student account at their school and download their T2202 forms. Even if they are not earning money now, they must file their return to declare tuition expenses. They can either carry forward the unused amounts to another tax year or transfer up to $5,000 to their parents or even grandparents.
Make sure you have your direct deposit information on your CRA My Account so you can get your refunds and any other paid benefits quickly. If you don’t have a CRA My Account, sign up.
If you are self-employed, don’t forget your business use-of-home expenses. The simplified deduction introduced by the CRA during the pandemic is capped at $500 for 2022, but in many cases it could fall way short of the real expense of working from home and it might be worth the extra accounting effort. You can also claim work-related vehicle expenses. Remember to maintain a mileage log to validate the use.
WHAT ABOUT A MISTAKE?
If you file your return and realize you’ve made a mistake, don’t panic. The CRA allows for adjustments on returns, which can be done through your CRA My Account under “Change My Return” or using a refile option on your tax solution if it is available. You can also complete the T1-ADJ request form and mail it in but you need to wait until you get your notice of assessment first.