Welcome to March! As we start to realize the end of the winter season, we need to turn our attention to the next “season”. The one I’m referring to in this case is tax season. In this context, I’m talking about personal taxes of course. Businesses may adopt a December 31 year end but in many cases corporations will adopt something different. Regardless, personal taxes always observe the calendar year. So what does all of this mean?
The biggest consideration for all of us as taxpaying individuals is that we all have to submit our personal tax returns by no later than April 30. This is the deadline that we must abide by. Late returns may be subject to penalties and interest, particularly if there are monies owing.
Businesses that have employees needed to get T4’s out to their staff by end of February. They also needed to submit copies of the T4’s and a T4 summary to Revenue Canada. For the ones that we take care of payroll for, this is what we do and this has been done. At the business level, this is all that needs to be done. At the personal level there’s more.
- First on the agenda is to collect all necessary paperwork. This would include but is not limited to:
- T4’s from all sources
- Charitable donation receipts
- Medical receipts
- Tuition receipts
- Rental income
- Numerous other “T” slips for things like investment income, pension plan income, RIFF income and any others that apply
- Documentation for other income like sole proprietorship or partnership income
- RRSP contributions
- Spousal support payments
- Child care and fitness receipts
Be aware that this is a partial listing and there may be more paperwork to collect based on your personal situation. Considering the complexity of personal tax laws, my recommendation would be to engage the services of an accountant or at least a reputable tax specialist. Not doing so could mean that you are leaving money on the table by not optimizing your return. Revenue Canada is under no obligation to point out missing deductions and credits that could reduce your taxes owing. It’s up to you.
On the flip side, you are only allowed to claim legitimate deductions. You are also obligated to claim income from all sources. Deviating from this is tax evasion. This is illegal. Tax avoidance or claiming all legitimate deductions is a noble pursuit. The trick is to pay what you owe and nothing more.
A good accountant will assist you in determining the paperwork that you need to collect – again, based on your personal situation. It’s also a good idea to have the same accountant work on the taxes for your significant other as they can better manage things like income splitting. Business owners should let the same accountant take care of all the tax filings for business and personal for much of the same reasons.
As a side note, we here at Fiscal Performance do NOT do personal tax returns. We leave this strictly alone while we concentrate on bookkeeping. We would be more than happy to offer a referral if requested.
Meanwhile, business goes on and so do we. Best of luck with your tax time adventures.
Welcome to March.