Are You Ready for Tax Time?

Fidelity outlines 5 simple steps to follow to file your taxes as well as some tax credits you should keep in mind when filing this year!

MARCH 2023

Tax time can be anxiety-inducing for some, but if you’re well-prepared it doesn’t have to be. While the majority of us might not relish the annual corralling of T-slips and receipts, filling out a return and filing it with the Canada Revenue Agency (CRA), putting off the deed too close to the deadline isn’t recommended. Here’s how to be better prepared and breeze through this tax season.

The early birds know that the CRA has been accepting returns for the 2022 tax year since February 20, 2023. What’s important to remember are the deadlines:

• May 1 is the last date for most employed Canadians to file their taxes. (Normally, it’s April 30, but since that date falls on a Sunday this year, we get an extra day.) Miss this deadline and you may be subject to financial penalties of 5% for your balance owing, plus an additional 1% for each full month you’re late after that, to a maximum of 12 months. • June 15 is the tax-filing deadline for self-employed people and their spouses or common-law partners. But even if this describes you, any taxes owing have to be paid by May 1 to avoid interest charges. How do I submit my taxes? Think of it in terms of these five steps:

1. Gather your documents. Near the start of the year, create a digital or physical file folder (you may need both) to collect the tax documents and relevant receipts that come your way. The important files to track include your previous year’s completed return and Notice of Assessment from the CRA, T4 slips from your employers, any T5s from other sources of income (governments, your bank, etc.), RRSP contribution receipts, charity receipts and other proof of income or expenses that could affect your tax balance.

2. Choose how you’re going to file. Many Canadians use low-cost tax-preparation software that fills out a return for you based on your responses to a series of questions and files it electronically with the CRA. You can find lists of such services on the CRA website. Alternatively, you can complete your tax return yourself and then file it directly using the CRA’s NETFILE service. If you’re uncomfortable filling out your taxes online, you can also download or pick up a paper copy of a blank T1 return at any Canada Post office, fill it in by hand and mail it to the CRA. Regardless of your method, you should set up a myCRA account online to keep track of your taxes and make payments if necessary.

3. Take advantage of tax deductions and credits. If your employer deducted income tax from your paycheque last year, you may be entitled to a tax refund after taking advantage of the many deductions that serve to lower your taxable income. That includes RRSP contributions, certain childcare costs and moving expenses (if you got a job in a different city). There are also numerous credits that may be subtracted from your income tax, such as for charitable donations, medical expenses, work-from-home costs, a first-time home purchase or interest on student loans. There are also tax credits payable directly to you in regular instalments, such as the GST/HST Credit, Canada Workers Benefit and Canada Child Benefit. These won’t be included in your tax refund, but you have to claim them on your return.

4. Consider hiring a professional. If your tax situation is complex – you own a business or investment property, for example – or you need more advice than tax software provides, you may want to hire a full-service tax accountant or bookkeeper. This person can often identify tax benefits or find ways to lower your tax bill in ways you wouldn’t figure out on your own. There is a cost for this personalized service, but if you are self-employed or earn any rental income, those fees are also tax-deductible.

5. File on time. Leaving things to the last minute puts you at risk of a late filing penalty. You don’t want to be searching for documentation or encounter some other holdup that forces you to submit after the deadline. The CRA has a preauthorized debit system you can set up through your myCRA account to arrange automatic payments in advance.

You can take a lot of stress out of filing season by breaking the tax task down into these steps., leaving yourself plenty of time and getting into the habit of starting your preparation early every year. You’ll not only have peace of mind knowing that a little organization helped you file on time, but also be in a better position to get the refund you’re entitled to receive. Good luck!

Little-known tax deductions that can boost your refund If you want to minimize your tax bill – and potentially grow your refund – it’s important to take advantage of all the deductions available to you. Here are a few of the lesser-known deductions to keep in mind when you’re preparing your taxes this year:

Staycation credit: To encourage Ontario families to get out and explore closer to home, the province introduced a temporary tax credit. Ontario residents can claim 20% of their eligible 2022 accommodation expenses, including hotels, cottages, campgrounds and more, up to $1,000 as an individual and $2,000 as a family. First-time homebuyer tax credit: Buying your first home can be challenging. To make it easier, qualified buyers can claim a tax credit of up to $10,000 on the purchase of a qualifying home in Canada. Work-from-home expenses: Still enjoying working from home? If your employer still allows you to work from your abode, you can claim up to $500 in employment expenses. Moving expenses: If you move more than 40 km for work, you can claim your travel costs, utility hook-ups and fees for replacing or updating your driver’s licence with your new address. Digital news subscription tax credit: If you have a digital or print subscription to a qualified Canadian news organization, you may be able to claim up to $500 of your subscription expenses. Home accessibility tax credit: Renovating your home to make it more accessible to seniors or someone with a disability? Qualifying individuals can claim up to $20,000 in expenses in 2022. Caregiver credit: If you support your spouse or common-law partner or have a dependent with a physical or mental impairment, you may be able to claim the caregiver credit. The size of the credit depends on several factors, including your relationship with the individual, your circumstances and the person’s income. Medical expenses: While many employers and private medical insurance plans ease the burden of prescription costs, dental visits and other medical fees, any expenses that aren’t covered can earn you a credit on your taxes. These expenses include tutoring for children with disabilities, dentures, prescription contact lenses or glasses, travel for medical treatment that is more than 40 km away, and more.

The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This article was written, designed and produced by [Name of the advisor], who is a Financial Advisor for Cannell Wealth Management, a trade name of Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Contents copyright by the publishers. The information contained herein may not apply to all types of investors.