Individual income tax filing deadlines
- April 30 (most individual filers)
June 15 (self-employed individual and their spouse)
Corporate filing deadlines
- Six months following the year end of the corporation
Due date for Taxes Owed
Individual tax payers including self-employed individuals
- April 30*
- 3 months after tax year ends**
* Please note that where an individual has deceased the final returns will need to be filed and any taxes due on the estate are due at differing times. Please contact me to seek professional advice.
** For corporations that are being wound up or sold the dates do not apply. Please contact me to seek professional advice.
- April 30 (most individual filers)
Toronto: (416) 645-6693
With the pressure mounting to gather your paperwork for the past year while keeping your business going, here are a few reminders to help you smooth through the wrinkles.
- Filing deadline for self-employed taxpayers and their spouse is June 15
- Tax payable is due April 30
- Keep mileage logs for business trips with information such as date, distance driven, client name. In addition, do not forget to log starting odometer reading for start of business year each year.
- If you use your home for business it is necessary first determine if you are able to write-off a portion of your home expenses for business purposes. Keep proper records of the relevant home expenses that are available for expenses in the business.
- Keep all business receipts as the CRA is unlikely to accept credit card statements as receipts. You run the risk of a business expense being denied if you do not keep the actual receipt whih shows the details of the expense.
With these few reminders you will be better set to face tax preparation time and have a worry-free tax season.
That is a very good question and one that is frequently asked by entrepreneurs who want to start off their business. Is it better for the business, the bottom line, the owner?
Recent trends in the technology industry have also led many who are looking for work to face this question. Why? Because they are now faced with the prospect of either incorporating or not getting a lucrative position being offered through third party recruitment firms. You may call it the shotgun approach to finding work. What are the implications of being in effect an incorporated “employee”?
So what are the advantages and disadvantages of incorporating? What approaches should you take if you incorporate?
Here is a bit of a misnomer on your tax return. Often it is assumed that when page 1 of the T1 General ask for marital status it is asking whether you the tax payer is married or not. It is in fact asking, not just that question but, what your relationship status was at the end of the tax year – single, married, divorced, widowed or common law.
The answer really matters because certain federal and provincial tax credits and/or benefits are based on how one reports their marital status. Canada child tax benefits, GST/HST credit and other credits are based on marital status and failure to accurately report this may result in very high penalties including the repayment of some benefits that may have been received. Another area that can be impacted is that of property disposal and capital gains.
So how does one classify one’s relationship? The most underreported marital status is that of being “common-law”. The Income Tax Act defines this as being in a conjugal relationship for at least 12 consecutive months. In addition, living arrangements, children and social ties have some bearing on determining whether you are in a common-law relationship. Bear in mind, either party may still be legally married to another individual from whom they are now separated or be divorced. It is the current relationship that matters from a tax perspective.
This is really a case where what you don’t know can harm you! If you are in doubt about how to answer this important question, please seek the advice of a professional accountant.
1. Are employed dependent children required to file with parent or can they file separately?
Yes. They can file separately there is no real benefit to doing so. If the child turns 19, then the month following their ninth birthday they become eligible for the HST credit payment.
2. Are common-law spouses required to file together at all time or can they file separate claims?
No they are not required to file together. However, the net income from each spouse must be reported on the other spouses return. This is especially important where there are dependent children, where certain other provincial and federal credits are being claimed and where pension income is being split. Examples of this would be CCTB, child care expenses and HST. HST can only be claimed by one spouse and CCTB payments and childcare expense credit are based on both parents income. Failure to report the net income of your spouse on your return may result in reassesment and repayment of some benefits received.
3. What credits can a taxpayer claim on their income tax return?
Apart from the basic credits (i.e. basic personal exemption), that will depend on a number of factors such as whether you have dependent children and/or spouse, employed or self-employed, medical expenses, donation,etc. Since each individual or family situation varies, it is best to speak directly to your tax preparer.
4. When should my son or daughter begin to file income tax returns?
It is not too early to start filing on behalf of a dependent child. Typically you may start to file on their behalf when they start to earn income. The advantage of this is that your child will start accumulate RRSP base as soon as possible. In addition, as was previously mentioned, they can start to collect HST credit in Ontario soon after their 19th birthday. Another advantage is that if they have been working at a part-time job and their CPP was overpaid, it provides a means of receiving a refund of the overpayment.
Keep checking back for some filing tips for the 2012 tax year.
As professional accountants, we sometimes have a difficult time explaining a point to clients in a way that is simple and understandable. Granted some topics are not given to a quick explanations, but I started this blog to try to accomplish that. For most of you I can appreciate this means just getting to the point or, more specifically, the bottom line. I will try to provide straight forward answers. Since each individual’s situation is unique, this blog is not meant to be relied on to make your decisions. It will serve merely as a guide. I look forward to being your quick guide in the areas of tax and accounting.
In terms of preparing for the tax season, most taxpayers don’t even give it a second thought. Generally you wait for all the t-slips that you think you are supposed to get, and then file either through an online program or through your tax preparer. For those using a professional accountant they expect everything to be complete. Then comes the summer or fall when the CRA start the matching process. A few unpleasant things happen among which might be a letter from the CRA notifying you about a reassessment due to unreported income – the missing slip! The goal here is to help prevent you from dealing with unnecessary consequences and the headaches associated with it. So here goes the list, albeit a brief one! Don’t you love a list? I will make it simple.
- It is best to wait for all your slips and not be in a rush to file. The last set of slips you will receive here in Canada is usually the ones related to investments, i.e. T3 and T5s. If you withdrew RRSP in the prior year, the bank is required to send you a T4RSP prior to March 31. I you have not received one contact your branch. If you forgot to file any T-slip, be it a T3, T5 or T4RSP, you may be in for a nasty surprise call the omissions penalty. So even if the forgotten investment account only shows $1.50 on the T5, do yourself a big favour and report file it on your personal tax for the year it is dated. Don’t hold on to it because it seems minor. It will cost you down the line.
- ALL your income must be reported even if your business have been in a loss for 5 years or that rental property you own is in Bora Bora. Sadly, there seems to be a misperception that the CRA does not require you to report very low income amounts. Canadian taxpayers are required to report ALL income from ANYWHERE in the world. Beware! Big brother is watching.
- If you decide to file your tax separate from your spouse, be sure to report his or her’ net income on your return. It will save you the aggravation of the reassessment that will be sure to occur. Especially in the case where dependent children are involved is this important as some Ontario benefits are based on family income.
- If you are running a business organize your receipts. It will save you time, fees and yes, further aggravation when your accountant keep sending emails about the missing 50% of your receipt. Don’t forget to keep your vehicle mileage log updated.
- Give yourself time to file. The last minute dash might be fine for those with a simple tax situation, but for those who have more complex situations, it just makes for headaches on your part.
- Keep all your receipts. If you are running a business you need to keep all your receipts for a period of time. The required time for an individual and a business differs so be sure to ask your accountant what the CRA retention policy is.
My grandmother use to tell us “Penny wise, pound foolish.” For those who are unfamiliar with this, it is basically saying get good advice from an experience professional before you make a decision that will cost you greatly later.
So get organized and get professional advice! You need it before, and not, after the fact!