Annually, many of us have to sit down and ponder over our prior year’s income tax filing. It could have very frustrating, upsetting, sleepless moments, but it doesn’t need to be. Tax rules are both simple and complex depending on one’s situation.
Yearly, the Canada Customs and Revenue Agency (CCRA), commonly called Revenue Canada, is adding more and more rules to the already huge volume of tax regulations. With proper planning, understanding and paperwork, your tax filing could be an easier task than you think it’s supposed to be. The aim is to maximize tax benefits and minimize tax liability.
Who should file? This is an annual question, but easily understood. Anybody expecting to receive a tax credit such as Child Tax Benefit, Property Tax Credit, GST Credit and others need to file with CCRA to receive these benefits. Anybody receiving any kind of income must report it.
Most tax filing do not result in taxes owed, as there are many factors that can result in a net return to the tax filer.
Each year at this time many of us start searching through drawers, envelopes or even the bottom of bags stuck in the corner of the closet that must have the ONE receipt that will solve our tax dilemma. Where did I put that letter/receipt/cancelled cheque? Is it clinging to the fridge under the “art” or, heaven forbid, in the deep recesses of someone’s purse of most would prefer to the more unpopular chores before starting the “find the paper” scavenger hunt. Is it any wonder bathroom floors and closets are their cleanest during this time of year?
To prevent this type of scramble, I often recommend an accordion file folder. These can be arranged by month or category and can help to organize receipts as they come in during the year. When cashiers give you a receipt don't put it in the bag but keep it to be placed in the folder when you get home. In circumstances where there is an automatic withdrawal, a record should be printed then added to the folder.
Now is the time our clients can begin planning to get to get their taxes done. You can begin figuring out if you need to purchase RRSPs. If you have a business or employment expenses, you can gather and tally your receipts to lower your income.
We have designed a free Microsoft Excel macro that can help manage these numbers.
Call us if you have any questions about this new tax season and what you can do to lower your tax bill. It may be too late for this year, but you can always get started on saving for next year.