Demystifying personal tax

DemystifyingPersonalTaxPRESENTED BY PATTY AUGER, CA, CFP

Patty Auger Consulting


Filing electronicallyPer CRA:

- approximately 80% of Canadians filed their returns electronically for 2013

- filing electronically does not increase your chances of audit

- could receive your refund in as little as 8 days (combined online filing with direct deposit)

Other facts:

- exceptions that may exclude return from being efiled

- requirement to efile by 3rd party preparers

- may receive request for information


Preparing your own return- LOTS of software options available!

- Consider needs of the software before purchasing

- Desktop / Online / Mobile products available

- Free or “almost free” options on CRA website◦ http://www.cra-arc.gc.ca

◦ search “Certified Software for 2015

- Canadian tax guide for personal tax – excellent resource!!


http://www.cra-arc.gc.ca/

Filing deadline…….

April 30th

…..or is it?


Taxes payable due April 30th

…..filing deadlines vary- regardless of filing date, all personal taxes payable are due April 30th (including GST

- most individuals’ returns must be filed by April 30th

- if you or your spouse carried on a business in 2014, both yours and your spouses returns are due by June 15th (including GST returns)

- if you are legal rep of estate of a person who died in 2014, may have to file a return for that person (due date depends on date of death)

- if the due date falls on a Saturday, Sunday or holiday recognized by CRA, must be received by the next business day

- even if you cannot pay the balance right away, file the return on time!


Interest and penalties- late filing penalty (5% of balance plus 1% of balance per month to max 12 months; if charged late penalty in prior 3 years, could be 10% plus 2% per month up to 20 months);

- balance owing- interest begins May 1st on any unpaid amounts at the prescribed rate (currently 5%)

- failure to report income in consecutive years could be 10% of amount failed to report

- interest on refunds starts May 31st (or 31 days after file your return or day after you overpaid your taxes) is paid to you at 3%


Books and records

However you organize, all personal tax records must be kept for 6 years from the date of filing!

CRA also now recognizes books and records retained electronically.

THERE ARE EXCEPTIONS

– information relating to long-term transactions such as investments and capital properties

- until a notice of objection or appeal is completed and time for further appeal has expired


Understanding taxable income


TAXABLE INCOME

equals

INCOME

less

DEDUCTIONS



Income sources

- employment (T4, T4A)

- pension (T4A)

- business (net of expenses)

- investments including rental properties (T3, T5, T5013)

- insurance (EI/WCB) (T4E)

- benefits (CPP/OAS/UCCB) (T4AP, T4AOAS, RC62)

- other (RRSP & RDSP withdrawals /support payments received) (T4RSP/T4A)



Deductions

- reduce income by 100% of amount incurred

- RRSP contributions (limit)

- union or professional dues

- child care expenses (limit; T778)

- moving expenses

- support payments made

- carrying charges and interest expenses

- other (employment expenses, OAS clawback, pension split, capital losses)

Understanding taxes payable


INCOME TAX CALCULATED

less

CREDITS

equals

TAXES PAYABLE


- add 10% to all rates above for Alberta tax


Income taxes calculated using taxable income and



Credits - see Schedule 1 – USE THEM OR LOSE THEM

- reduce taxes payable by 15% of amount calculated except donations

- Children’s fitness amount – increased to $1,000 per child for 2014

- adoption expenses – increased to $15,000 for 2014

- tuition, education and textbook amounts (Schedule 11)◦ $5,000 maximum transfer per child

- medical expenses - > 3% of income before deductions or $2,171

- donations – 15% of first $200, 29% of all others (Schedule 9)



Other Credits

- political donations

- Family Tax Cut (Schedule 1A)

– maximum $2,000 credit, new for 2014

Refund or balance owing?Taxes payable (Schedule 1) are

Increased by:

- CPP and Ei payable on self-employment earnings

Reduced by:

- source withholdings

- instalments

- CPP overpayment

- Working income tax benefit


You’ve filed your return…..what now?CRA may issue a Request for Information

- 30 days to respond

CRA will issue a Notice of Assessment (NOA)

- review for completeness

- includes RRSP contribution room

- can file an objection up 90 days after day of NOA


Oh no….you missed including something…..what now?

File a T1 Adjustment

- must include all source documents

- if adjusting a previous number, will also need to provide support for original amount submitted

- can go back 10 calendar years

Voluntary disclosure


What else is new?Lifetime capital gains exemption increased to $800,000

GST credit – do not have to apply, CRA calculates

Enhanced Universal Child Care Benefit (UCCB) in 2015

- increase in 2015 from $100 to $160 per month per child under 6

- will replace child tax credit and receive benefit of $60 per month for children 6-17

Register for online mail with CRA – will receive email notification that mail for you to view on My Account secure online service


Thank you!

Questions or comments?

Please email me at [email protected]


Date post:	16-Jul-2015
Category:	Economy & Finance
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Demystifying personal tax

Economy & Finance