Every Canadian knows the irony of the annual Federal Income Tax Return. Tax time in Canada is every minute of every day. Taxes are on every item purchased and the place you call home. Taxes flow down from the Federal government, the Provincial government and Municipal governments. Through a convoluted system all goods and services, have a gouge and screw tax or the beloved GST, due to corporate boss Brian Mulroney. Many Provinces have joined their Provincial sales tax with the GST to have a harmonized tax. Calling a tax harmonized proves bureaucrats have a pale sense of humor.
What is the Purpose of an Income Tax Return?
“When the white man discovered this country Native Peoples were running it without taxes or debt. The white man thought he could improve our system” Native American Proverb
A temporary tax on income was introduced in 1917 as a measure to pay the war debts from WW I. Canada began following the American capitalist methodology too difficult to understand. A clever system where all the wealth of a nation is handed over to the wealthiest, not necessarily citizens, of the country. Statistics Canada gives you a glimpse of taxation in Canada on an archived page. Of all the information on the Internet you will find Statistics Canada the most informative.
There are several reasons to prepare, as accurately as possible, an Income Tax Return (TR). A not so obvious purpose is a statistical one. Your reported income along with various contributions, charities, political parties and church groups are mainly for a statistical analysis pertaining to Canada.
The question you want to know is, how much did you pay, in taxes on your earnings? An incorrect expression used is “how much do I get back this year?” Look closely at your pay cheque to find the deductions made during the previous year. The most common ones are: Income Tax, Canada Pension (CPP), Employment Insurance (EI), Union Dues, Pension Plan, Medical Plan and RRSP Contributions. There are others depending on your place of employment along with those for self-employed persons. Every dollar you earned is yours in a purely capitalist system found in pseudo democracies.
It is to your advantage, to prepare a TR so the excess funds deducted, are returned to you. I have prepared many 1000s of Tax Returns, for those working for companies, without correct deductions. You will end up owing the Federal government money each spring. The Federal government collects the income taxes for the Provinces.
Another incorrect phrase used all often by the media: “you are giving all your money to the Federal government”. Although I must admit they do keep a rather large piece of it. The Federal government, in Ottawa, returns funds to the Provinces via your TR. In other words the Feds are tax collectors.
Preparing Your Income Tax Return
Here I am neither promoting the way I do tax returns, nor any company, or any of those who develop software. Simple facts to remember and perhaps reminders.
- If you are Internet savvy you should already have an online account with Canada Revenue Agency. It is available in our national languages, French and English.
- Set up an online account for yourself and help a friend do so when possible.
- The account gives you access to all reported T-slips required including previous years.
- CRA (Canada Revenue Agency) has streamlined the website to make it easy to find information. There is a mobile app available.
- You can call CRA while online to ask a question about your return.
- When you call, remember, the person answering the phone is human. Treat the person the way you want to be treated.
- Be accurate with your request for information and be patient.
- You can use the online account to make a correction to your TR.
- Flush your browser cache after your session.
- Stop wasting paper for your returns and assessment. Everything is online and downloadable.
Some Canadian use the paper return, others use software while many use the instant cash back method or an accountant. Instant cash back is offered by companies, for a fee or percentage of excess funds, deducted during the year.
Use good software developed in Canada when you select the one you want to use. Software programs are not equal. You can miss a big tax credit by using sloppy software. CRA includes a selection of approved software on the website. You may save some money by purchasing the software online directly from the company.
Canada Revenue Agency and Low Income Canadians
During the 2014 tax year over 600,000 Canadians used the Community Volunteer Income Tax Program known as CVITP. It is offered everywhere in Canada.
“The Community Volunteer Income Tax Program (CVITP) is a collaboration between community organizations and the Canada Revenue Agency (CRA). Community organizations host tax preparation clinics and arrange for volunteers to prepare income tax and benefit returns for eligible individuals who have a modest income and a simple tax situation.”
Many community organizations have slightly higher income thresholds than recommended by CRA. Low income is described by CRA, as individuals having less than $30,000.00 and couples with less than $40,000.00 income per year. A complete list or community organization tax return clinics is found here. There are no fees or expenses for preparing and e-filing your tax return. All volunteers are trained and cleared by a criminal background check as required by CRA. You will be given a printed tax return after it is accepted by CRA online. The tax return is not kept by any of the groups approved by CRA.
Community groups are being flooded heavier with calls this year. Appointments are required by most but not participants in CVITP.
Final Word of Caution for Seniors
Your benefits will be cut off in July if you do not file a Tax Return on time. The benefits will not show up in your bank account at the end of July. CPP is all you will have to live on until the tax return is completed and received by CRA. Old Age Security, Guaranteed Income, GST rebate, Provincial Benefit and Supplements will disappear. It can take several months to begin receiving them if you are late filing. Most of the CVITP participants close down at the end of April while others have a few volunteers to assist you all year.
For those who read this it would be kind of you to share the information. Your parents or grand-parents could see their income reduced to under $500.00 per month.
Wealthy people write about poverty while never consulting those who live or see it every day.