Tips for Filing Tax Returns in Canada

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Just when you thought you were off the hook it is time to send in your Tax Returns to the Federal Government. Yes you have paid taxes on everything from a light bulb to a USB drive all year so why more?

Someone has to pay for the 1.7 million Canadian bureaucrats, their health care, their days off and their pensions. Can you remember the last time you called the Canadian government and talked to someone in Canada’s two official languages French and English? You will have a better chance by calling from 7 a.m. ET to 3 p.m Pacific Time. I am not suggesting you call ET although you would have more fun trying. ET is Eastern Time plus 30 minutes in Newfoundland.

Electronic Filing via Internet

It is the fastest method to get it over with quickly. Faster when you have an online account with Canada Revenue Agency (CRA). Someone told me a few days ago there are more than 3 billion people using the Internet. Yet 20% of the highly Canadian techno savvy population know how to set up an account with CRA. Your account gives you a way to get all of your T slips or reassess an Income Tax Return. Plus look over information regarding CPP, OAS and other benefits. Factually speaking they are not benefits since the money comes from your contributions to various plans such as an RRSP. Hyperlinks above will take you to the CRA website where you can set up your account.

Deadline to Remember

Canada Revenue Agency set April 30, 2017 as deadline for filing your 2016 tax return. Your employer has until the end of February to hand over T slips. If you worked more than one job then call the employer(s) for the T-4 slip(s). There are several billion dollars of unclaimed amounts being held by CRA due to people not filing an Income Tax Return. Last year I completed a return for a 30-year-old who had not filed in 6 years. He was delightfully silly when the money owed to him arrived. If you had deductions and most do have them file your Return. It is your money.

Ways to File and Income Tax Return

Electronic filing with CRA approved software is the best method ever. Here is a list of the software approved to date. Some are free for low-income earners below $30,000.00 for a single person and $45,000.00 for a couple. My non-sponsored recommendation for those who have a simple return is UFile 2016. It should be called Income Tax for Dummies because it is so easy to use. (Place name here … Address here…)

Many other software programs are listed and some require more computer skill. Often times you can also get a discount via the CRA website from the software developer.

Paper Filing

Paper tax returns can be found around the Post Office or Federal government locations such as Service Canada and CRA of course. You require pencils, pencil sharper, paper and lots of patience. The paper manual included with the kit will give your brain a good workout. Last time I had to use paper returns was for a lovely lady who failed to do any tax returns during the previous ten years.

Community Volunteer Income Tax Program

It was initially started in Quebec and Ontario to find out if there was a need for a volunteer program. They were swamped and CVTIP became a national way for Canadians on low incomes to have their taxes prepared and filed with CRA. The low-income markers are slightly different from one volunteer group to another. The CRA guideline is $35,000.00 per individual and $45,000.00 per couple. CVITP does not include those with T-5 financial resources over the amounts stated nor self-employed persons.

The volunteers across Canada assisted people on low incomes by preparing and filed close to 750,000 Income Tax Returns in 2016. We expect a sharp increase this year. Look over this link to find a volunteer group in your town or city. Bring your T slips and make an appointment where it is applicable. Every person involved goes through a clearance process with CRA and police clearance. A copy of the return is printed for you and none of the volunteers or local groups keep your returns on file. If you require a special need or assistance with language ask before you arrive.

A Few Additional Notes

Anyone collecting a pension, a disability allowance or additional funding need to file an income tax return. If you do not file a return your pension or any funding will be cut off in July. This includes GST rebates from July 2017 onward until the return if filed.

Seniors will only receive the CPP amount when the return is not filed by the April deadline. Let us pretend you are receiving $1600.00 a month pension plus the other allowances. Those allowances are the part of the pension you will not receive after July. Your July pension will be reduced to $400.00 +/- a month. I do volunteer after doing taxes for a few decades and it is heart breaking to see an 80-year-old in tears. For those reading this please do whatever is possible to ensure the elders in your family get their returns done on time. Provincial benefits as low as they are will also stop.

The current Federal government has introduced some of what they call poverty reduction into tax system. As I see it through the tax returns it is more than likely going to toss a few 100 thousand people out of their homes. This poverty reduction tax plan has a gaping hole in it someone forgot to research.

Most housing subsidy programs in Canada ask for the amount on Line 150 or Line 236 of your income tax form when applying. Line 150 is your total income and includes any current subsidies and Line 236 is the adjusted amount. These two lines are usually the same amount of dollars. The Federal government is going to increase the amounts on Line 150 and thus Line 236. It will put low-income earners in a higher artificial income bracket and disallow them Local or Provincial Housing assistance.

They claim there will be a decrease in poverty. It will be followed up by a massive increase in homelessness. It is more akin to a double negative balance found in most oligarchies.

Fraudulent Emails and Phone Calls

Best to put a hyperlink to the last scams being used in Canada. A few minutes of your time will make you aware of scams via phone, text messages, email, online and telemarketing.

 

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The Canada Pension Promise

I would hope by now you are happy with the Liberal plan, in Budget 2016, to eliminate poverty with an increase to the Canada Pension Plan. (CPP)

In a nutshell the CPP is made up of several plans all in one or nothing at all:

  • Canada Pension Plan for those who contributed
  • Old Age Security
  • Guaranteed Income Supplement
  • Provincial Benefit Plans

Your Investments reduce all of the above as punishment for thinking ahead. You get to pay taxes on the interest and pay taxes a second time when your withdraw money. On top of those insults your CPP+ benefits decrease. Company Pension Plans can reduce or eliminate all of the above.

If you worked for the government at any level, you need not worry, since those wealthy pensions are funded by the taxpayer.

The word poverty is used 13 times in the 271 page edition of Budget 2016. Three times when mentioning seniors in Canada. The same people who worked and find themselves facing a convoluted pension plan after 60 plus years.

Anyone who worked had best prepare yourself for the usual $7.00 per month pension increase in July. Examples of a large increase, used in Budget 2016, will only apply to people who never worked.

Yet another meaningless promise to the millions of seniors in poverty from the Liberal government under Justin Trudeau

Canada signed onto the Millennium Poverty Goals at the United Nations. Sadly reports in Canada base the poverty line on the Low Income Cutoff or LIM. Statistics Canada has made it very clear LIM is not a measure of poverty in Canada. The second false premise about poverty is the use of Line 150 on the Income Tax Return. Total income on Line 150 includes  non-taxable supplements.

Poverty and low-income should be using Total Taxable Income on Line 260.

We needn’t concern politicians with low-income and poverty despite their promises made to Canadians and the United Nations. Their only concern is ensuring a wealthy pension for themselves with funds on an island in the Caribbean.

Income Tax Time in Canada Tips

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.

  1. 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.
  2. Set up an online account for yourself and help a friend do so when possible.
  3. The account gives you access to all reported T-slips required including previous years.
  4. CRA (Canada Revenue Agency) has streamlined the website to make it easy to find information. There is a mobile app available.
  5. You can call CRA while online to ask a question about your return.
  6. When you call, remember, the person answering the phone is human. Treat the person the way you want to be treated.
  7. Be accurate with your request for information and be patient.
  8. You can use the online account to make a correction to your TR.
  9. Flush your browser cache after your session.
  10. 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.