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Six things to avoid at tax time

These tips from the Canada Revenue Agency (CRA) could save you time and money! At tax time, avoid the following six things:

1. Not doing your taxes

Even if you have not received income for 2016, you should still file your income tax and benefit return. You may be eligible for a refund, credits and benefits such as the Canada child benefit and the goods and services tax/harmonized sales tax (GST/HST) credit. To get your benefit and credit payments, you have to file a tax return every year so that the CRA can calculate the amount you should receive.

If you have a modest income and a simple tax situation, you may be able to get help doing your taxes at a free tax preparation clinic near you. Find out more at cra.gc.ca/volunteer.

2. Not reporting all your income

Make sure you report all your income. You should have received most of your slips, such as T4 slips, from your employer, payer, or administrator by the end of February. If you have not received, or have lost or misplaced a slip for 2016, ask the issuer of the slip for a copy. If you register with My Account you may have access to electronic copies of your slips. If you are still missing information, use any documents you have and enter estimated amounts.

Sold your principal residence in 2016? Starting with sales in the 2016 tax year, you are required to report basic information (date of acquisition, proceeds of disposition, and address) on your income tax and benefit return when you sell your home to claim the full principal residence exemption.

If you file your return online, you can save time by using Auto-fill my return, available through some certified tax preparation software. This secure service will automatically fill in certain parts of your return with information the CRA has on file. To use Auto-fill my return, you must be fully registered for My Account. For more information, go to cra.gc.ca/auto-fill.

If you already filed your return but did not report income from a slip, you can change your return by using the “Change My Return” feature in My Account or by filling out Form T1-ADJ, T1 Adjustment Request, and sending it to your tax centre.

If you want to correct earlier mistakes and put your tax affairs in order, you can make a voluntary disclosure through the CRA’s Voluntary Disclosures Program. The program gives taxpayers a second chance to correct their taxes.

3. Making a claim you’re not entitled to

Various non-deductible amounts, such as funeral expenses, wedding expenses, loans to family members, a loss on the sale of a home designated as a principle residence, and other similar amounts, are sometimes claimed in error.

If the CRA determines that a taxpayer has made a mistake or made a claim to which they are not entitled, their return is adjusted. See the reasons for the most frequent adjustments at cra.gc.ca/commonadjustments.

4. Missing out on tax credits, benefits, and deductions

The Government of Canada has credits, benefits, and deductions that may apply to your tax situation. Before filing your return, go to cra.gc.ca/getready to learn about the new and existing tax measures that could help you save money. Some certified tax software programs offer suggestions on credits, benefits, and deductions you can apply for, based on the information you enter.

5. Filing late

If you have a balance owing and do not file your return on time, the CRA will charge you a late-filing penalty. The penalty is 5% of your balance owing on the due date of your return, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months. Even if you cannot pay your balance owing by the filing deadline, you can avoid the late-filing penalty by filing on time.

If you cannot pay the amount you owe by the due date, it is best to contact the CRA before then. The CRA will work with you to resolve your tax debt or other government programs debt. You may qualify for a payment arrangement or taxpayer relief.

6. Not keeping receipts and records

Keep your receipts and documents for at least six years after you file your return. If the CRA chooses to review your return, you will need to send your receipts to the CRA to support your claims.

 

For more tax questions or additional information, contact any member of our tax team.

This information was made available at: http://www.cra-arc.gc.ca/nwsrm/txtps/2017/tt170209-eng.html

Buying or selling a home? What you should know

If you bought your home in 2016 or plan to buy a home, the Canada Revenue Agency (CRA) has information that may help you.

Principal Residence Exemption

Sold your principal residence in 2016? File a tax return and claim the principal residence exemption for capital gains.

Starting with sales in the 2016 tax year, you are required to report basic information (date of acquisition, proceeds of disposition (e.g. sale) and address) on your income tax and benefit return when you sell your home to claim the full principal residence exemption. You do not have to pay tax on any capital gain when you sell your home if it was your principal residence for all the years you owned it and did not use any part of it to earn income. A property may qualify as your principal residence for any year that you or certain family members lived in it, if none of you designated another property as a principal residence for that year.

Home buyers’ amount

If you are a first-time home buyer, you may be able to claim $5,000 for the purchase of a qualifying home in 2016.

You qualify for the home buyers’ amount if you did not live in another home owned by you or your spouse or common-law partner that year or in any of the four preceding years.

A qualifying home must be located in Canada and registered in your name and/or your spouse’s or common-law partner’s name according to the applicable land registration system. It includes existing homes, such as single-family houses, semi-detached houses, townhouses, mobile homes, condominium units, apartments in duplexes, triplexes, fourplexes, or apartment buildings, as well as homes under construction.

You do not have to be a first-time home buyer if:

  • you are eligible for the disability tax credit; or
  • you acquired the home for the benefit of a related person who is eligible for the disability tax credit.

Home Buyers’ Plan

You may also be eligible to participate in the Home Buyers’ Plan (HBP), a program which allows you to withdraw funds from your registered retirement savings plan to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year, and you have up to 15 years to repay the amounts you withdraw. Your first repayment starts the second year after the year you withdrew the funds from your RRSPs for the HBP.

To qualify for the Home Buyers’ Plan:

  • you must be a first-time home buyer; and
  • you must have a written agreement to buy or build a qualifying home for yourself.

You are considered a first-time home buyer if, in the preceding four-year period, you did not live in a home that you or your current spouse or common-law partner owned.

You must intend to live in the qualifying home as your principal place of residence within one year after buying or building it. For more tax information for homeowners, go to cra.gc.ca/myhome.

Home Buyers’ Plan for persons with disabilities

You do not have to be a first-time home buyer to participate in this plan if you are eligible for the disability tax credit or if you acquired the home for the benefit of a related person who is eligible for the disability tax credit. The purchase must be made to allow the person with the disability to live in a home that is more accessible or better suited to their needs.

 

For more tax questions or additional information, contact any member of our tax team.

This information was made available at: http://www.cra-arc.gc.ca/nwsrm/txtps/2017/tfsk13-eng.html

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