INCOME TAX

Last Updated: March, 2020

One of life’s certainties is income tax. Keep track of all the changes to Canada’s income tax system and ensure that you meet all your obligations.

Canadian residents are subject to personal tax on many sources of income, including capital gains. Canada’s tax filing system is voluntary, which means that you generally only need to file a return if you have taxes payable or have received a request to file.

WHY YOU SHOULD FILE A PERSONAL TAX RETURN

Filing a personal tax return permits you to participate in many social programs based on your income. Many Canadians are entitled to substantial tax credits and deductions which can result in tax refunds. Furthermore, to apply for mortgages or loans, or even contribute to an RRSP, your returns should be up to date.

FAILURE TO FILE

If you have taxes payable and fail to file your return on time, you will be subject to a late filing penalty. The penalty is equal to five percent of the tax owing. The Canada Revenue Agency will also charge arrears interest on late payments.

ADDITIONAL REPORTING

If you sell your home, you must report this on your personal tax return. Failure to do so could result in significant penalties.

If you have foreign holdings with a cost of more than $100,000, you have additional reporting requirements. Failure to report details of these holdings can also result in significant penalties.

DUE DATES

Tax returns for most Canadians are due on April 30th. For self-employed individuals, the filing deadline is June 15th. In rare circumstances, the Canada Revenue Agency extends the standard deadline. As a result of the COVID-19 outbreak, the 2019 filing deadline was extended to June 1st, 2020. The CRA also provides interest relief on occasion. For 2019 taxes, any outstanding balances would not be subject to interest if paid on or before August 31st.

THE BOTTOM LINE

We will cover many personal income tax topics that may be helpful for you. When in doubt, consult a tax professional to assist you.

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