Organize your shoebox: common tax-time myths and mistakes
Here are some common myths and mistakes— and the corresponding facts that could mean extra money in your pocket or at least prevent you from running afoul of the Canada Revenue Agency's (CRA) rules.
- I don’t have any income so I don’t have to file: You should always file a tax return so you can claim the GST/HST credit, the Canada Child Tax Benefit, and other tax credits and deductions that may result in a refund.
- I’m too young to file: Young people should file a return even if their income is under the basic personal exemption. This will allow them to:
- Get back tax withheld at source
- Add to their RRSP contribution room
- Trigger a GST/HST credit (if turning 19 in the next year)
- Prove they have no income if applying for federal/provincial loans and bursaries
- My spouse can claim the child tax benefit for both of us: Each spouse has to file to get this credit.
- I e-file my return so I don’t have to worry about receipts: Whether you e-file or send in a paper return, you must keep all supporting documentation in case the CRA asks for it, otherwise your claim can be rejected.
- Failure to file by deadline: If you are paying taxes, you will face a late filing penalty of 5% plus 1% for each month your return is late, up to 12 months. You will also lose the option of lowering taxes through income-splitting.
- Incorrect calculations: According to the CRA, tax return math mistakes are very common. You could end up paying more than you owe.
- Failure to file a caregiver’s claim: You can make this claim as a parent taking care of a disabled child or your aging parents.
- Claiming invalid expenses on employment income: You can claim only those expenses actually related to your job, such as automobile or home office expenses. Other expenses – dry cleaning, for example – do not qualify.
- Not reporting a common-law relationship (including same-sex couples): You must file as a common-law couple to receive the same treatment as married couples.
- Not being aware of new credits: For example, the Children’s Arts tax credit and Family Caregiver tax credit have been introduced recently.
Your personal ‘shoebox’ can take many forms. A professional advisor can help you sort it all out to your best financial advantage at tax time and for all the times of your life.
Date reviewed: January 27, 2015
This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), presents general information only and is not a solicitation to buy or sell any investments. Contact a financial advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.