Tax Tip Thursday
Important Deadlines and Things to Know
Self-Employed Readers, there is a special deal for you here! Read more to find out…
Normally I wait to talk about deadlines and penalties until we get closer to them, but I thought it might be a bit more helpful if people knew about them well ahead of time. This way you have more time plan for them! There is lots of important information in here today, so read carefully!
Important Information
MyCRA Accounts
I talk about this a lot, and it’s very important. You can manage your taxes without this, but it makes it a lot easier. It could impact your ability to get your tax return completed at all or at least including all your income. There have been a lot of problems getting people authorized for many accountants. We are not sure of the reason, but we are sure if you have a MYCRA account, you can authorize us yourself. This is more important than ever this year!
When we prepare your return, we first get authorization to represent you. This is a form you sign with your sin number on it and then we submit it to CRA. This allows us to download all your tax information for the current year. Many times people do not have all their slips (and may not even know it). Us being able to download them gives you a better chance of having all your income reported correctly.
Tax Returns for the Deceased
If you are the executor of an estate or legal representative of a deceased person and they died before November 1, the final return is due also on May 1. If the person died from Nov 1 to Dec 31, then the return is due 6 months after their death.
If the individual was self-employed, the same rules apply, but the return is also due on June 15.
Penalties for Late Filing
These penalties apply to both personal and corporate filings.
If you file your tax return after the due date and have a balance owing, you will be charged a late-filing penalty. Filing late may also cause delays to your benefit and credit payments.
If you cannot pay your balance owing, you should still file on time to avoid being charged the late-filing penalty.
The late-filing penalty begins on May 2 and is 5% of your balance owing, plus an additional 1% for each full month you file after the due date, to a maximum of 12 months for a total of 17%.
If the CRA charged you a late-filing penalty for 2019, 2020, or 2021 and requested a formal demand for a return, your late-filing penalty for 2022 will be 10% of your balance owing. You will be charged an additional 2% for each full month that you file after the due date, to a maximum of 20 months, for a total of 50%!!
Tax Installment Penalties
It is important to know that if you owe more than $3,000 in the 2021 tax year, in 2022 you were required to make installments toward the 2022 taxes, NOT to pay the outstanding balance of your 2021 taxes! They are NOT suggestions, they are a requirement and you will be charged additional interest. If your installment interest charges for 2022 are more than $1,000, then you will also pay penalties on your missed installments!
So please do not give the government any more money than you have to. Please pay your taxes on time.
Requests to Cancel or Waive Penalties or Interest
You can request the CRA to cancel or waive penalties or interest if you are unable to meet your tax obligations due to circumstances beyond your control. The CRA can only grant relief within 10 years from your request date.
Deadlines
February 20 EFILE Opens
This means you can have your return e-filed to the CRA starting Feb 20.
For many, you will not have all your tax documents by that date and the financial institutions (including the government) have no obligation to have them to you by that date. BUT, if you are self-employed without any Tslips (investments, pensions, CCB, etc…), you can file your return on Feb 20. This is the one group of people that can get ahead of the curve without relying on employers, Services Canada, banks investment companies, etc…. and can actually get their taxes all done early, ready to go and filed on Feb 20!!
March 1 RRSP Contribution Deadline
This is one that most people are quite familiar with. This is the LAST day to make an RRSP contribution and have it be eligible for the 2022 tax year.
May 1 Personal Tax Return Deadline
While April 30 is normally the deadline to have your personal taxes filed without penalty, April 30 is on a Sunday this year, so you have until the end of the next business day to file without penalty if you owe taxes.
June 15 Self-Employed Tax Return Deadline
If you or your spouse are self-employed, then your tax return is due on this date. Please keep in mind, if you have any tax owing, it was still due on May 1.
Looking to File ASAP?
I want to really push the self-employed people to get their taxes done early in 2023! EFILE opens on February 20. You could have all your taxes filed and out of the way by then! You are the one group of people who can get ahead of the curve without relying on employers, Service Canada, banks, investment companies, etc., and can actually get everything done early!
So, as an incentive for Self-Employed people, we are offering an early-bird rate. If you get us your completed books before March 1 or sign up for our monthly bookkeeping package, we will offer you $100 off the tax preparation fee!
Looking to take advantage of our early-bird rate? Book your appointment today!
Disclaimer:
This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.