Tax planning is an ongoing, continuous process. No matter how much foresight you had in January this year, chances are you are still open to a few year-end tax tips for 2021. Things change throughout the year, and this year has certainly been no exception. So, here are some year-end tax tips for December 2021, so doing your Canadian taxes in 2022 gives you the best possible return, and you pay the lowest possible taxes.
Here’s how to file your taxes in Canada in 5 simple steps.1. Determine if you need to file taxesBefore you file a tax return, determine if you are required to. You may need to file a tax return if you are a Canadian resident and earn income or if you want to claim government benefits, such as the Canada Child Benefit (CCB). You may also need to file taxes if you have amounts owing in the Home Buyers’ plan or Lifelong Learning Plan, or are self-employed and pay employment insurance (EI) premiums. If you are unsure whether you need to file an income tax and benefit return, you can call the Canada Revenue Agency to determine if you should file a return.2. Gather your tax documentsWhen filing your taxes, Canada Revenue Agency may request for supporting documents. Even if you are not required to submit your tax documents, it is important to keep your tax documents for a period of six years following the tax year as the CRA may ask for them sometime in the future. Tax Tip: You can easily store your receipts electronically on CloudReceipts, and access them anywhere on the go. Snap a picture, tap the category and throw away your receipt. Depending on the type of income you earn in the year, you may need tax slips that contain your income information. For employed individuals, you will need a T4 slip which is a statement of remuneration, such as salaries, vacation pay, benefits, and bonuses that your employer paid you. If you made certain investments and received investment gains and income such as dividends, interest income, or capital gains, you will need a T5, statement of investment income form to report your income.For self-employed individuals, keep all your documents that support your business income, expenses, tax credits, and tax deduction claims.3. Choose if you want to file your taxes yourself or use a representativeYou can authorize a representative such as an accountant to file your taxes on your behalf. Some people have complex tax situations and may need a tax expert to guide them or file their taxes. If this is you, I recommend booking a call here with one of our tax experts here to walk through your return and maximize your deductions. Alternatively, you can file your taxes yourself with our simple easy-to-use tax filing application here.4. File your taxes online or by mailIf you want to file your taxes yourself, you can do this online or by filling out paper forms. The Canada Revenue Agency allows you to file taxes electronically using NETFILE and EFILE certified tax software.NETFILE tax software provides an easy way to file your taxes with minimal errors. Approved software developers may offer free tax filing software or paid options. Regardless of whether you have a simplified or complex tax situation, most NETFILE filing options help you file your taxes easily.When you file your taxes online, you can receive your tax refund as early as two weeks from your filing date. The CRA will pay your tax refund to your bank account. Sometimes, you may not be able to file your taxes electronically. For example, if you stop being a Canadian resident, use a tax discounter, or if the CRA requires you to file your taxes through automated phone assistance, you can not use online tax software to file your taxes. To use a registered tax filing preparer, you need to provide your tax slips and supporting documents, and they can help you file your taxes online using EFILE tax software. Tax service providers will charge you a fee for their services. At CloudTax, we provide affordable options to get your taxes filed by a tax professional (click here to learn more). You can also use community tax clinics to file your tax. However, most tax volunteer organizations require you to have a simple tax situation or meet certain criteria to use their services. When filing your taxes by paper form, you need to fill the required tax forms, such as the T1, income tax and benefit return form, and mail it to the CRA.5. Review your tax assessment after filing your taxesWhen you file your taxes, the Canada Revenue Agency will send you a Notice of Assessment (NOA). Your Notice of Assessment will contain information about your Registered Retirement Savings Plan (RRSP) deduction and room, your tax assessment, the Home Buyers’ Plan, and the Lifelong Learning Plan, if applicable.If you disagree with your tax assessment, you can file a complaint within 90 days from when you receive your notice of assessment.
Important Things To Note When Filing Your Taxes
When filing your taxes, you should take note of the following important items.
- Minimize your taxes by claiming eligible tax credits and deductions
The CRA provides ways to reduce your taxes through tax credits and deductions. For example, if you relocated for work or school purposes and you are eligible, you can claim some moving expenses. Also, some child care, family and caregiver expenses qualify for tax credits and deductions. Also, if you contributed to your Registered Retirement Savings Plan (RRSP) in the tax year, you can claim the RRSP deduction and reduce your taxes.
- Be aware of tax filing deadlines
Generally, every year, the tax filing deadline is April 30. If this date falls on a weekend or holiday, the deadline is the following Monday or business day. In 2023, April 30 falls on a Sunday, so the tax deadline is May 1st which is a Monday.If you or your spouse or common-law partner runs a self-employed business, you have a different tax due date, which is June 15. If this date also falls on a weekend or public holiday, the deadline will be the next business day.Filing your taxes late can attract tax penalties and fees, which you want to avoid.
- The fastest and easiest way to file your taxes is online.
Use certified online software, such as CloudTax, to submit your T1, income tax and benefit return. You also get to receive your refund deposited into your bank account in 2 weeks.
- Keep receipts and supporting documents
Do not discard your tax documents until at least six years after you file your taxes. Even if the CRA does not request for tax receipts when you file your taxes, you may need to submit them later.If you cannot support your tax return with supporting documents, the CRA may ask you to pay back tax refund amounts.Looking for an easy app to store, organize and manage your receipts? Check out CloudReceipts.
- Pay tax owing amounts when due
After the Canada Revenue Agency assesses your tax return, you will receive a notice of tax assessment which tells you if you will get a tax refund or owe the CRA. If you owe tax amounts, make plans to pay CRA before the due date, which is usually April 30.Don’t fret if you can not make a lump sum tax payment to the Canada Revenue Agency, you can make arrangements to pay over a period of time. Alternatively, call CRA to discuss your inability to pay your taxes and assess your options.
FAQs on Filing Taxes In Canada
Can I file my taxes myselfYes, you can file your taxes yourself in Canada. You can do this online or by mailing your tax return to the Canada Revenue Agency. If you have questions about your taxes, you can contact the CRA directly for clarification. If you have a complicated tax situation, you can use a tax expert and representative to file your taxes.When is the deadline to file my taxes in 2023?The 2022 tax deadline is May 1st, 2023. This is because the usual April 30 tax return deadline falls on a Sunday. If you or your spouse or common-law partner are self-employed, your tax return deadline is June 15.How soon will I get my tax refund?If you file your taxes electronically using NETFILE software, you can get your tax refund two weeks from when you submit your T1, income tax and benefit return. Filing your taxes via paper form is more lengthy and will take a longer time to process. If you file your taxes by paper form, you should expect to receive your tax refund in about 8 weeks from your filing date.Key TakeawaysSubmitting your taxes online is the easiest way to file your tax and receive your tax refund early. When using NETFILE tax software, you need to provide your income and expenses information, and any possible tax credit or deduction claims. Start planning early, and gather your tax documents and slips to avoid late tax filing fees. Remember to keep your tax documents even if the CRA does not request for them, you may need to provide them later. Without supporting documents, you may be asked to repay a refund. Your tax notice of assessment will provide details about CRA’s decision to issue you a tax refund or request for tax payment. If you file your taxes online, you can receive your tax refund in your bank account as early as two weeks from the filing date.CloudTax provides step-by-step guidance, and unlimited chat support, and is compatible with Android mobile&iOS mobile/iPad. Get a head start on your taxes and create an account here.
