Last updated: Nov-12-2018

    
 
Delinquent tax returns? 8 reasons to catch up now!
11/13/2018 5:27:49 PM
HOME : FEATURES : COLUMNS : Delinquent tax returns? 8 reasons to catch up now!
Show Printable Version Download Plain Text
 
Financial Education
Tax and investment know-how from a leading Canadian financial education institute.



By Knowledge Bureau  | Thursday, November 01, 2018


 

TAX PLANNING FROM THE KNOWLEDGE BUREAU



By Evelyn Jacks

It pays to file outstanding tax returns before year end, not only to recover refunds that the Canada Revenue Agency (CRA) may still owe you, but also to avoid paying penalties and interest that would be charged for gross negligence or in some cases, tax evasion. But also, when you don’t file on time, you miss out on important tax-planning opportunities that may end for you on Dec. 31. Here are eight important reasons to review your return before year-end.

To the first point, it makes no sense to have the CRA hold on to your tax refund. You will receive no interest payment from the government as it holds on to your money. Leaving this money in their hands means that not only is it being eroded by inflation, but you are also missing out on opportunities to maximize tax-efficient investment opportunities for your retirement. You must file a return to earn unused RRSP contribution room and class capital losses incurred in a non-registered savings account and earn in the marketplace in a registered or non-registered account.

Second, you must file a tax return to avoid penalties and interest if you owe money to the CRA when any of the following circumstances apply to you. Be sure to file a tax return immediately if:

1. You have taxable income and must pay federal or provincial income tax in the current tax year or any of the three preceding tax years. This is the normal statute of limitations for CRA to request additional information for audit purposes. However, if CRA expects fraud, they can go back a full 10 years. A tax services specialist can help you assess if it’s to your benefit to file or adjust returns, if applicable, for the full 10-year period, whether or not fraud applies. These returns or adjustments will be accepted by the CRA.

2. You have disposed of any capital property in the year, including a principal residence, which requires the filing of form T2091 – Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust). Failing to file a return in this situation comes with a separate “failure to file” penalty of up to $8,000.

3. You will be required to repay OAS (Old Age Security) or EI (Employment Insurance) benefits to the government.

4. You are repaying, or are required to repay, HBP (Home Buyer Plan) or LLP (Lifelong Learning Plan) amounts to your RRSP through your tax return.

5. You are required to make contributions to the CPP or are electing not to contribute.

6. You are holding offshore properties with a cost of $100,000 or more and must file form T1135 – Foreign Income Verification (whether or not you file a return).

7. You received an advance on the Working Income Tax Benefit.

There is an eighth reason to file prior missed returns: The 2008 tax year becomes statute-barred after Dec. 31, 2018. Be sure to recover potential tax refunds, create unused RRSP contribution room, and log any losses available for carryovers before then.

© 2018 The Knowledge Bureau, Inc. All rights reserved. Reprinted with permission.

Evelyn Jacks is the founder and President of Knowledge Bureau, which brings continuing financial education in the multiple areas of specialization to advisors and their clients. She is the author of 52 books on tax and wealth planning. This article originally appeared in the Knowledge Bureau Report. Follow Evelyn Jacks on Twitter @EvelynJacks. Visit her blog at www.evelynjacks.com.

Notes and Disclaimer

The foregoing is for general information purposes only and is the opinion of the writer. No guarantee of investment performance is made or implied. It is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting or tax advice.

 
:: STOCK SEARCH
Find a Stock

(Leave blank for all)
Symbol   Name
:: MEMBER SERVICES
Username:
Password:
Forgot your password?
Register now
Tech Support
:: USEFUL LINKS
For general inquiries, please email the Librarian.
 
Home |  Features |  Member Services |  Tools |  Funds |  About Us
For any questions or problems with this site, please contact the Librarian.
Page ID: 20:40:1091:00016796:9/12/2017:3:10:55 PM Duration of this visit: 0 sec.