When you work somewhere, you don’t have to worry about your tax obligations to the CRA, as your employer will primarily remit all the payroll related tax liabilities to the CRA. All you need to do is to file your personal income tax return every year and fill out all the data of T4 Slips in tax software so that you correctly report your salary income. If your employer withholds and remits your taxes, you will not face any complications for your tax liability at the end of the year. As long as you have one job and your employer manages your payroll taxes, you will have less complications in your tax liabilities. But if you have more than 01 jobs; your employer is not aware of your income from another employer, you will have to arrange different slips and manage your income taxes vigilantly.
If you are self-employed and have registered yourself as a corporate entity, you need to hire a tax accountant who can manage your GST/HST and Corporate Taxes. There are a few important tips that you need to follow to deal with the tax obligations of the CRA. You won’t face a tax debt problem if you keep an eye on the following tips to deal with the tax obligations of the CRA:
Tip 1: File Your Taxes on Time
You need to make sure that you file your taxes on time to avoid any penalties and accrued interest. If you are a salaried person, you need to make sure that you file T1 before the 30th of April each year. If you are running your business as self-employed and you are registered for an HST/GST account, you need to make sure that your HST returns are submitted on time as per the HST reporting period. If you have incorporated a business and you are registered for the Corporate account, you need to make sure that you file a T2 return for your corporation at each tax year-end. You need to be very careful about tax filing deadlines.
Tip 2: File Personal Income Tax
Even if you think that you will not owe any taxes to the CRA, you need to file your return because the CRA takes the information from your return to calculate certain benefits and tax credits. If you don’t file your personal income tax return, you will not be able to get certain benefits and tax credits from the CRA.
Tips 3: Outsource Your Accounting
If you are running a business and you feel that you cannot get on top of your bookkeeping, accounting, and tax matters; you can outsource these tasks to a Chartered Professional Accounting firm that is fully capable of doing tax planning, and manage your HST and corporate tax returns more effectively.
Tips 4: Contribute to RRSP’s
If you have a high income in a particular tax year, you should contribute more to the RRSP account. The money you put into your RRSP reduces your taxable income and also reduces the amount you owe in taxes to the CRA.
Tips 5: Ignoring CRA Doesn’t Work
The CRA might not call you immediately while they catch up with processing your return and reviewing your assessment but when they do, they have extensive and very powerful collection practices. An unpaid tax debt may also impact your credit score. Be proactive and take charge of the situation, ignoring them won’t make them go away. If you have any unpaid tax amounts, you will be charged interest on your overdue taxes. Interest is also charged on any penalties that arise due to a reassessment of your tax return. The interest charged is compounded daily and may change every three months. Outstanding tax payable balances from previous years are also subject to interest charges. You need to make sure that you are putting every effort to avoid interest charges and penalties of the CRA on late filings.
Contact a Chartered Professional Accountant to help you get back on track with your CRA tax obligations.
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.