Benjamin Franklin famously said, “Nothing is certain except death and taxes. ”Whether you're pursuing your degree, working your first job, or about to retire, tax filing is a part of life here in Canada, no matter what stage of life you're in. Whether it is your first time filing - or you need a refresher - this tax-filing process can seem a bit confusing. However, it also teaches you valuable lessons in financial planning that you can use in the future. Our tax experts have put together these top tips for first-time Canadian tax filers to address this uncertainty.
1. Get Organised
Provide all the information you have available, including your T4 statements from your employer, as well as any other income statements and tax slips you may have received. You should also have receipts, charitable donation slips, and any other documentation that you think is necessary to help you report your income. Whether you use QuickBooks, which does this for you if you are preparing your business records, it's a good idea to organize them all by category to make it easier to enter information. If your return is selected for review, the Canada Revenue Agency (CRA) recommends that you keep your tax records and documentation for six years after filing. If you find it difficult, you could always contact a tax expert in Toronto who can help you prepare and file your taxes. Signing up for CRA My Account is a great way to access many slips and tax history details that you may need for filing your tax return.
2. Create a CRA My Account
You can see your RRSP and TFSA contribution limits, track your refund, check your benefit and credit payments, view or change your return, and even set up direct deposits for payments with Canada Revenue Agency My Account. The most accurate and up-to-date information is automatically populated on your tax return with just a few clicks so that you can file your return much faster. Also, if you forget to include a tax slip with your tax return, the CRA will charge you a penalty and interest, regardless of the amount of the missing slip. Note, however, that not all slips will be available simultaneously, and some will not be available until the end of March. Please wait until you receive those if you were expecting them and have not yet received them.
3. File Your Return Accurately
Make sure your information is accurate before submitting your return. The CRA will reject your tax filing if any of your personal information is not valid, such as your name, date of birth, or social security number. Be sure everything appears exactly as it does on your Social Security card before you submit it. This is where most people contact an accounting and tax consulting firm in Toronto for their personal tax filing as well as corporate tax filing. The first tax return that new Canadians file will be on paper, followed by a NETFILE filing in the future. Penalties and interest are another reason to be as accurate as possible. You are fined either $100 or 50% of the amount of understated tax or overstated credit on your return if you omit or misstate information on your return. Tax returns should never be lied on, or you could be faced with much more severe penalties and fines.
As a first-time personal tax filer in Toronto, you might find the entire process daunting. You have to ensure that all your receipts are in order. You have to create a CRA My Account and you have to make sure that whatever taxes you file, are accurate and there’s no misstatement. Talk to a professional accounting firm in Toronto for all your tax filing and preparation purposes and life will become so much easier for you.