Who Has To File Income Taxes
Who has to file income taxes?
- You have to pay tax for 2018.
- You received a request to file a return.
- You and your spouse or common-law partner elected to split pension income for 2018.
- You sold property or realized a taxable capital tax gain.
- You have not repaid any of your Old Age Security (OAS) or Employment Insurance (EI) benefits.
- You have not repaid all of the amounts you withdrew from your Registered Savings Plan (RRSP).
- You have to contribute to the Canada Pension Olan (CPP).
- You received Working Income Tax Benefit (WITB) advance payments in 2018, and you want to apply for WITB advance payments for 2019.
You still may want to file if any of the following apply.
- You want to receive a refund.
- You want to apply for the Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit.
- You or your spouse or common-law partner wants to begin or continue receiving Canada Child Tax Benefit.
- You have incurred a non-capital loss and you want to be able to apply in other years.
- You want to carry forward or transfer the unused part of your tuition, education or textbook amounts.
- You want to report income for that you could contribute to your Registered Retirement Savings Plan (RRSP) so that you can keep your RRSP deduction limit for future years.
- You want to carry forward the unused investment tax credit.
- You are applying for the Ontario Energy and Property Tax Credit.
Filing Income Taxes
You may file your tax return with the Canada Revenue Agency (CRA) by Internet, by phone, or by mail.
By Internet options: NETFILE or EFILE. The NETFILE option is for a taxpayer who wants to prepare his/her own tax return and send it electronically directly to the CRA. The EFILE option is for a taxpayer who has his/her tax return prepared by a registered electronic filing service provider…such as Liberty Tax Service…who then sends the completed tax return to the CRA electronically on behalf of the taxpayer. Both options require that the tax return be prepared using one of the commercial tax preparation software packages or Web applications certified by the CRA to meet system requirements.
By phone: After preparing your tax return, use a touch-tone phone to file your tax return with the CRA by calling
1-800-959-1110 from mid-February through September 30 of each year. Have your Social Insurance Number (SIN) and personalized access code available in order to file your tax return with the CRA by phone.
By mail: Mail your completed paper tax return to the CRA tax center serving your region using the envelope included in your tax package.
Canada Income Tax Filing Deadlines & Dates
Canada Child Tax Benefit payments:
Working Income Tax Benefit payments:
- April 5, 2019
- July 5, 2019
- October 4, 2019
- January 3, 2020
- April 30 (most filers)
- June 15 (self-employed filers and their spouses or common-law partners)
- July 02 (TFSA return)
GST/HST credit payments:
- April 5, 2019
- July 5, 2019
- October 5, 2019
- January 5, 2020
Installment payments due:
- March 15
- June 17
- September 16
- December 16
- December 31 (farmers and fishers pay once on December 31)
RRSP contribution deadline:
- February 28
Filing Late Tax Returns & Penalties for Late Tax Returns
If you have a balance owing for 2018, you are charged compound daily interest starting May 1, 2019, on any unpaid amounts owing for 2018. This includes any balance owing if your return i reassessed. In addition, you will be charged interest on the penalties starting the day after your return is due. The rate of interest you are charged can change every three months. If you have amounts owing from previous years, they will continue to charge compound daily interest on those amounts. Payments you make are first applied to amounts owing from previous years.
If you owe tax for 2018 and do not file your return for 2018 on time, you will be charged a late-filing penalty. The penalty is 5% of your 2017 balance owing, plus 1% of your balance owing for each full month that your return is late, to a maximum of 12 months.
If you were charged a late-filing penalty on your return for 2015, 2016, or 2017 your late-filing penalty for 2018 may be 10% of your 2017 balance owing, plus 2% of your 2016 balance owing for each full month that your return is late, to a maximum of 20 months.
Failure to File Income Tax & Penalty for Not Filing Taxes
If you owe tax for 2018 and do not file your return for 2018 on or before April 30, 2019, then the CRA may impose penalties and interest. They will charge you a late-filing penalty. The penalty is 5% of your 2019 balance owing, plus 1% of your balance owing for each full month that your return is late, to a maximum of 12 months. Your late-filing penalty may be higher if you were charged a late filing penalty in any of three previous years. Liberty Tax Canada strongly suggests that, even if you can not pay the entire amount on April 30, that you still file to avoid the late filing penalty.
Our Tax Specialists are prepared to help you. Please contact your Toronto Tax Accountant for more information.
Income Tax Evasion
Income Tax Evasion involves the taxpayer deliberately ignoring a part of the Canadian income tax laws. The vast majority who commit tax evasion are under-reporting their income or claim expenses that are non-deductible or overstated. Tax Evasion in Canada carries criminal consequence and the taxpayer will face prosecution in criminal court.
Tax Reviews & Tax Audits
Your Liberty Tax Service consultant will do everything possible…with your help…to minimize the chance that you will be subject to a tax return review by the CRA.
Types of Reviews:
- Pre-assessment Review Program: The CRA reviews deductions and credits claimed by the taxpayer before issuing a Notice of Assessment or a refund as the case may be. The peak period for Pre-assessment Reviews is February to July.
- Processing Review Program: The CRA reviews deductions and credits claimed by the taxpayer after issuing a Notice of Assessment or a refund as the case may be. The peak period for Processing Reviews is June to November.
- Matching Program: The CRA compares information on a taxpayer’s tax return to the information provided by third-party sources such as employers and various financial institutions. Items of particular interest to the CRA include verification of employment income; investment income; Canada Child Tax Benefit (CCTB); the Goods and Services Tax/Harmonized Sales Tax (GST/HST) credit; Guaranteed Income Supplement (GIS); Registered Retirement Savings Plan (RRSP) deduction limit; spousal-related claims including child-care expenses, provincial tax credits, and provincial tax reductions. The peak period for Matching Program reviews is September to March.
Common reasons that trigger tax return reviews by the CRA:
- Failure to respond to a request by the CRA for information within the time specified.
- Failure to notify the CRA of mailing address changes; a high percentage of taxpayers involved are students.
- Failure to provide all required information slips and/or information slips referred to on the taxpayer’s tax return.
- Failure to make a complete and accurate disclosure of retiring allowances (separation pay) received or transferred to a Registered Retirement Savings Plan (RRSP).
- Failure to follow the rules that govern Registered Retirement Savings Plan (RRSP) deductions…to provide official receipts for amounts contributed (for paper tax returns) and a completed and filed Schedule 7 “Registered Retirement Savings Plan (RRSP) Unused Contributions, Transfers, and Home Buyer’s Plan (HBP) or Lifelong Learning Plan (LLP) Activities” for amounts contributed.
- Inappropriate claim for Annual Union, Professional, or Like Dues.
- Inappropriate claim for Moving Expenses.
- Inappropriate claim for Support Payments made.
- Inappropriate claim for Northern Residents Deductions.
- Inappropriate claim for eligible dependent amount.
- Inappropriate claim for infirm dependent 18 years of age or older amount.
- Inappropriate claim for caregiver amount.
- Inappropriate claim for interest paid on a student loan.
- Inappropriate claim for tuition fees.
- Inappropriate claim for Education and Textbook amounts.
- Inappropriate claim for transferring of Tuition, Education, and Textbook amounts.
- Inappropriate claim for Medical Expenses.
- Inappropriate claim for Public Transit amount.
- Inappropriate claim for Federal Foreign Tax Credit amount.
- Inappropriate claim for Ontario Credit-Occupancy Cost amount.
Income Tax Refunds
When to expect your tax refund:
Four to six weeks for a paper return – CRA does even begin to process returns until mid-February. So do not call before mid-March, even if you filed your return in January.
If you filed your return on or before April 30th, please wait fours weeks before calling.
If you filed you return after April 30th wait six weeks before calling.
E-file – If you electronically file your return could be processed in as little as eight business days but wait at least three weeks before you call.
To find out about your tax refund:
Visit My Account at www.cra.gc.ca/myaccount
Telerefund 1-800-267-6999 press “1”
Income tax instalments are periodic income tax payments that the individual tax payer has to pay to cover the taxes that they otherwise have to on April 30th of the follow year.
You may have to pay your taxes in instalments if not enough income tax was withheld from your income.
If the CRA has determined that you might have to pay your taxes in instalments, they will send you an Instalment Reminder, the suggest amounts you need to pay and the dates the payments are due.
The instalment threshold for individuals has increased to $3000 or $1800 if you were a resident of Quebec.
Business Tax Filing & Tax Forms
To report your business income and expenses, you can complete either one of the following forms:
http://www.cra-arc.gc.ca/E/pbg/tf/t2125/README.html (Form T2125, Statement of Business and Professional Activities)
- This form used to calculate your income from professional activities using the same rules as for a business. However, some aspects of professional activities are different from those of other types of businesses.
You have to complete a separate form for each business or professional activity you operate. For more information, see IT206, Separate Businesses.
For further topics for reporting your business income and expenses like:
- Completing Form T2125 – Statement of Business & Professional Activities
- Getting Form T2125 – Statement of Business & Professional Activities
- Industry codes – Industry codes list to be used when completing the form T2125
- Capital cost allowance – How to deduct the cost of capital property over the years
- Eligible capital expenditures – Definitions, calculations, election and replacement property
- Important Dates – Due dates for filing your returns and making your payments. Establishing fiscal year-end and calculating instalment payments.
- Other Forms and Publications
Click CRA link: CRA Reporting your business income and expenses
Business Tax Deductions & Business Expenses
You can deduct any reasonable current expense you paid or will have to pay to earn business income. The expenses you can deduct include any GST/HST you incur on these expenses less the amount of any input tax credit claimed. You cannot deduct personal expenses. List of Common Business Expenses Listed below:
- Advertising expenses
- Allowance on eligible capital property
- Bad debts
- Business start-up costs
- Business taxes, fees, licenses, dues, memberships, and subscriptions
- Business-use-of-home expenses
- Capital cost allowance
- Computer and other equipment leasing costs
- Convention expenses
- Current or capital expenses
- Delivery, freight, and express
- Fuel costs
- Leasing costs
- Legal, accounting, and other fees
- Maintenance and repairs
- Management and administration fees
- Meals and entertainment
- Motor vehicle expenses (automobile)
- Office expenses
- Other expenses
- Prepaid expenses
- Property taxes
- Salaries, wages, and benefits
- Telephone and utilities
Income Tax for Non-Residents
As a non-resident of Canada, you still may be required to pay income tax if you receive income from Canadian sources or you are deemed a resident.
You are a non-resident for tax purpose if:
- You normally, or routinely live in another country or you are not considered a Canadian resident
- You do not have residential ties with Canada and you live outside Canada throughout the tax year or you stay in Canada for less than 183 days.
You are a deemed resident for tax purposes if for the entire year if:
- Stayed in Canada for 183 days or more in that tax year.
- You do not have residential ties with Canada
- You are not considered a resident of another country under the terms of a tax treaty.
You are a deemed non-resident for tax purpose if:
- You are a factual or deemed resident of Canada for tax purposes and a resident of another country according to a tax treaty Canada has signed. You are considered a resident there.
Your tax obligation:
The type of tax you may have to pay and the requirements to file an income tax return depend on the income you received. There are two types of income that a non-resident can receive that is subject to taxes.
Part XIII Tax – you do not file a Canadian return, except in two situations…
This type of tax is deducted from the types of income listed below. You want to make sure the correct amount is deducted so it is vital that you inform the Canadian payer if you are a non-resident and the country of your residence.
The most common types of Part XIII tax
- interest and dividends;
- rental and royalty payments;
- pension payments;
- Old Age Security (OAS) pension;
- Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) benefits;
- retiring allowances;
- registered retirement savings plan (RRSP) payments;
- registered retirement income fund (RRIF) payments;
- annuity payments;
- Management fees.
Interest received from Canada savings bonds and Treasury bill is not subject to Part XIII tax.
If you receive income that is subject to Part XIII tax, the Canadian payer must deduct Part XIII tax when the income is paid. Part XIII tax is deducted from your final tax obligation to Canada. Part XIII tax is non refundable, so do not file a Canadian tax return unless you elect to file.
Income is described as all the payments of any type paid to you or on your behalf.
- Canada Child Tax Benefit (CCTB) payments
- Child assistance payments and the supplement for handicapped children paid by the province of Quebec
- Child Support if agreement or court order is after April 30, 1997.
- Gifts: in most cases
- Goods and Services Tax/Harmonized Sales Tax (GST/HST) payments
- Inheritances: in most cases
- Life insurance policy death benefit payments: most amounts received from a life insurance policy following someone’s death
- Lottery winnings
- Social Assistance Payments (SA), but you must still include it on your tax return to ensure that any benefits you may be entitled to are calculated properly
- Workers Compensation Benefits, but you must still include it on your tax return to ensure that any benefits you may be entitled to are calculated properly
- Apprenticeship insensitive
- Bond income
- Business income
- Capital gains
- Child support if agreement or court order is prior to May 1, 1997
- Cleric’s housing allowance
- Commission income from sales, self-employed
- Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) child benefits
- Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) death benefits
- Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) disability benefits
- Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) lump-sum payments
- Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) survivor benefits
- Dividends from taxable Canadian corporations
- Earnings…employment income
- Earnings on life insurance policies
- Employment Insurance (EI) benefits
- Employee profit sharing plans
- Farming income
- Fishing income
- Foreign income: business income
- Foreign income: currency exchange rates
- Foreign income: dividends, interest
- Foreign income: employment income
- Foreign income: pension income
- Foreign income: rental income
- Goods and Services Tax/Harmonized Sales Tax (GST/HST) and Quebec Sales Tax (QST) rebates
- Group term life insurance plan premiums paid
- Guaranteed investment certificates: bank accounts, term deposits, & guaranteed income certificates
- Home Buyers’ Plan (HBP) repayments
- Investment income
- Interest income
- Lifelong Learning Plan (LLP) income
- Net partnership income
- Net federal supplements
- Old Age Security pension income
- Pension splitting income
- Professional income, self-employed
- Registered Education Savings Plan (RESP) income
- Registered Retirement Income Fund (RRIF) income
- Registered Retirement Savings Plan (RRSP) income
- Rental income
- Retiring allowances…severance pay
- Saskatchewan Pension Plan (SPP) payments
- Spousal Support
- Stock options income
- Stocks income
- Supplementary unemployment benefit plans
- Trust income
- Unemployment Insurance (UI) income
- Universal Child Care Benefit (UCCB) income
- Wage-Loss Replacement Plan (WLRP) income
Common Tax Deductions, Tax Rebates & Tax Credits
List of common tax deductions and tax credits to help you prepare to file your Canada income taxes.
Perfect Accounting and Tax Services consultant is prepared to help you maximize the value of these potential deductions and credits.
As a taxpayer, you may qualify for the following deductions and credits:
- Pension adjustment
- Registered Pension Plan (RPP) deduction
- Registered Retirement Savings Plan (RRSP) deduction
- Saskatchewan Pension Plan (SPP) deduction
- Deduction for elected split-pension amount
- Annual union, professional, or like dues
- Universal Child Care Benefit (UCCB) repayment
- Child care expenses
- Disability support deduction
- Business investment loss
- Moving expenses
- Support payments made
- Carrying charges and interest expenses
- Deduction for Provisional Parental Insurance Plan (PPIP) premiums on self-employment income
- Exploration and development expenses
- Other employment expenses
- Clergy residence deduction
- Social benefits repayment
- Canadian Forces personnel and police deduction
- Employee home relocation loan deduction
- Security options deductions
- Limited partnership losses of other years
- Non-capital losses of other years
- Net capital losses of other years
- Capital gains deduction
- Northern resident deduction
- Basic personal amount
- Age amount
- Spouse or common-law partner amount
- Amount for an eligible dependent
- Amount for infirm dependents age 18 and older
- Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) contributions on self-employment and other earnings
- Employment Insurance (EI) premiums
- Adoption expenses
- Pension income amount
- Caregiver amount
- Disability amount
- Disability amount transferred from a dependent
- Interest paid on your student loans
- Tuition, education, and textbook amounts
- Tuition, education, and textbook amounts transferred from a child
- Amounts transferred from your spouse or common-law partner
- Medical expenses for self, spouse or common law partner, and your dependent children born in 1989 or later
- Allowable amount of medical expenses for other dependents
- Donations and gifts
- Public transit passes amount
- Children’s fitness amount
- Amount for children born in 1990 or later
- Provincial Parental Insurance Plan (PPIP) premiums paid
- Provincial Parental Insurance Plan (PPIP) premiums payable on employment income
- Provincial Parental Insurance Plan (PPIP) premiums payable on self-employment income
- Federal foreign tax credit
- Federal political contributions
- Federal political contributions tax credit
- Investment tax credit
- Labour-sponsored funds tax credit
- Additional tax on Registered Education Savings Plan (RESP) accumulated income payments
- Net federal tax including “recapture of investment tax credit” and “federal logging tax credit”
- Canada Pension Plan (CPP) contributions payable on self-employment and other earnings
- Social benefits repayment
- Federal tax on split income
- Federal dividend tax credit
- Overseas employment tax credit
- Minimum tax carryover
- Provincial or territorial tax
- Yukon First Nations tax
- Total income tax deducted
- Tax transfer for residents of Quebec
- Refundable Quebec abatement
- Canada Pension Plan (CPP) overpayment
- Employment Insurance (EI) overpayment
- Refundable medical expense supplement
- Working Income Tax Benefit (WITB)
- Refund of investment tax credit
- Part XII.2 trust tax credit
- Employee and partner Goods and Services Tax/Harmonized Sales Tax (GST/HST) rebate
- Tax paid by instalments
- Provincial or territorial credits
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