Did you know?
If you’re moving for school this year you may be able to claim a tax deduction for moving expenses when you file your income tax and benefit return. You may also be able to claim a non-refundable tax credit based on the cost of your transit passes. So don’t forget to keep your receipts!
In addition, there are other benefits and non-refundable tax credits that students may be eligible to claim. Non-refundable tax credits reduce your federal tax; however, if the total of these credits is more than your federal tax, you will not get a refund for the difference.
- Education amount: You may be able to claim a full-time education amount of $400, or part-time amount of $120, for each month or part of a month in the year in which you were enrolled in a qualifying program at the post-secondary level.
- Textbook amount: You may be able to claim a textbook amount for each month that you qualify for the education amount.
- Tuition amount: You may be able to claim the fees you pay for the courses taken at the post-secondary level or at an educational institution certified by Human Resources and Skills Development Canada. To qualify you must have paid more than $100 in tuition fees for the year.
- Goods and services tax/ harmonized sales tax (GST/HST) credit: The GST/HST credit is a tax-free quarterly payment that helps individuals and families with low or modest incomes offset all or part of the GST or HST that they pay.
Interest on student loans: You may be eligible to claim an amount for the interest paid in 2012 or the preceding five years on your student loan if you received it under the Canada Student Loans Act, the Canada Student Financial Assistance Act, or a similar provincial or territorial government laws.
Keep your receipts!
It is important for Canadians to keep all their records and receipts after filing their income tax and benefit return in case the Canada Revenue Agency (CRA) asks to see them later. Each year, the CRA looks at income tax returns to review deductions and credits and ensure that various income amounts have been correctly reported. Keep your receipts and supporting documents for six years.
Most registrants claim their input tax credits (ITCs) when they file their GST/HST return for the reporting period in which they made their purchases. However, you may have ITCs that you did not claim when you filed the return for the corresponding reporting period.
If so, you can claim those ITCs on a future GST/HST return as long as it is filed by the due date of the return for the last reporting period that ends within four years after the end of the reporting period in which the ITC could have first been claimed.
You are a quarterly filer and you buy office furniture in the reporting period October 1, 2011, to December 31, 2011, for which you can claim an ITC. The due date of the return for this reporting period is January 31, 2012.
The last reporting period in which you can claim an ITC for the tax you were charged on the office furniture is the reporting period October 1, 2015 to December 31, 2015. The due date for this return is January 31, 2016. This means that you can claim the ITC in any return due and filed by January 31, 2016.
To support your claim for ITCs, the invoices or receipts you use must contain specific information. See the chart in Sales invoices for GST/HST registrants, for more information.
The time limit for claiming ITCs is reduced to two years for:
- listed financial institutions (other than a corporation that is deemed to be a financial institution because it has made an election to have certain supplies deemed to be financial services and that election is in effect); and
- persons with annual taxable supplies of goods and services of more than $6 million for each of the two preceding fiscal years.
However, the two-year limit does not apply to the following persons even if they fall into the second category listed above (these persons have four years to claim their ITCs):
- charities; and
- persons whose supplies of goods and services (other than financial services) during either of the two preceding fiscal years are at least 90% taxable supplies.
Under the two-year limit, you can claim your ITCs on any future return that is filed by the due date of the return for the last reporting period that ends within two years after the end of your fiscal year that includes the reporting period in which the ITC could have first been claimed.
You are a monthly filer with a fiscal year end of December 31. You buy goods in the reporting period September 1 to 30, 2011, for which you can claim an ITC. The fiscal year that includes the September 2011 return ends on December 31, 2011. You can claim the ITC on any later return for a reporting period that ends by December 31, 2013 and is filed by January 31, 2014.
Brampton, Ontario, August 21, 2012 … The Canada Revenue Agency (CRA) announced today that on August 17, 2012, Jim Payne, of Bolton, was fined a total of $12,000 in the Ontario Court of Justice in Brampton. Ontario. He pleaded guilty to five counts of failing to file personal income tax returns and seven counts of failing to file corporate income tax returns. He was given four months to pay the fine. All outstanding returns have been filed.
Mr. Payne failed to file his 2006 to 2010 personal income tax returns. In addition he failed to file the 2006 to 2008 corporate income tax returns for Pashin Holdings Inc., a real estate development company as well as the 2007 to 2010 corporate income tax returns for V2R Group Inc. which performs general contract consulting.
The preceding information was obtained from the court records.
In addition to the fines imposed by the courts, individuals or corporations convicted of failing to file tax returns are still obligated to file the tax returns and pay the full amount of taxes owing, plus interest, as well as any civil penalties that may be assessed by the CRA.
Taxpayers who have not filed returns for previous years, or who have not reported all of their income, can still voluntarily correct their tax affairs. They may not be penalized or prosecuted if they make a valid disclosure before they become aware of any compliance action being initiated by the CRA against them. These taxpayers may only have to pay the taxes owing, plus interest. More information on the Voluntary Disclosures Program (VDP) can be found on the CRA’s website at www.cra.gc.ca/voluntarydisclosures.
Canadians and their tax advisers sometimes disagree with the CRA about the meaning of tax laws. These disagreements are normal and can be resolved.
However, over the past few years certain groups have begun publicizing incorrect and misleading advice about tax laws and the legal obligation to pay taxes.
People who accept such incorrect advice and fail to comply with the law could expose themselves to serious financial and legal problems. For more information, see Debunking tax myths.
The CRA and the Department of Finance Canada
When you’re searching government Web sites for tax-related information, your search will be easier if you’re aware of the different roles played by the CRA and by the Department of Finance Canada.
The CRA administers tax laws, but we don’t make or develop fiscal policies or tax laws.
- As a rule, the CRA Web site is where you’ll find information about what the current tax laws say and how they’re interpreted and applied.
- As a rule, the Department of Finance Canada Web site is where you’ll find information about proposed changes to tax laws, proposed tax cuts or increases, studies about the effects of taxation, and possible future tax policies. You may want to consult that department’s news releases and speeches.
- Details of legislation proposed or enacted during the current session of Parliament are available on the Parliamentary Web site.
Tax legislation is also developed by individual provinces and territories (Provincial and Territorial Governments page, Canada Site).
You may also wish to consult the Government of Canada Newsroom and the Department of Human Resources and Skills Development News Room.
Knowing when the return is due, and more importantly when the tax is payable is important to avoid costly interest and penalties.
Be aware that the due date for filing is different than the day the corporation must pay it’s outstanding tax bill.
Corporate Filing Due Date
The due date to file your corporate income tax return is six (6) months following your corporation’s year end.
For example, if you have a
- December 31st year-end –> Return is due June 30th.
- March 31st year-end –> Return is due September 30th.
When Corporate Taxes Must be Paid
Existing corporations are required to pay tax by installments throughout the year if their income tax bill is more than $3,000. New corporations are exempt from the installment requirements in their first year.
If you have a new corporation, or if you will have a balance owing, knowing your due date will help ensure you avoid costly penalties.
Due Date for CCPC
The due date for a Canadian controlled private corporation, claiming the small business deduction and whose taxable income is less than $500,000, is three months following the corporations’ year-end.
- December 31st year-end –> Balance is payable by March 31st.
- June 30th year-end –> Balance is payable September 30th.
For all other corporations, the due date is two months following their year-end.
The penalty for remitting taxes late is 5% of the unpaid amount and 1% per month on any past due amounts.
A tax bill of $10,000 can result in a penalty of $500 if remitted late.
When To Meet With Your Accountant
It’s important to plan filing your corporate tax return before the end of the corporation’s fiscal year.
If you have a fiscal year-end that does not fall on December 31, you should meet with your accountant around December 31st to ensure that your annual tax slips are prepared and filed on time.
If you’re looking for help filing your corporate tax returns and related tax-slips, please give us a call at 905-858-0775 to get started. We can help you reduce the amount of tax you will pay by taking full advantage of the corporate structure.