“I’m spending a year dead for tax reasons” – Douglas Adams
TSX Reaches All-Time High
The Toronto Stock Exchange’s S&P/TSX Composite Index closed up 68.57 points, or 0.41%, to finish at 16,612.81, passing the previous high of 16,567.40 reached on July 12, 2018. The main index has increased for the fourth straight week.
CRA Tax Deadlines Explained
The CRA filing deadline is April 30th, or June 15th if you have self-employment income. You are only subject to a late-filing penalty if you have a balance owing with CRA. If you know you will receive a refund, you will not be penalized for filing after your deadline.
CRA has two types of penalties: late-filing, and late-payment. Late-filing is by far the most punitive. The penalty is 5% of your 2018 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months.
Example: If you owe $5,000 to CRA and you file one week late, you will be assessed a late-filing penalty of $5,000 x 5% = $250.
The “penalty” for late-payment is simply an accrual of interest of 6% a year.
Example: You owe $5,000 to CRA and you pay your balance one month after the deadline. You will be assessed late-payment interest of $5,000 x (1/12th of 6%) = $25.
Conclusion: If you have a balance owing with CRA, filing a few days after your deadline can be expensive. Paying a few days after the deadline will have more minor consequences.
Be Aware: CRA Scams Abound
As we enter the full swing of tax season, it is important to remember that scammers posing as CRA agents are also getting into full swing. The CRA has put together a helpful list of things they MAY and things they WILL NEVER do, depending on the type of communication (phone contact, email contact, mail contact).
The CRA website page on the subject is here. One thing CRA will never, ever do is threaten you with arrest or prison, or demand immediate payment by e-transfer, bitcoin / other e-coins, prepaid credit cards or retail gift cards (iTunes, Amazon, etc). They will NEVER do this.
As always, if you are contacted by the CRA or by someone you think might be a scammer, feel free to contact us and let us know. If we prepare your taxes, we can contact the CRA on your behalf to determine whether the contact you received is legitimate or not.
The You First office will be closed on Friday, April 19th for Good Friday. It will re-open Monday, April 22nd.
On behalf of the entire You First team, Happy Easter!
Sources: Canada.ca, CI Investments
This information is provided for general information purposes only. It does not constitute professional advice. Please contact a professional about your specific needs before taking any action.