Getting Excited about Tax Preparation
March 5, 2021 by David Christianson
Readers and friends have teased me over the years about my unbridled enthusiasm about income tax preparation.
I’ll confess that some of that enthusiasm has been pretend, but there is one thing I do love about tax prep that I think might help get you excited as well.
What I like is that tax preparation has an end. So many things in our lives these days are never-ending, like Groundhog Day, over and over again. It’s hard to find a project where you can say, “That’s done!”
On the other hand, when you sign and mail that tax return (yes, I know, you actually push “Send” on your computer or give your accountant the go-ahead to do the same), that tax return is finished. Yes, you must wait for your Notice of Assessment from CRA and they may ask for some more information, but at least your part of the job is now complete.
And our friends at the Canada Revenue Agency have made a lot of improvements this year to make filing easier. Today we will focus on those.
As a reminder, my last column on February 19th give you all the information you need about filing Work from Home expenses. If that’s relevant for you, make that your starting point.
CRA has hired hundreds of additional call centre workers this year to, as they put it, “help Canadians through a tax year like no other”. They have extended hours from 7 AM to 8 PM Eastern time five days a week (except holidays, which is when most of us find time to work on these things) and they now have a callback service so you don’t need to stay on hold for long periods. They will call you back when it’s your turn at the front of the line, like the system the airlines now use.
www.canada.ca is the place to start. Click the Taxes button and you have everything you need.
CRA encourages electronic filing, which some 90% of taxpayers used last year. This speeds your assessment and your refund, if you’re expecting one.
Paper filing is still allowed and anyone who filed by paper last year will have received their tax package in the mail from CRA by now. However, the agency is warning that it may take 10 to 12 weeks for an assessment of a paper return, which will obviously delay any refund.
Some low-income earners with consistent filing patterns have also received letters letting them know they can file by phone.
Your tax life gets much easier if you register for My Account, which some 3 million people did between March and September, according to CRA.
The system works infinitely better than it did when first introduced a few years ago. It also now gives you access to “Auto-fill my return”, “Express NoA” (notice of assessment) and email notifications when your filing status updates or you have mail from CRA.
The auto fill function requires a NETFILE-certified software, but it will then populate your return with your personal information and your T-slips (including Covid benefits), RRSP and pension contribution receipts, tuition and most other items. CRA says it will also check your return for completeness before allowing filing. Pretty slick.
My Account also allows you to view the T-slips that CRA has on your file, to reduce omission mistakes when completing yourself. A quick check this morning of my own My Account showed I had 10 slips issued, with all the information available there online. If any are missing, I can get the information and print it. Also very slick.
With 30 million tax returns filed last year and the expectation of even more this year, computers are finally earning their keep.
Be sure to file by April 30, 2021, especially if you have money owing. This is true even if you can’t pay the amount you owe. There is a penalty for not paying, but a bigger penalty for not filing on time.
Special for 2020 is the ability for some people to delay paying their outstanding balance until April 30, 2022, without interest charged. But you still have to file on time.
If your net income is $75,000 or less AND you received money from one of the special government Covid-19 relief programs, you can defer payment of your outstanding amount for those 12 months.
I can’t wait to hear all of your stories about how much fun you had with your taxes this year. With the river skating rinks and walking paths closed, what else will you do next weekend?
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Dollars and Sense is meant as an introduction to this topic and should not in any way be construed as a replacement for personalized professional advice.
Please consult legal, tax, insurance and investment experts for advice on your unique situation.
David Christianson, BA, CFP, R.F.P., TEP, CIM is a Senior Wealth Advisor & Portfolio Manager with Christianson Wealth Advisors at National Bank Financial Wealth Management, and author of the book Managing the Bull, A No-Nonsense Guide to Personal Finance.
