It sounds simple enough: Get your (tax) stuff together. But every year, too many Canadian taxpayers find themselves scrambling at the last minute to find their myriad of slips, receipts and forms they need to file their tax returns on time.
That may be partly because, as your life progresses, what was once a simple task largely dependent on T-slips provided by the government becomes more complicated when you move into home ownership and sales, capital gains on investment, even medical expenses, and the paperwork grows exponentially.
Trying to round this up at the last minute sets you up for a tax return that doesn’t get you back everything you deserve, or worse, one that exposes you to tax liabilities down the road. Get them together early, and you’ll have all the paperwork you need at your disposal.
It all begins, of course, with the T-slips, particularly your T4 (for employment income) and T5 (for investment income). Your employer is required to supply you with a T4 before the end of February to give you plenty of time to get your tax affairs in order.
You can also get on top of your employment income and deductions by creating an online account with the Canada Revenue Agency. You’ll see your T4 information long before your employer puts it in your hands, and you can also view information about many other tax issues like RRSPs, child tax benefits, account balances and much more.
Life gets more complicated as you get older, buy or sell a home, make and dispose of investments, and the like. Because you’ve been accustomed to having the information you need for your return supplied to you in an easy-to-digest form, there’s a belief that your capital gains and losses will be reported to you as well.
That isn’t always true. In some cases, a third party will provide the information, but not always. You’re responsible for keeping track of when and for what price you buy a home or investment instrument, and when and for what price you sell. Keep copies of bills of sale and stock statements and file them where you can put your hands on them.
Many Canadians overlook claiming medical expenses because they haven’t kept track of all the little slips of paper from pharmacists and specialists. You can ask your pharmacy to print out your account for the year, and it’s the same with your dentist.
There are many slips of paper Canadians overlook every year that can reduce their tax payable. You can find a checklist of the most common that are needed by a tax professional to prepare your return at http://www.hrblock.ca/resources/documents/HRB_Tax_Checklist.pdf.
It’s November, and it’s early to be talking New Year’s resolutions, but consider this one: Start putting receipts and tax slips away in a safe, easy-to-access place beginning January 1. That will save the scrambling around come tax time.