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Five common mistakes that you could easily avoid when filing your tax return: Advice from a North York accounting firm

Soon enough your income taxes will be due and while you may be tempted to rush through the process and get it over with as quickly as possible, it’s best not to file your return hastily. The errors that you could make or omissions that could take place could result in a delay in receiving your refund or even not being granted certain benefits or credits. It may even result in a penalty.

S & P Accounting Services (a North York accounting firm) discusses five common mistakes that you could easily avoid when filing your tax return.  They are 1. Failing to file your income tax return, 2. Discarding records once your income tax has been filed, 3. Postponing filing your income tax return because of missing slips, 4. Not notifying CRA of any changes to your personal information, and lastly, 5. Failing to keep a record of the eligible medical expenses you could claim.

We discuss them in more detail below.

1.Failing to file your income tax return

Perhaps you didn’t show income in Canada for 2017 or perhaps your income is tax exempt. Even if you fall under one of these two categories, you are still obligated by law to file your tax return. In fact, you will only receive credits and benefits that you are eligible for if you file your return.  Here are some benefits and credits that you may qualify for:

2. Discarding records once income tax return has been filed

Another common mistake that people may make is that once they file their tax return, they discard their records. Records are  “organized accounting and financial documents that summarize your transactions” and include the documents to support these transactions. For instance, records include, purchase receipts, income tax returns, sales invoices, contracts, banks statements, canceled cheques, credit card receipts, work orders and all correspondence that supports your transactions. Here is a full list of documents that fall under the category of records.  

Keeping these documents is not limited to anyone who runs a business or carries out commercial activity. In fact, anyone who files a tax return is obligated by law to keep their records and supporting documents. Generally speaking, these records must be stored in a secure place for a period of six years from the end of the last tax year they relate to. Whether you decide to store your records as a hard copy or electronically, all records must satisfy the following requirements;

  • – be reliable and complete
  • – include the information needed to meet your tax obligations and to calculate your credits
  • – be supported by documents
  • – be kept in English, French, or a combination of these two languages

Keeping your records is vital in case the CRA  (Canada Revenue Agency) asks to inspect, audit or examine them. In the event that you are selected for review, all receipts and supporting documents that the CRA requests have to be provided at that time. If they are not provided within the set timeframe, your claim may be reduced or disallowed.

Here is a list of individuals and organizations that need to keep records.

3. Postponing filing income tax return because of missing slips

A third common, yet avoidable mistake that individuals may make is that they delay filing their tax returns because of missing T4s or other information slips. If you cannot find the missing slip(s) by the due date, use your pay stubs or statements to approximate your income and any deductions and credits that you may qualify to claim. Filing your taxes on time will help you avoid penalties.

For the majority of people, their income tax and benefit returns are due on or before April 30, 2018.  For self-employed individuals, and their spouses or common-law partners, their returns are due no later than June 15, 2018.1 It’s best to mark these days on your calendar and start filing your taxes as soon as possible. Otherwise, if you owe tax for 2017 and file your tax return past the due date, the CRA will charge you a late-filing penalty. You will be subject to pay 5% of your 2017 balance owing. Additionally, you will also be subject to pay 1% of your balance owing for each full month your return is late, to a maximum of 12 months.

Note that if you are a self-employed person, and have a balance owing for 2017, you have to pay it on or before April 30, 2018. For more information on how to make your payment, see Make a payment.

Also, if you do not file your return on time (see exception to the due date of your return), benefits and credits that you might be eligible for such as Canada child benefit payments, old age security benefit, and other provincial tax credits and benefits payments may be delayed or stopped.

You should have received most of your slips and receipts by the end of February. However, T3, and T5013 slips do not have to be sent before the end of March. If you have not received, or have lost or misplaced a slip from 2017, you have to ask your employer, or the issuer of the slip, for a copy.

Yet, most important, even if certain slips are missing, file your return for 2017 on time.

4. Not notifying CRA of any changes to your personal information

A fourth common mistake people may make is not informing the CRA of changes to their personal information such as whether they are married, divorced, widowed, etc. and/or how many children they have. Changes to your personal information such as your marital status, the number of children in your care, your banking information and your address directly impact your benefit and credit payments. If there has been a change in your life, notify the CRA as soon as possible in order to ensure that you receive the benefits and credits that you qualify for.

5. Failing to keep a record of the eligible expenses you could claim

A final recurring yet avoidable mistake that people may make is that they neglect to keep a record of the expenses that are tax deductible. Generally speaking, you are required to have proper receipts to support all expenses claimed as eligible expenses.  

For instance, a proper receipt for medical expenses is one that indicates the purpose of the payment, the date of the payment, the patient for whom the payment was made and if relevant, the specialist (i.e., audiologist, dentist, medical doctor, etc.) who prescribed the purchase or gave the services.   A canceled cheque, on the contrary, is not acceptable as a substitute for a proper receipt.  

There are many expenses you may be able to claim when completing your income tax return such as child care expenses, employment expenses, medical expenses, education expenses, donations, etc.

Related: For information on eligible medical expenses, see Income Tax Folio S1–F1–C1, Medical Expense Tax Credit.

In order to reduce the taxes that you owe, it is best to keep a record of your receipts and any supporting documents. Receipts and supporting documents for employment expenses should go in a separate file than receipts and supporting documents for medical expenses. This way, when tax season rolls around, you will be able to accurately and efficiently claim your expenses on your income  tax return,

Summary

In summary, the five common mistakes that you could make on your income tax return are: 1. Failing to file your income tax return, 2. Discarding records once your income tax has been filed, 3. Postponing filing your income tax return because of missing slips, 4. Not notifying CRA of any changes to your personal information, and lastly, 5. Failing to keep a record of the eligible medical expenses you could claim. These common mistakes are completely avoidable and could easily be prevented by keeping your records in an orderly manner and filing your taxes accurately and on time.  And finally, making sure to keep all your records in a secure place, will be important in case the CRA wants to review them.

If you need assistance filing your taxes, you may be eligible for help

If you have a simple tax situation then you may be eligible to receive help filing your taxes from a free tax preparation clinic near you.

There are free tax preparation clinics nationwide. Here are several located in different regions of Ontario.

Markham

Mississauga

North York

Richmond Hill

Thornhill

Toronto

Vaughan

You are not considered to have a simple tax situation if you are:

  • – self-employed or have employment expenses
  • – have a business or rental income and expenses
  • – have capital gains or losses
  • – filed for bankruptcy
  • – are completing a tax return for a deceased person

If you need assistance with your tax return or have any accounting inquiries, please do not hesitate to contact us at S & P Accounting Services. We are a full-service accounting firm handling taxation, bookkeeping, payroll, and accounting. We happily serve clients in North York, Toronto, Vaughan, Mississauga, Richmond Hill and other cities situated in the GTA.

Polina Presman, CPA, CA

T- 416-371-6017

F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031

F- 416-667-0404

S&P Accounting Services LLP

2727 Steeles Ave. W. Suite 300

North York, ON, M3J 3G9

www.spaccountingservices.ca

Disclaimer:

We strive to ensure all information on our site is accurate and up to date. However, the contents of the site are naturally subject to change from time to time. That means, we can’t always guarantee the accuracy of all information on the site. YOU ARE RESPONSIBLE FOR CHECKING THE ACCURACY OF RELEVANT FACTS AND OPINIONS GIVEN ON THE SITE BEFORE ENTERING INTO ANY COMMITMENT BASED UPON THEM.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.

Eight CRA fraud prevention tips from an accountant in Toronto

Advice from a Toronto accountant about how to protect yourself against CRA fraud

Over the past few months there has been a rise in Canadian residents falling victim of Canada Revenue Agency (CRA) scams.  A man in Peterborough was defrauded out of $2,400. Residents in south-central Ontario and Chilliwack, British Columbia have also fallen prey to this scam.

Although, in a previous post, I’ve provided advice about how to protect yourself against tax evasion scams, I think its worth mentioning the importance of protecting yourself against such frauds, especially given the rise of these unfortunate defrauding cases.

In this article, I share with you eight CRA fraud prevention tips that will hopefully help you avoid falling victim of a CRA scam.

Typically, victims of the scams receive a phone call from someone pretending to be a representative of Canada Revenue Agency. The fake CRA representative tells the victims that they owe x amount of dollars or their assets will be seized. Alternatively, theses scams could be communicated by email, text message or on the answering machine.

Here are eight crucial fraud prevention tips from an accountant in the Toronto area

If you receive a call from someone saying that they are from the CRA use these guidelines to help verify if the call is legitimate:

  1. The scammers can be extremely assertive and aggressive. Remember the the CRA will never use coercive language or  be aggressive or try to intimidate you.
  2. The scammers may threaten to arrest you or send you to the police. Remember the CRA will never threaten you to arrest you or take you to the police.
  3. If someone calls you saying that they are from the CRA and asking for personal information and/or asks you to give them money. Do not take immediate action. Hang up and verify the information by calling the CRA through the official phone number.
  4. The CRA will never ask you for credit card information or for prepayments by prepaid credit cards or your personal information by email or text message. So if you receive mail, an email or a text message requesting personal information, know that these are fraudulent and never respond to them. Hang up.
  5. Before you take any action or share any personal or financial information, hang up and call a trusted family member, friend, your bank or your chartered accountant to get a second opinion on the call.
  6. Ask yourself:
    1. Is it really safe to transfer money to someone I do not know?
    2. Is there a legitimate reason that the CRA may be calling? Do I have a tax balance outstanding?
    3. Is the requester asking for information I would not include with my tax return? Is the requester asking for information I know the CRA already has on file for me?
    4. Am I confident I know who is asking for the information?
  7. Ask the caller for their ID and verify the callers ID by calling the CRA directly.
  8. Check that status of your account by either logging in to MyAccount or calling CRA directly.

Is the message that you receive from CRA legitimate? when in doubt, ask your Chartered Accountant

If you are unsure if the phone call, email or text message is legitimate or a fraudulent message, ask your Chartered Accountant. Your Chartered Accountant should know how the CRA communicates with taxpayers and your Chartered Accountant should be able to distinguish between fraudulent communication and legitimate communication from the CRA.

If you feel that you’ve been a victim of fraud or have received deceptive telemarketing, you should call 1-888-495-8501 or visit CRA fraud website. Follow these steps if you’ve been defrauded.

If you require consultation or a have any accounting inquires, please do not hesitate to contact us.  S&P Accounting Services has experienced Chartered Accountants and we serve clients in in Toronto and other cities in the GTA which include, North York, Thornhill, Richmond Hill and Vaughan.

Polina Presman, CPA, CA

T- 416-371-6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

Are you looking for a tax accountant in Toronto to help you with your tax return?

You may be eligible for free tax services

If you are looking for a tax accountant in the Toronto or North York area, yet have a simple tax situation and modest income, you may be eligible for free tax services.

In fact, there are many community organizations throughout Canada that have volunteers completing tax returns for eligible individuals. These tax clinics are made feasible through the Community Volunteer Income Tax Program (CVITP).

You might qualify for theses services if you have a modest income and a simple tax situation.

1. What is a modest income?

Modest income means that your family income is less than the amount shown in the chart below. Verify with the community organization in your vicinity to see if you are eligible as some organizations have different eligibility requirements. 

Family size Total family income
One person $30,000
One person with one dependant $35,000 (add $2,500 for each additional dependant)
Couple $40,000 (add $2,500 for each dependant)

2. Do you have a simple tax situation?

In general, your tax situation is simple if you have no income or if your income comes from these sources:

  • employment
  • pension
  • benefits such as CPP, disability, CCB, EI, social assistance
  • RRSP
  • support payments
  • scholarships, fellowships, bursaries or grants
  • interest (under $1,000)

Your tax situation is not simple if you:

  • are self-employed or have employment expenses
  • have business or rental income and expenses
  • have capital gains or losses
  • file for bankruptcy
  • are completing a tax return for a deceased person

In such circumstances, you may wish to seek advice and assistance from a tax accountant.

3. When are these free tax services offered?

Volunteer tax preparation clinics are generally offered each year between February and April but many are operating all year at various locations across Canada.

4. Where are the tax preparation clinics located?

Here is a list of free tax preparation clinics in:

5. What to bring to the tax preparation clinic?

 In order for volunteers to complete your income tax and benefit return for you, make sure to bring your:

  • Tax information slips
  • Receipts
  • Social Insurance Number
  • Identification

Volunteers need the above items to prepare your income tax and benefit return.

7. How do you get your slips?

You can visit Service Canada‘s secure site to get access to your current year and prior year old age security (OAS), employment insurance (EI) and Canada pension plan (CPP) tax slips electronically. 

For more information, see Information slips – T4 and other slips.

8. What if I require assistance with my taxes and don’t qualify for assistance from one of the free tax clinics?

If you require assistance with your taxes and are not eligible for assistance from one of the free tax clinics, you may contact S & P Accounting Services. We are a full-service accounting firm handling taxation, bookkeeping, payroll and accounting. We happily serve clients in North York, Toronto, Vaughan, Mississauga, Richmond Hill and other cities situated in the GTA. If you require consultation or a have any accounting inquiries, please do not hesitate to contact us.

Polina Presman, CPA, CA

T- 416-371-6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

Disclaimer:

We strive to ensure all information on our site is accurate and up to date. However, the contents of the site are naturally subject to change from time to time. That means, we can’t always guarantee the accuracy of all information on the site. YOU ARE RESPONSIBLE FOR CHECKING THE ACCURACY OF RELEVANT FACTS AND OPINIONS GIVEN ON THE SITE BEFORE ENTERING INTO ANY COMMITMENT BASED UPON THEM.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.

 

 

Unsure if you should hire an accountant early on in your business?

Hiring an accountant early on could be advantageous for a number of reasons.

In this article, I discuss why this is the case, as well as eight tips that could help you start your business off on the right foot.

  1. When you decide to start your own business, an accountant could provide you with sound financial and strategic advice. An accountant can suggest how you can apply for a loan, as well as how you can get tax refunds and credits, business grants and financing. For more information about credits, benefits, and incentives, check this useful resource page from Canada.ca, as well as this page by the Ministry of Finance.
  2. When starting a business you have to decide which type of business structure is most suitable for your business needs. The four different business structures are: sole proprietorship, partnership, corporation and co-operative. The structure that is most appropriate for your business is dependent upon a number of factors which include: the type and size of the business, the risks involved, the number of people employed, the geography covered, as well at the tax situation of the business owner. An accountant could help explain which business structure is most appropriate for your needs. For information about the advantages and disadvantages of each business structure, read this article by Canada Business Network.
  3. Also, prior to starting your business, you need to register your business with several different levels of government. One question you might ask is, do you register your business on a provincial or federal level? This is a good question to ask a chartered accountant. This useful page by Canada Business Network provides an overview of the key registration requirements that may apply to your business.
  4. There are specific rules and regulations that every business must follow and there are different regulations and standards for every industry. For instance, daycares have different regulations, permits and licensing requirements than importing companies and these regulations can change over time. Therefore, it’s important to stay up-to-date with the latest regulations.  A professional accountant could direct you to the most relevant and current resources that will help you determine which regulations and standards apply to your industry. For more information about regulations, licensing and permits, read this article by Canada Business Network.
  5. When starting a business, are you required to register with a GST/HST account? When do you file for your GST and when do you pay? A chartered accountant will also advise you on these matters, as well as the advantages of registering with a GST/HST account. For more information about how to register for a GST/HST account, check Canada.ca.
  6. When starting a business, it is highly recommended that you open a business bank account that is separate from your personal account. A good accountant will explain the requirements of opening a business bank account and why it is critical to keep the business account separate from your personal one. For instance, having a business account not intertwined with your personal account could help you keep track of how profitable your business is and help you make financially sound decisions based on your business income and expenses. Muddling up your personal and business expenses could also make it more difficult to file your taxes.
  7. Bookkeeping and accounting are a significant part of any running business. At the start up phase of the business, you need to know which documents you should collect and how to establish a good filing system for all your receipts and invoices.  Whether or not you decide to conduct the bookkeeping yourself or prefer to hire a bookkeeper, it may be advantageous to ask a professional accountant about how to bookkeep. This article by Canada Business Network outlines the benefits of keeping organized records and the types of records to keep.
  8. Lastly, there are numerous accounting software systems such as QuickBooks, Peachtree and Xero, which could assist new business owners to keep track and monitor the key metrics of their business such as sales and expenses. An experienced accountant could suggest which accounting software is most recommended and user-friendly. This article by Business News Daily discusses the best accounting software for 2017.

In summary, there are many different factors and steps involved in starting up a business. Hiring a good accountant or at least seeking advice from an accountant is critical even in the beginning phases of a business. 

We are a full-service accounting firm handling taxation, bookkeeping, payroll, and accounting. We happily serve clients in North York, Toronto, Vaughan, Mississauga, Richmond Hill and other cities situated in the GTA. If you require consultation or a have any accounting inquiries, please do not hesitate to contact us.

Polina Presman, CPA, CA

T- 416-371-6017
F- 416-667-0404

Shani Marzin, CPA, CA

T- 416-731-9031
F- 416-667-0404

S&P Accounting Services LLP
2727 Steeles Ave. W. Suite 300
North York, ON, M3J 3G9
www.spaccountingservices.ca

 

Disclaimer:

We strive to ensure all information on our site is accurate and up to date. However, the contents of the site are naturally subject to change from time to time. That means, we can’t always guarantee the accuracy of all information on the site. YOU ARE RESPONSIBLE FOR CHECKING THE ACCURACY OF RELEVANT FACTS AND OPINIONS GIVEN ON THE SITE BEFORE ENTERING INTO ANY COMMITMENT BASED UPON THEM.

This post was written by Biz Source, a content creation company and is for illustration purposes only. For professional advice, please contact S & P Accounting Services.