Disruptions around the COVID-19 pandemic and the economic fallout have delayed this year’s tax filing deadlines and the federal government has some temporary changes for this 2020 tax season. Georgia Swan, a Tax and Estate Planner with TD Wealth says that while even the most organized among us may be distracted by current events, we should keep these deadlines and the following tax planning ideas at hand. If you have yet to file your 2019 taxes, here are some things to keep in mind.
New deadlines for individual filers
The new deadline for individual filers is June 1, 2020. Any money owed to the Canada Revenue Agency can be deferred until September 1st, 2020, with no penalties or interest payable.
New deadlines for businesses
The filing deadlines for some businesses have changed. Corporations that otherwise would have a filing date between March 18 and June 1 for the current tax year have their filing date extended to June 1, 2020. However sole proprietors must still file their returns by June 15, 2020. The Canada Revenue Agency will allow all businesses to defer any payments on amounts which would normally have been owing starting March 18 until September 1, 2020. That would include balances due, as well as installments. No interest or penalties will accumulate on these amounts during this period.
New deadlines for trusts
The new filing deadline is May 1, 2020 for trusts with a year end of December 31, 2019. For trusts with a year end which would have resulted in a filing deadline date between April or May, the new filing deadline date is June 1, 2020. Any balance which would have been owed between March 18 and September 1 may be deferred until September 1, 2020 and any interest and penalties will be waived.
Has the pandemic affected how you should file?
Swan says that returns are based on income received in 2019 and any exemptions, deductions or credits that you qualified for last year. She notes that even though there are some measures that have been put into place which would allow for a delay in filing returns or paying outstanding tax liability for 2019, you may still want to file your return as soon as possible. That’s because certain benefits are calculated based on your tax returns for the previous year, such as GST/HST credits or the Canada Child Benefit, so it is valuable to file as soon as you can. As well, if you usually get a refund, getting your return in as soon as possible means you get that refund in your hands right away.
The Canada Revenue Agency is aware that tax preparers and accountants may not be able to meet with their clients. To make things easier, the CRA will accept electronic signatures. CRA services that are normally available only in person, such as the CRA Outreach Program, will be available by phone.
Got everything organized?
Give yourself time, find your receipts and compare your 2019 filing with 2018’s return. Ensure your tax return is accurate and submit before the new deadline if you can. Note, you can log into My Account on the Canada Revenue Agency (CRA) website, or use the MyCRA app on your mobile device, to view your personal income tax and benefit information online. You can also get more information from the CRA’s Outreach Liaison Officer Services.
Do you know what’s new this year?
Residents of Alberta can now join those in Ontario, Manitoba and Saskatchewan to claim the new federal Climate Action Incentive payment and it may reduce your 2019 tax payable or increase your refund. The amount you could be entitled to depends on where you live and your family situation. A family of four living in Alberta could receive $888 but if you’re in Ontario, the amount could be $448. And the payment could be higher if you were living in small or rural communities. New Brunswickers could formerly claim this credit but the province has recently adopted their own program on carbon pollution.
Do you have tax obligations in the U.S. or another country?
If you spend a significant amount of time in the U.S. (based on the U.S. substantial presence test) or you have a parent who is a U.S. citizen (and therefore may yourself be considered a U.S. citizen at birth even if you were born outside the U.S.), the Internal Revenue Service (IRS) may, depending on the specific circumstances, regard you as a “U.S. Person.” That means you may have an obligation to file a tax return with the IRS even if you do not owe any U.S. taxes. Find out what your obligations are if you have any ties to the U.S. or to other foreign countries.
Are you up on last year’s small business tax changes?
There have been some wide-ranging tax changes over the past two years, many affecting small business corporations. If you haven’t already done so, consider checking in with your legal and tax professional to re-evaluate decisions you made in the wake of these tax changes.
Let your donation be a motivation
Twenty dollars to the local cancer society here and $30 for a fundraiser all adds up, but it isn’t always easy to keep track of such donations. If you think you may have missed claiming any charitable donations on past years’ tax returns, don’t fret. You can go back and claim donations in the year they were made for any of the previous five years. Those missing receipts (up to five years back) can be claimed on your 2019 return and you don’t have to amend your previous returns. Just dig deep and find those receipts. It may have a worthwhile impact on your tax return.
Have a Canadian digital news subscription?
New this year is the Digital News Subscription Tax Credit designed to support Canadian news journalism online. If you have an online subscription to an organization that produces written news content — such as a newspaper — you could be eligible for up to $500 in costs for a maximum tax credit of $75. Note the definition of “written news” — this credit does not include journalism organizations engaged in “broadcast news.” If you are unsure, check out the definitions of which organizations qualify.
What about those vacation property upgrades?
If you have a chalet, cottage or cabin in Canada or in the U.S. sunbelt, and have made any capital improvements, make sure to find the receipts and get them in order. The higher the documented cost of any capital improvements, the lower the potential tax liability that may arise if a gain is realized when the property is eventually sold, even if that is decades away. This isn’t strictly a consideration for this year’s filing but could potentially help you or your heirs down the line.
Do you know a senior who could use help with their taxes?
If you’re checking on an elderly relative, ask if they need help with their taxes. You might think helping out a relative or parent with their taxes is just part of your regular duties as a family member, but this tax housekeeping may ultimately benefit the whole family. That’s because if a senior doesn’t file annual returns, it can potentially make managing their estate more complicated when they pass away. Beneficiaries can’t receive the estate until it is given the green light by the CRA and this can be challenging if there are tax returns missing.
Is the CRA holding an uncashed cheque meant for you?
Lastly, the CRA has a new feature on MyAccount which allows a taxpayer to view uncashed cheques, with the ability to request a duplicate. Why might the CRA have your uncashed cheque? If you moved addresses or if the cheque was inadvertently destroyed, the original cheque may not have reached you. Log in and see if there’s an unexpected surprise waiting for you.
“Tax preparation time is not only a time for what you owe the government, it’s a time to think about what you owe yourself,” says Georgia Swan, a Tax and Estate Planner for TD Wealth. Since you’re already deep into financial calculations, she says you may want to think about how you’re progressing towards financial targets like retirement savings, RESPs or other money goals. And if you don’t know, you can make an appointment with a tax professional.
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