The tax deadline for Canadians has finally arrived. The much-anticipated date means different things for different people, depending on whether you own your own business, have grown children, or find a last-minute mistake on your return. Here are five things you need to know on tax day.
WATCH: CRA Tax Tips
If you owe money, pay up by tonight
While the deadline to file your tax return is May 1 if you expect to receive money, the deadline to repay the government any money you owe is also May 1. This means that your payment should be submitted, or postmarked before midnight, on the tax deadline. Which is today.
If you miss the deadline, you’ll automatically be charged a penalty of 5 per cent of the balance you owe. The penalty increases by 1 percentage point for every month you’re late, up to 12 months.
In addition, the Canada Revenue Agency (CRA) will charge you compound daily interest on any unpaid tax amounts for 2016.
The tax deadline is different if you’re self employed
If you’re self employed, you have a bit more time to get your paperwork in order. For Canadians who have run a business, or whose spouses ran a business, during the 2016 fiscal year, your tax deadline is pushed out to June 15.
However, it’s important to remember that any amount owing on your personal return is still due by 11:59 p.m. on May 1. Furthermore, depending on your annual income, you may have to make tax installments throughout the year.
You can correct mistakes on your return
If you discover a mistake on your return, all hope is not lost. You have the ability to correct it by logging on to your account and request changes through the My Account option on the CRA website. If you prefer to file on paper, you can request a T1 Adjustment using form T1-ADJ, or “T1 Adjustment Request.”
WATCH: Tax tips for you to keep in mind
Canadians must wait to receive their “notice of assessment” before making any changes to their returns. If those changes mean you owe the CRA more money, you’ll have to pay interest on any amount not paid by May, 1. However, you won’t have to pay a late-filing penalty if you sent in your original return by deadline.
Your kids may be able to file a tax return
If you’re child is under 18 but had a part-time or full-time job during the summer months, they may have to file a tax return. Anyone who earns over $11,635 annually (though every province has a different basic personal amount) must send in their own tax paperwork. However, the CRA recommends that young people do so even when they’re not required to, in order to get accustomed to the process and be able to contribute to an RRSP.
Most students can also claim refunds on textbooks and tuition, which can’t be accounted for if they haven’t filed a return at all.
Consider investing or saving your refund
It may be tempting to treat your tax return as free money, but there are many ways to invest your return for a greater, long-term reward. One of the top ways to do this is to contribute to your RRSP, as the amount can be claimed as a tax deduction on next year’s tax return. If you have children, the money could also be used to contribute to their RESP, which can in turn yield an additional 20 per cent on the first $2,500 saved in the account each year.
In addition, you may want to think about contributing to your tax-free savings account (TFSA), where the interest earned on the money is tax-free.
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