Newswire

Reminders for Tax Season

April 1, 2024

It is personal income tax season once again. Given increasing interest rates, don’t overlook the importance of filing your taxes and paying balances and instalments on time, as interest assessed on insufficient payments can be significant.

Tax Filing Deadlines — The general deadline to file your 2023 personal income tax and benefit return is April 30, 2024. For self employed individuals and spouses, the general deadline is June 17, 2024 (the usual filing date of June 15 falls on a weekend). However,
any taxes owed must be paid by April 30, 2024.

Late-Filing Penalties — If a return is filed late and a balance is owing, the late-filing penalty is a minimum of five percent of any balance owing, plus one percent of the balance owing for each full month that the return is late, to a maximum of 12 months.

Interest Charges on Unpaid Balances — Unpaid balances will accrue compound daily interest at the prescribed interest rate. For Q2 2024, the prescribed rate (calculated quarterly) on overdue taxes stands at a very substantial rate of 10 percent.

Keep Good Records
Remember that both individuals and corporations are required by law to keep tax records for six years from their filing date. The CRA may request these records for audit purposes. The timeframe for recordkeeping may be extended for documents essential in determining a
person’s future tax obligations.

Here are some other tax season reminders:
Claim all credits/deductions. Keep in mind that tax rules change annually so the support of a tax expert may be helpful. There were very few credits/deductions that were introduced for the 2023 tax year; the multi-generational home renovation tax credit was a notable addition, allowing a tax credit for certain renovation costs when creating a secondary unit so that qualifying individuals (seniors/disabled) can reside with their relations. However, consider that changes to your personal situation can also change eligibility for credits previously not claimed.

Reporting requirements can change. This may be due to changes to the CRA rules. For instance, for the 2023 tax year, the CRA is no longer offering the temporary “flat-rate” method to claim employment expenses for employees who worked from home. Employees will be
required to use the detailed method to claim home office expenses. The updated CRA Form T2200 must be completed by the employer in order for the employee to deduct expenses from their income. Consider also the new reporting requirements for trusts, which now include bare trusts. Changes to your circumstances may also expose you to new reporting obligations. As a reminder, if you owned specified foreign property with a total cost of C$100,000 or more at any time during 2023, you are required to complete CRA Form T1135. Or, if you sold your principal residence in 2023, don’t forget that this must be reported on your tax return. As always, consider speaking with a tax advisor to ensure you’re claiming all of the credits and deductions to which you’re entitled and completing all of the required reporting obligations.

https://www.canada.ca/en/revenue-agency/services/tax/prescribed-interest-rates.html

Be Aware: TFSA Contribution Information May Be Incorrect
If you’ve based your TFSA contribution on CRA “My Account” information, be aware that it may not be accurate. According to the CRA, any contributions made or withdrawn in the prior year may not be reflected in current year contribution room until “after the end of February,” since issuers have until the last day of February to submit TFSA transactions to the CRA. Yet, the lag in updating this data may extend to March or even late April. The consequence, of course, is the one percent per month penalty on excess TFSA contributions, which can add up. And, it appears that a growing number of TFSA holders are being assessed penalties. The total amount of overcontribution penalties paid in 2022 was $132.6 million, more than triple the $41.7 million paid in 2019 and 38 percent higher than the $96.2 million paid in 2021. Why is this the case? CRA reporting lag times often create confusion. Some hold multiple TFSA accounts, which can lead to recordkeeping errors — the latest statistics suggest that 245,000 TFSA holders hold between five and nine TFSA accounts! Or, there may simply be a misunderstanding of the rules. One example: If you withdraw TFSA funds, this amount only becomes available to contribute at the start of the following calendar year. At the end of the day, it is the taxpayer’s responsibility to keep good records. If you do rely on CRA contribution room information, a general rule of thumb is to wait until late April when all records should be updated.
https://www.theglobeandmail.com/investing/personal-finance/article-people-keepmaking-this-costly-tfsa-mistake-and-paying-penalties/

This figure may not account for inactive accounts.

The information contained herein has been provided for information purposes only. The information does not provide financial, legal, tax or investment advice. This does not constitute a recommendation or solicitation to buy or sell securities of any kind. Market conditions may change which may impact the information contained in this document. Wellington-Altus Private Wealth Inc. (WAPW) and the authors do not guarantee the accuracy or completeness of the information contained herein, nor does WAPW, nor the authors, assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. All insurance products and services are offered by life licensed advisors of Wellington-Altus Insurance Inc. or other insurance companies separate from WAPW. WAPW is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. © 2024, Wellington-Altus Private Wealth Inc. ALL RIGHTS RESERVED. NO USE OR REPRODUCTION WITHOUT PERMISSION. www.wellington-altus.ca

Recent Posts

October Market Insights: THE GREAT DELUSION

The Mirage of Recovery: How We’re Fooling Ourselves As we emerge from the shadow of COVID-19, a narrative of robust economic recovery has taken hold.

Navigating the Journey: Seven Investing Pitfalls

While we can learn much about successful investing by studying the best investors, there may be valuable lessons learned by examining our mistakes. The CFA Institute has identified 20 of the most common investing mistakes, and here are seven notable pitfalls

Market Insights Video by James Thorne: Brace For Blows

As central banks pivot their worries from #inflation to growth, Canadian investors should brace for more punches. However, there is still a glimmer of hope. Learn more in James Thorne’s next #MarketInsights coming soon. #Investing

Perspectives on Retirement Saving & Spending

According to an article in the popular press, this is what many of us can anticipate in retirement. If you’re retired, perhaps you concur. If retirement is still on the horizon, the promise of retirement bliss is something to look forward to.

SUMMER BRINGS HOME-BUYING SEASON

As a result of the federal budget increasing the withdrawal amount for the Home Buyer’s Plan (HBP), some clients have asked which plan is better for younger family members: the First-Home Savings Account (FHSA) or the HBP, via the Registered Retirement Savings Plan R(RSP).

The opinions contained herein are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Wellington-Altus Private Wealth. Assumptions, opinions and information constitute the author’s judgement as of the date this material and subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Graphs and charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. All third party products and services referred to or advertised in this presentation are sold by the company or organization named. While these products or services may serve as valuable aids to the independent investor, WAPW does not specifically endorse any of these products or services. The third party products and services referred to, or advertised in this presentation, are available as a convenience to its customers only, and WAPW is not liable for any claims, losses or damages however arising out of any purchase or use of third party products or services. All insurance products and services are offered by life licensed advisors of Wellington-Altus.