Hello and I would like to thank you all for your support and patronage for the tax year. This week’s article is going to reflect on some of my observations which I have noticed during the year.

First, I am going to reflect on late filing and the impact it can have on the taxpayer. If you are entitled to benefits like GST and Ontario Trillium, you will not be entitled to them till you file your Return.  A significant number of the Returns that get filed are getting a refund so there is generally little reason to delay. For taxpayer who has a tax liability, late filing means nondeductible interest and penalty. This year the CERB bought out many late filers who were happy with the outcome, including a payout of the Climate Action Initiative (in 2019 the amount is $224).

Second comment will be on the deductions available that taxpayers ignore. These include:  RRSP slips, charitable donations, tuition credits (some part of this can be transferred to a spouse and/or a parent), student loan interest , first time Home Buyer credit and medical expenses ( generally this has to be a significant amount] and lastly rent and/or property tax which results In Ontario Trillium Benefits.  All the deductions should be explored and considered prior to filing.

Third observation relates to request for documentation from the Canada Revenue Agency (CRA). If one does not comply with the request it will result in a reassessment, result the taxpayer will owe money.

My fourth comment relates to taxpayer who has/was working in two or more jobs.  When it is time to file it is likely they will be required to pay additional taxes at the time of filing your tax return.  Taxpayers can avoid this situation by having additional taxes deducted at source with the primary employer or taking out an RRSP. This happens because every employer will only deduct the mandatory tax deduction as required, but the taxpayer must pay taxes on the total income earned in the year.

My fifth comment relates to RRSP withdrawals, this withdrawal adds to one’s total income and may result in a tax liability.  If the amount is significant and it is towards the end of the year, it may be wise to withdraw some in the current year and the remainder the following year (January). Another option to avoid the tax liability is to have the amount split between the spouses.

Lastly if you have got a refund enjoy the money or better still invest wisely and/or pay down your debt. If you owe money pay on time to avoid interest.

Rattan Gandhi is owner of Quick Refund Tax, 133 Sixth St. His opinions stem from 15 years of experience in helping clients in the tax area. If you have questions, he can be reached at 905-616-5253 or rattangandhi@gmail.com.