According to a recent Leger Marketing survey, approximately 10 per cent of Canadians say they have already filed their return. I am one of those people. I like to get it done early. But there are millions of taxpayers who will wait until April or later to file a tax return.
If you still need to file, I recommend reserving a time in your calendar, whether someone does it for you or you do-it-yourself. It is easy to procrastinate. Scheduling it will also ensure that you leave yourself enough time without distractions. Multi-tasking is tempting but never underestimate the power of human error.
Whether you file on the first day NETFILE is open or midnight on April 30, you need to make sure you have compiled all your paperwork to prepare your return correctly. You may have your T4 slip but it is not the only piece of paper you need.
Every receipt equals tax savings
It wasn't too long ago that charitable donation receipts were usually mailed at the end of the year, so they were fairly easy to collect. Now if you sponsor someone's marathon, bike race or moustache, you receive your receipt via email immediately, so I think they are easier to lose.
Develop a system for collecting your charitable donation receipts in one place. And you are allowed to claim up to six years of donations, so if you find a missed receipt you can probably use it. The biggest federal credit comes when you donate more than $200, so saving receipts may make sense. And there are also provincial credits, so every receipt means tax savings.
If you just realized you can claim medical expenses and have zero receipts, you will need to do some legwork. You can usually request statements from your pharmacy or dentist to show how much you spent during the year. Or you can claim your best 12 months of medical expenses as long as one of the months is in the tax year. Translated into non-tax speak, this means you can claim from September 2011 to August 2012 on your 2012 return if that gives you the most tax savings.
For the public transit credit, you may be out of luck if you didn't keep the pass and receipt. You need a document that shows what you paid and the duration of the pass. If you use an electronic card system, you can usually get statements that work as tax receipts.
Child Care expenses are one of the most commonly reviewed deductions because they can lead to big tax savings. If you do not have receipts, you cannot make the claim. And any individual you use for child care must include his or her SIN on the receipt.
Find last year's return
Your 2011 Notice of Assessment has a wealth of information that will be useful for filing your 2012 return, since it will include information such as carry forward amounts and Home Buyers Plan repayment.
If your NOA is missing in action, you may want to register for the CRA's My Account service so you can access this information online. You need to wait for an access code and this takes about a week to get set-up, so it is not a last-minute solution.
It is also good practice to compare your returns. If your 2012 tax return produces a large tax refund for no apparent reason, you may want to check it against 2011. Remember, once you sign your return, you are accepting responsibility for all of the information in it, no matter how you prepared it.
Filing and paying
If you prepare your return and find that you owe money, you can still file. Your balance owing is not due to the CRA until April 30. You can wait until then to pay at a bank, visit a CRA kiosk or mail a cheque. Even if you cannot pay, file a return by April 30 to avoid the five per cent late filing penalty. You won't, however, avoid the interest.
Do not put off filing if there is a lien against your return. For example, government student loan defaults are registered with the CRA. This means your tax refund and other benefits like the quarterly GST/HST credit will be applied to your debt first. It may be tempting to not file because you don't see the money, but every dollar helps against your student loan.
The CRA will not deduct liens from Canada Child Tax Benefit payments. And filing as common-law does not mean one spouse's tax refund can be applied against another's debt.
If you don't owe money, then the April 30 deadline is arbitrary. There is no penalty for filing a late return in Canada if you don't owe. But if you are expecting a refund, it is money you overpaid the government last year. I figure I spend my money more intelligently than the politicians in Ottawa.
And I am going to return to the advice I opened with: schedule a time and get your return done before the deadline. There is no advantage to being late, but there are penalties.