Personal Tax

Find out how the 2016 tax changes impact you in minutes

One of my posts last year focused on the tax changes the federal government introduced for 2016. The changes impact almost everyone especially high earners with children.
But what do all these changes mean for your bottom line?
You can find out in a matter of minutes. The Office of Parliamentary Budget Officer has introduced a tool that lets taxpayers know not just their net tax difference compared to 2015 but also the exact measures that affect your overall taxes.
Take a minute to answers a few questions and find out whether you are better or worse off with 2016 tax changes:

Budget 2016: Tax Tool Calculator

 

CRA Penalties and interest

Let’s get the simple stuff out of the way first:

  • Your tax return is considered late if it is not received by the due date and a penalty applies
  • If you don’t owe or are owed a refund there is no penalty
  • Penalties are fixed and apply to returns that are late; interest is variable and depends on how long the owing amount was outstanding

Late-filing penalty

If a taxpayer owes tax for 2016 and does not file a return by May 1, 2017, the CRA will charge a late-filing penalty. The penalty is 5% of your 2016 balance owing, plus 1% of your balance owing for each full month your return is late, to a maximum of 12 months (i.e. as high as 13%)

 

If a taxpayer is charged a late-filing penalty on their return for 2013, 2014, or 2015 their late-filing penalty for 2016 may be 10% of their 2016 balance owing, plus 2% of their 2016 balance owing for each full month your return is late, to a maximum of 20 months (i.e. as high as 50%).

Conclusion:

  • Always try to file and pay by the deadline
  • Even if you can’t pay on the deadline, file your return by the deadline
  • If you can’t afford to pay the entire amount owing you or you representative call CRA’s debt management call centre at 1-888-863-8657 from 7 a.m. to 11 p.m., Eastern time.

 
CRA prescribed rates can be found here

Filing your personal income tax

Unlike the medical and law professions, anyone can call themselves an accountant. However, not all accountants have the professional training and acumen to deliver superior results.

When you trust a professional to prepare and file your income tax returns you:  

– Ensure your business records are professionally maintained: CPAs are bound by the regulatory body’s the rules of professional conduct and must therefore handle client files according the profession’s standards. This means that your records are kept private and confidential and you will be able to request or retrieve your file at any time. At MKG, all engagements come with standard documentation so that you know what we will be performing, the scope and extent of our work, and exactly what you will receive.

– Keep up with tax changes: CPAs regularly participate in professional development seminars and courses to ensure they are up-to-date with the latest changes to the Income Tax Act and are able to assess their clients’ accounts based on these changes. Did you know that you can refile your tax returns for the past three years? If you are unsure whether your taxes have been filed properly, give us a call. We perform free reviews of your prior tax returns. You will only pay if we recover an additional refund for you.
– Taking advantage of all possible tax savings: The Income Tax Act is complex and somewhat difficult to understand for the layman. When you trust a professional accountant to deal with your tax matters, you will be able to take advantage of all possible tax savings, pay the minimum required tax, and maintain a good standing with the CRA. We will spend as much time as needed to get to know your current situation and future plans and will recommend tax-saving strategies in order to pay the lowest overall tax possible.
– Avoid interest, penalties, and hassle: Canada’s tax system is based on self-assessment. This means that individuals voluntarily complete an income tax return to report their annual income and claim all deductions or credits that apply to their situation. If, however, you are unable to provide sufficient documentation or have claimed deduction or credits that did not apply to your situation, you will be responsible for returning the refund you received and may also be liable for interest and penalties. If you have not filed your prior year tax returns, I can help you avoid the interests and penalties.

These are just some of the ways in which we will deliver superior and reliable results. Contact us to make an appointment for a free consultation or a free review of your prior tax returns.