File your taxes early. Cash is king if you have a refund; if you owe the CRA, you avoid penalties.
CRA’s NETFILE services reopened on February 21, 2022, to launch the 2022 tax season. The 2022 tax season also includes the RE-File services.
Unlike other first-world countries like the UK, it is your civic duty to file your taxes before a deadline. In the UK, if you do not have a secondary source of income, your employment deductions will be deemed as accurate.
In Canada, the window for tax filing is liberal for every resident to gather their documents together and file their taxes. The same is true of businesses. In the event these deadlines are missed, penalty charges will be incurred.
Continue reading to learn about the 2021 tax filing deadlines, do’s and don’ts.
Table of Contents
Overview
The CRA has a list of approved NETFILE tax software for each tax year. Each software details what system they can use (mobile, tablet or computer system) to transmit your income tax and benefit return.
A salient point to note on service hours is that the NETFILE the services are available 21 hours a day. Due to daily maintenance activities, the services are not available for three hours a day from 3 am to 6 am (Eastern time).
Filing your taxes using approved tax software (such as H&R Block or TurboTax) and NETFILE means your transmission is immediate, and your assessment is faster. If you are due for a refund and have your bank detail set up with CRA, the refund is automatically deposited into your bank account.
Individual 2021 Tax Filing Deadline
Clients often misinterpret deadlines for taxes. For the 2022 tax season, it reads April 30, 2022. As much as this is the deadline, it is the date CRA starts accruing interest on the balance owing. So, if you prepared your taxes on that date and it is assessed, your balance owing starts to accrue interest on the same date.
Incidentally, in 2022, April 30 deadline falls on the weekend, and as such, the CRA approved that clients’ return will be considered filed on time in either of the following situations:
- we receive it on or before May 2, 2022
- it is postmarked on or before May 2, 2022
The deadline for individuals or their spouses/common-law partners who are self-employed will be June 15, 2022. However, late payment penalties start accruing on April 30, 2022 (May 2, 2022).
Businesses 2021 Tax Filing Deadline
It is important to understand that businesses refer to incorporated companies which have become a separate legal entity from yourself. If this is not the case, you fall under the self-employed for an individual – your deadline is June 15, 2022.
For corporations, the T2 tax return is six months after the end of the corporation’s tax year. The corporation tax year becomes an item of corporate decision stemming from incorporation date vs corporate calendar.
For CRA’s article on payment of corporation tax due, visit the link. Also, the CRA issued a 2022 T2 guide for 2021 corporation Income tax.
As for penalties on the corporation taxes, they accrue on balance owing from the prior tax year. It is pertinent to note that the CRA requires installment payment based on the last tax liability owed.
Interest on Penalties
We have dealt with unnecessary money pits you can avoid in prior posts. One is penalty payment. The issue of penalty on late tax balance owing may be stemming from lack of proper planning. Every penny paid in penalties is hard-earned monies gifted away.
Worse still, when you begin to build interest on the penalty slapped on you for late payment. If you are a follower of this page, you know wasting money in this way is what we frown at.
FREE Tax Software
The CRA NETFILE has certified tax software that operates a pay-what-you-use model. It can be accessible to the extent to which your tax situation is simple. Below is a list for these:
PAID Tax Software
In the same vein, there are several certified paid software for NETFILE. See below:
Canada Tax Filing Dos and Don’ts
When it comes to filing taxes in Canada, there are several dos and don’ts that you should keep in mind.
Here are some important ones to consider:
Dos:
1. Do file your taxes on time
The deadline for filing your personal income tax return in Canada is generally April 30th.
It’s important to file your taxes on or before this deadline to avoid penalties and interest charges.
2. Do keep organized records
Keep track of all your income, expenses, and supporting documents throughout the year.
This includes T4 slips (employment income), T5 slips (investment income), receipts for eligible deductions, and other relevant documents.
Having organized records will make it easier to complete your tax return accurately.
Read Also: Line 15000 Tax Return: What it Means & How to File It?
3. Do claim all eligible deductions and credits
Take advantage of deductions and credits that you are entitled to.
This may include deductions for medical expenses, charitable donations, RRSP contributions, and tuition fees, among others.
Make sure to keep proper documentation to support your claims.
4. Do file electronically
The Canada Revenue Agency encourages taxpayers to file their tax returns electronically.
This method is faster, more efficient, and reduces the risk of errors.
You can use free or paid tax software or hire a tax professional to file your taxes electronically.
5. Do review your tax return before submitting
Before submitting your tax return, review it carefully to ensure accuracy.
Double-check all the information, calculations, and amounts entered.
Mistakes can lead to delays in processing or potential audits.
Don’ts:
1. Don’t ignore deadlines
Failing to file your tax return on time can result in penalties and interest charges.
If you can’t file by the deadline, consider filing for an extension or contact the CRA to make arrangements.
2. Don’t forget to report all income
It’s important to report all sources of income, including employment income, self-employment income, investment income, rental income, and any other relevant income.
Failure to report income accurately can lead to penalties and potential audits.
3. Don’t make false claims or omit information
Be honest and accurate when completing your tax return.
Making false claims or omitting information can result in penalties, interest charges, and even criminal charges.
Ensure that all the information you provide is truthful and supported by appropriate documentation.
4. Don’t assume you’re not eligible for credits or deductions
Take the time to research and understand the various tax credits and deductions available in Canada.
There may be credits or deductions that you qualify for but are not aware of.
Consult the CRA website, seek professional advice, or use tax software to identify all available tax credits and deductions.
5. Don’t hesitate to seek professional help
If you’re unsure about how to file your taxes or have complex tax situations, it’s a good idea to seek help from a qualified tax professional.
They can provide guidance, ensure compliance with tax laws, and help you maximize your deductions and credits.
Related Posts:
- Tax Filing in Canada: A Step-By-Step Guide
- Canada Federal and Provincial Tax Brackets and Rates
- How to Reduce Your Taxes in Canada
- Tax planning: Canada Capital Gains Tax 2023
Conclusion
In conclusion, file your 2021 taxes early. Cash is king if you have a refund; if you owe the CRA, you avoid penalties.
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