It’s that time of the year again: time to gather up your receipts and get ready for your tax return. As the official tax-filing season opens, with electronic filing service Netfile starting on Monday, it’s essential to be prepared. To help you navigate the process and potentially maximize your refund, here’s a detailed guide on what you need to do.
Start with the “Messy Part”
Brian Quinlan, a partner and chartered professional accountant at Allay LLP, recommends tackling the “messy part” first when preparing your return. This means gathering up all the documents and receipts that aren’t readily available through the Canada Revenue Agency (CRA) website.
You’ll need receipts for expenses like medical bills, donations, child care, union dues, and more. These are things you can’t simply download from your CRA profile, so be sure to collect them early.
On the other hand, some essential forms, such as T4s, T4As (for pension income), T5s (for interest and investment income), and T3s (for trust-related information), can typically be found on your MyAccount profile on the CRA website. Many of these slips are now sent electronically by your bank or employer, making it easy to access them. Quinlan notes that even if you’ve moved or didn’t receive a slip, it’s likely available on your CRA profile.
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Key Tax Filing Deadlines
The tax-filing deadline for most Canadians is April 30, but for self-employed individuals, the deadline is extended to June 16 since June 15 falls on a weekend. However, keep in mind that interest on any taxes owed will begin to accumulate in late April, even though the filing deadline for self-employed individuals is in June.
If you’re looking to reduce your taxable income for the 2024 tax year, the RRSP contribution deadline is March 3, so be sure to contribute before then to get the tax benefits for this year.
Important Changes for 2024 Tax Season
One of the significant changes this filing season is the deferral of the capital gains inclusion rate increase. Originally, the federal government planned to hike the inclusion rate for capital gains over $250,000, taxing two-thirds of them. However, this has been deferred until 2026, meaning the tax treatment for capital gains remains the same as it was in 2023, with only 50% of capital gains subject to tax.
The CRA has also announced that its systems won’t be ready to process tax returns involving capital gains or losses until late March due to these changes. To help ease the transition, interest and penalties for late filing will be waived until June 2, giving you extra time to file.
Additionally, a two-month extension has been granted to taxpayers who made charitable donations after December due to the Canada Post strike that disrupted mail delivery. Donations made in the first two months of 2025 can be claimed either on your 2024 or 2025 return.
Maximizing Your Tax Return
When it comes to credits and deductions, there are more than 400 available, which can make it easy to overlook some you may be eligible for. To maximize your return, make sure to combine or transfer certain credits within your family. For example, charitable donations and medical expenses can sometimes be grouped together or transferred to other family members to increase the total claim.
Quinlan advises against being a “selfish tax planner” and recommends looking at the tax returns of your entire family. For example, tuition credits from a student with low income can be transferred to a higher-earning parent, which might result in a higher tax refund.
The Myth About Missing the Filing Deadline
A common myth about tax season is that you don’t need to file if you don’t owe any taxes. This is not the case. Yannick Lemay, a tax specialist at H&R Block, emphasizes that missing the filing deadline can still have negative consequences, even if you know you won’t owe taxes.
Even if you had no income to report for 2024, it’s still important to file your tax return in order to receive certain benefits. This includes the Canada Child Benefit, the GST/HST tax credit, and the Canada Carbon Rebate. Failing to file could mean missing out on these benefits, or in some cases, facing penalties.
Conclusion
Filing your taxes doesn’t have to be overwhelming if you stay organized and take advantage of all the credits and deductions available to you. By keeping track of receipts, being aware of key dates, and staying informed about new changes in the tax code, you can set yourself up for a smooth filing experience and potentially maximize your refund.
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