A survey by H&R Block Canada says there were still seven million Canadians who had not filed their taxes with the Canada Revenue Agency as of last week.
Many will struggle to finish them before midnight tonight, although some admit they put it off because they fear owing money.
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According to Revenue Canada, it is estimated that about ten percent of Canadians never file a tax return because they are worried about owing money, because there may be a language problem, or because they don’t know it’s something they should do.
But if you don’t, you could miss out on government benefits.
“To obtain benefits, for example child benefit or the GST credit, you need to file your tax return for the government to properly determine the credits and benefits you deserve,” said UFILE tax expert Gerry Vittortos.
The Canada Revenue Agency (CRA) has been speeding up the process of assessing returns and Vittortos said many Canadians who have already filed their taxes have received their refunds.
“If your tax return is not too complicated, there is an automated system and it can process your return and your refund into your account within five business days,” Vittortos said.
There are some changes to the tax system when you file this year.
About 500,000 Canadians opened a First Home Savings Account (FHSA) last year in the hopes that it can help them save a down payment on their first home, including Greg Rondeau of Geraldton, Ont. near Thunder Bay.
“It’s definitely better than what we had before and I think in this case more is better,” Rondeau said.
Rondeau said he maxed out his FHSA last year with $8,000 and hopes to invest another $8,000 this year, which will also help him get a larger tax refund.
“I’m glad I started investing and paying myself first. I’m seeing the returns on my investments and it’s super fun,” Rondeau said.
FHSA contributions of up to $8,000 can be made annually up to a lifetime maximum of $40,000. Contributions are tax deductible and income earned within the registered plan from qualified investments will not be subject to tax.
“This is a key new financial incentive for first-time homeowners,” said John Oakey, vice-president of tax at Chartered Professional Accountants Canada.
There is also a multigenerational tax credit for home renovation. A refundable tax credit of up to $7,500 (15 per cent of $50,000) has been introduced for Canadians who renovate their home to accommodate a qualifying person. This new credit will allow taxpayers to deduct 15 percent of qualified expenses on qualified renovations, incurred on or after January 1, 2023, up to a maximum amount of $50,000 for each qualified renovation completed in the year.
Another important change is full taxation on residential properties bought and sold within 365 days. Under the CPA, profits from the sale of residential properties, including rental properties or personal use properties, that are owned for less than 365 consecutive days will be taxed entirely as business income. They will not be treated as a capital gain, as part of the new “anti-flipping” rules. Exceptions may apply, such as a sale related to a death or relocation.
Traders’ spending on tools also doubles. The deduction doubled from $500 to $1,000 in tax year 2023. Employees can now deduct up to $1,000 annually for eligible tools of the trade necessary for employment.
Mortgage rates have gone up and the CRA has also increased their rates when it comes to penalties if you owe money to the government.
“I think the interest rates last quarter for the CRA were 10 percent, so if you want to manage your tax situation well, you need to make sure you pay your tax dues and taxes due on time,” Oakey said.
Tax software can guide you through how to complete your return and there are many free programs you can use that are accepted by the government. You can find a list of them at the CRA website.