How to survive Canadian tax season

HR MacMillan Space Centre
HR MacMillan Space Centre
If you are like me, then paying your taxes must rank right up there with root canal work as one of your least favourite things. I am not going to kid you that it is any better in Canada than anywhere else. Whatever else Canada has going for it, a simple taxation system is not one of them.

OK. Time for a disclaimer. I am not an accountant, financial advisor or any of those professions that my mother wished I would be. So I am just writing as Joe Public, and a pretty dumb one at that.

The Canadian tax system relies on a self-assessment. Basically everyone has to file a tax return that works out what tax they owe. Tax season ends on April 30. At that time you have to have paid any taxes owing or you pay penalties and interest. (Anyone who has noticed my newsletters are late or missing can blame the tax man!)

So how hard is it completing your tax return? If you are an employee and don’t have investments, overseas income, rental properties or other complications then it can be pretty simple. By the start of tax season you will have received a number of tax documents – T4 forms and the like. These will be what you need to report to the Federal and Provincial tax authorities. You will also need to work out what you can legitimately claim against your tax.

You have a few choices in how you complete your tax return:

  • Get the paper forms and fill them in
  • Buy some tax software
  • Go to a high street tax filing bureau
  • Get an accountant

FORM FILLING

This is probably the worst choice to make. The forms are available in post offices (in the pharmacies usually). Flicking through this pack for the first time will fill you with dread and fear however simple your tax situation. I know this is how I started my tax education in our first year here.

TAX SOFTWARE

There are several software packages available. These include Quicktax and UFile amongst others. You will see these prominently on display in Staples, Futureshop and London Drugs. I have used Quicktax myself and can only speak of it, however I assume that most will have some sort of wizard feature to take you through the whole process. You should also be able to netfile your return – which means that your tax return is sent to the CRA via the internet, rather than in the post. My first experience of it was still rather baffling and because you cannot netfile your first return, I ended up moving onto the next level…

TAX FILING BUREAU

When I chickened out of filing my first tax return, I ended up going to H&R Block. They are tax filers with offices in the high streets and malls all over the place. During tax season they even set up temporary booths in the concourses of the bigger malls. You can’t miss them. And they are pretty good option for a lot of people. You need to turn up with all your tax documents and they will complete your return for you. If your return is pretty simple, because you are an employee with no added complications, then H&R Block’s claim that you can walk out with your tax refund will probably come true. My oldest daughter did just that this year. And she’d already spent the refund before I’d even filed my return!

TAX ACCOUNTANT

If your situation is more complicated then a tax accountant is the way to go. It is worth looking around a bit and finding one who is helpful in explaining the system to a newcomer. And if you find one let me know! My first accountant was good at doing the taxes and rubbish at advising me on what to do. As the system is self assessed, you are responsible for reporting your income and working out what you can claim. Your accountant should be able to help with this, but it is something you learn from experience. It is no good finding out you can claim medical expenses, for instance, if you have not kept your receipts!

HOW COMPLICATED CAN IT BE?

As I said earlier, the simplest case is when you are an employee with a few T4 forms to report. If you are self-employed, have rental properties, overseas income and the like, then there are more forms to fill. And you need to have all your receipts so that you can claim any legitimate deductions.

If you are one of those neat freaks who has all that well organized and at your finger tips then hooray. Your life may not be interesting but tax filing should be pretty easy! For the rest of us, we are digging around in shoe boxes for our car service receipts and our trying to guess how many business miles we did last year. All the soul searching about whether we did it right can be pretty taxing. With help you’ll get through it and each year it should get easier. At least I hope it will.

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2 thoughts on “How to survive Canadian tax season

  1. A couple of further notes to add to this from my experience. If you have an international tax number (similar to a SIN) and are due a refund from the Revenue then don’t expect it any time soon. I am due a refund and it’s a year now and no urgency what so ever to pay. The revenue did not allow me to deduct the refund of tax off my current year’s tax return, the T1. Oh and they do not pay you any interest on the amount they are kindly ‘keeping’ for you, unlike in the UK. Last grump! The revenue sent me a letter stating that I need not file my tax return until deadline of 30 June each year, so I thought I was okay for a time. However when delving into this it actually means that I can do this but still have to pay any tax owing by 30 April, same as everyone else. So to do this of course I have to have worked out my figures before end April! Not exactly straightforward.

  2. Linzi,
    thanks for the comment. You are right about the deadline for self-employed filing being later. I had the same experience (realtors being self-employed) in that I had to calculate all my taxes and pay before the end of April. It is small consolation that the paperwork could be submitted later!

    When you are here the tax refunds do come through pretty quickly – at least for our kids.

    Warmly,

    Frank

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