Many individuals wait until the last couple weeks of April to file their income tax return and this year will probably be no different. The following is a checklist of some last minute reminders that individuals should be aware of when preparing their 2004 individual income tax return:
- The deadline to file your 2004 individual Canadian income tax return to the Canada Revenue Agency is April 30, 2005. Selfemployed individuals and their spouses (or common -law partners) have until June 15,2005 to file their 2004 income tax return. The importance of these deadlines is that if there is a balance of tax owing on your tax return and the deadline is not met, then there will be a late filing penalty of at least 5% of the balance owing. If there is a refund owing then there are no penalties for late filing.
- Regardless of the above filing deadlines, if there is a balance of tax owing for 2004, this tax should be paid on or before April 30, 2004 (even for selfemployed individuals) to avoid late interest charges.
- To maximize tax savings, spouses should consider combining their charitable donations and have the higher income earning spouse claim such donations on hislher tax return.
- To maximize tax savings, spouses should consider claiming the family’s medical expenses on the lower income spouse’s tax return assuming that spouse is paying at least some taxes.
- If you sold securities in 2004, make sure the Adjusted Cost Base is accurate. If not, there could be double taxation.
- If you received a tax refund from the Canada Revenue Agency in 2004, check the Notice of Assessment to determine if the CRA also paid you interest in 2004 on this refund. If so, this interest income is taxable and should be reported on your 2004 tax return.
- If after netting your capital gains and losses you have excess capital losses in 2004, consider completing Form TIA to carry back the unused capital loss to offset taxable capital gains reported in 2001, 2002 and/or 2003. This will allow you to recoup some taxes paid from previous years.
- Check the amounts in the “Paid by You” Column on your Summary of Investment Income and Expenses to determine if any of these amounts can be claimed for tax purposes as a deduction or credit.
- If there was a security in a non-registered account that had no value during 2004, determine if the security is “worthless” and if a 2004 capital loss can be claimed.
- If you anticipate receiving a tax refund for next year (i.e. 2005 tax return), consider filing Form T1213 to the CRA. This form is optional, so there is no deadline. If this form is accepted by the CRA, they will send you a letter that can authorize your employer to reduce your tax withholdings on your paycheques gomg forward which will increase your net pay.
If you have any questions or require clarification of any of the issues discussed in this document, do not hesitate to discuss these with your advisor.