Koroll & Company Blog

As the Canada Revenue Agency (CRA) notes on its website, new tax scams are devised every single day of the week. And, despite the cautionary tales which appear frequently in the media and the warnings posted by the CRA on its website, Canadians continue, with regularity, to fall victim to each new (and old) tax scam and tax fraud.

While Canadians are contacted every day by would-be fraud artists, there seems to be something about a communication from the tax authorities, whether real or fake, that makes people especially vulnerable. Perhaps it is the fact that most Canadians are unfamiliar with the workings of a system. Most of us only interact with the CRA once a year.

If spring is the season for real estate sales in Canada, then summer is the time when all those real estate buyers and sellers pack up their belongings and move to their newly purchased homes. And, while buying a new home and making that move is usually something home buyers are doing by choice, that doesn’t make the actual process of moving any less stressful or costly.

Many Canadians are aware that a tax claim of some kind can be made in respect of costs incurred in relation to a move, but few are aware that such tax claims can only be made in specific circumstances, or that there are detailed rules which govern what expenses can be claimed, and in what amounts.

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Once they’ve completed and filed their 2016 tax return, most Canadians give a sigh of relief that the dreaded annual chore is done, and that income taxes will be out of sight and out of mind until the next filing deadline rolls around.

If all goes as planned, that is how events will unfold. In the best case scenario, the Canada Revenue Agency (CRA) will issue a Notice of Assessment which indicates that the Agency agrees with the taxpayer’s summary of his or her income, deductions, credits, and taxes payable for the past year, and that it has no further questions or concerns. And, for the vast majority of Canadians, that is exactly how things will unfold. For many others, however, there will be a few more questions to be answered or steps to be taken before the tax filing and assessment process for the year is finally completed.

The principal residence exemption provides Canadian taxpayers with substantial tax relief.

When you sell property, you realize either a capital gain or a capital loss. A capital gain will occur if you sell your property for more than you paid to acquire it and make improvements, known as capital costs. The opposite is true for a capital loss.

While it would seem like good news to find out you made a profit on the sale of the property, the existence of a capital gain means that you have an additional tax liability. 

If, however, the property was your principal residence for all or part of the time you owned it, you may be able to avoid all or some of the liability.

If you or your spouse or common-law partner are self-employed, the last day to file your 2016 income tax return is June 15, 2017. If you do so by this date, you will not incur a late-filing penalty.

You will not, however, escape interest for unpaid balances owing.

As per legislation, any balances owing, on your income tax return are due on April 30 unless April 30 falls on a weekend. 

Please note that because April 30, 2017 was a Sunday, the due date for balances owing on your 2016 return were due May 1, 2017.  

For several years, the Canada Revenue Agency (CRA) has been encouraging taxpayers to manage their taxes and benefits online, through the CRA website, and has been largely successful in that effort. More recently, the Agency has taken the next step, by creating mobile apps which taxpayers can use to obtain most of the same information, and carry out many of the same tasks, as can already be done online.

For individuals, there are currently two such apps – MyCRA and MyBenefits CRA. The former gives users access to a range of information about their own tax affairs, as well as more general information about the CRA’s services, as follows:

Older taxpayers who have recently completed and filed their tax returns for 2016 may face an unpleasant surprise when that return is assessed. The unpleasant surprise may come in the form of a notification that they are subject to the Old Age Security “recovery tax” – known much more familiarly to Canadians as the OAS clawback.

The OAS clawback is a product, in part, of the way in which Canada’s government-sponsored retirement income system is structured. OAS is one of the two main components of that system – the other being the Canada Pension Plan (CPP).

While many retired Canadians receive both OAS and CPP benefits, the two plans are quite different. 

As just about everyone knows, individual income tax returns for the 2016 tax year should have been filed, by most Canadians, and any tax balance owed must've been paid by all individual Canadians, on or before May 1, 2017. And, most Canadians do file that return, and pay any tax balance owed, on or before the deadline.

As of April 24, 2017, the Canada Revenue Agency (CRA) had received just over 18 million individual income tax returns for the 2016 tax year. There are, however, a significant minority of Canadians who don’t file a return, or pay taxes owed (or both) by the annual deadline.