Koroll & Company Blog

By the time this summer reached the halfway mark, most Canadian taxpayers have filed a tax return for 2015, received a Notice of Assessment with respect to that return, and considered that their income tax obligations for this year were complete.

For a significant number of those taxpayers, however, the filing of that return will trigger the issuance of a 2016 Tax Instalment Reminder from the Canada Revenue Agency (CRA), and that reminder will show up in their mailboxes sometime during the month of August. On that form, the CRA will suggest to the recipient that he or she should make instalment payments of income tax on September 15 and December 15, 2016, and will identify the amount which should be paid on each date.

Complete, accurate and readable records will make a Canada Revenue Agency (CRA) audit less onerous.

Regardless of whether your business is a proprietorship, a partnership or an incorporated company, the CRA requires the business to maintain financial books and records. Here are a few ofthe CRA’s record-keeping requirements you should know about.

For most of the year, taxpayers live quite happily without any contact with the Canada Revenue Agency (CRA). During and just following tax filing season, however, such contact is routine – tax returns must be filed, Notices of Assessment are received from the CRA and, on occasion, the CRA will contact a taxpayer seeking clarification of income amounts reported or requesting documentation for deductions/credits claimed on their annual return.

By the end of June, all individual taxpayers should have filed their 2015 income tax returns and most will have received a Notice of Assessment (NOA). This assessment will outline the Canada Revenue Agency’s (CRA’s) conclusions with respect to that taxpayer’s income and tax position for the year. In most cases, the Notice of Assessment won’t vary a great deal from the information provided by the taxpayer in their return. When it does vary, and the change is to the taxpayer’s detriment, taxable income assessed is greater than the amount reported by the taxpayer, or a deduction or credit is denied, then the taxpayer has to decide whether they want to dispute the CRA’s assessment.

By the beginning of June, most taxpayers have filed their annual return for the previous year and have most likely received a Notice of Assessment (NOA) for that return, containing the good or bad news about their tax situation for the year. At this point, most Canadians are probably happy to put taxes out of sight and out of mind until next year’s filing season rolls around. For a number of reasons, however, that’s not the best strategy.

The mid-point of the year is, in fact, a very good time to take a look at one’s current year tax situation, to determine whether things are on track for the year or, if not, how to make things right while there’s still time to do so. There are a few basic steps which require no more than a few hours’ time to make sure of just that.

By May 23, 2016, the Canada Revenue Agency (CRA) had processed just under 26 million individual income tax returns filed for the 2015 tax year. Of those returns, 56% resulted in a refund to the taxpayer, 18% required payment of a tax balance by the taxpayer and just over 20% were “nil” returns – returns where no tax is owing and no refund claimed, but the taxpayer is filing in order to provide income information which will be used to determine his or her eligibility for tax credit payments (such as the Canada Child Tax Benefit or the HST credit ).

By now, most Canadian taxpayers, except the self-employed and their spouses who are not required to file until June 15, will have filed their 2015 income tax returns. Once the Canada Revenue Agency (CRA) has processed these returns, taxpayers across Canada will begin to receive Notices of Assessment for 2015. In most cases, the issued Notice of Assessment will simply confirm the information which the taxpayer provided on their return, perhaps with some minor mathimatical corrections. 

However, not infrequently, the Notice of Assessment will indicate that the CRA has disallowed or changed the amount of certain deductions or credits, or has included income amounts that were not declared by the taxpayer on his or her return. When that happens, it’s time for the taxpayer to decide whether to dispute the CRA’s assessment of their tax situation.