Tax preparation doesn’t need to be confusing. Make it easier on yourself by knowing the right information and staying up to date on what the Canada Revenue Agency expects from you. Here are six things you need to know before the Canadian tax deadline:
When is the Deadline?
The Canadian tax deadline is April 30th if you have an outstanding balance. The regular deadline is April 30th, but since that day falls on a Sunday this year, you can file your taxes on time if it’s received or postmarked by May 1st.
Is There a Deadline for Contributing to my RRSP?
There is no deadline for contributing to your Registered Retirement Savings Plan (RRSP). If you want to claim your contribution as a tax deduction on your 2016 income, you are too late; you would have needed to make your contribution by March 1st.
What are the Tax Brackets?
The 2016 tax brackets are as follows:
- The first $45,282 of taxable income — 15 per cent tax
- The next $45,282 of taxable income, up to $90,563 —20.5 per cent tax
- The next $90,563 of taxable income, up to $140,388 —26 per cent tax
- The next $140,388 of taxable income, up to $200,000 – 29 per cent tax
- Any taxable income over $200,000 — 33 per cent tax
Remember, your taxable income is not what you made over the year, it’s the income on which tax can be applied (what you report on line 260 of your federal return).
How are Taxes Calculated?
The amount of tax you pay depends on how much money you make. First, you declare your total income (gross income) for the year. This includes employment income and any money you made from your own business, investments, capital gains, dividends, and interest.
Next, look for tax credits and deductions that can reduce the amount of income that is taxed. These could include things like public transit passes and a $5,000 home buyers’ amount, if you’ve recently purchased a home. Your federal tax is calculated based on whatever income is left after these credits and deductions.
What Documents are Needed for my Tax Preparation?
You need to collect several documents based on how you made your money, they include:
- A T1 General 2016 form to note your income, credits, and deductions
- If you’re an employee, a T4 is required, which shows how much your employer paid you
- If you’re retired, a T4A, which shows how much you earned from your pension and/or benefits
- A T5 is required if you made money from investing. It shows dividends, interest from bonds or money you loaned, and more
- If you received employment insurance, a T4E is required
- If you receive worker’s compensation or social assistance, you will need a T5007 Statement of Benefits
What Documents will I Need for Tax Deductions?
You will need slips such as your T4, T4A, T4E or T5007. Receipts are required to claim expenses like public transit, child care, moving and medical expenses. RRSP receipts are needed as proof of your total contributions to your plan. Lastly, certain deductions require special certificates, for example: volunteer firefighters.
If you’re in need of professional help for your tax preparation this tax season, Elite Tax can help. Call us today at 647-264-3059 or browse our tax preparation services here.