February is a great month to get organized for personal income tax filing before April 30th. Even if you are self-employed and have a registration deadline of June 15, the taxes owed are still due April 30. Increasing your taxes early on can avoid unnecessary frustrations and / or penalties.
When do you expect your tax receipts?
- Reportable businesses are required to submit specific tax receipts for 2020 income including T4, T4As and T5 by February 28, 2021.
- If you’ve received taxable COVID-19 benefits, the rating agency will provide you with a T4A receipt, which you should receive before March 10, detailing the amounts.
- If you applied for a COVID-19 benefit with Service Canada, you will receive a T4E receipt instead of a T4A receipt.
- Trusts report receipts to beneficiaries on T3 receipts by March 31st.
- Partnerships that benefit their partners on T5013 receipts are also valid through March 31st.
What to do with your tax documents
A written checklist or personal tax organizer can keep track of the receipts and receipts expected and received and help you identify anything that may be missing.
By compiling your receipts and information, you can also check its accuracy and spot any omissions.
Penalties for not reporting receipts
Tax certificates can help you ensure that all sources of income are reported every year. If a 2020 personal tax return does not show an income amount of $ 500 or more and an income amount of $ 500 or more in 2017, 2018, or 2019, that person will be classified as an unreported income penalty.
The federal and state or territorial penalties correspond to the lesser of:
- 10 percent of the amount you did not report on your return for 2020; and
- 50 percent of the difference between the undervalued tax (and / or overvalued credits) on the amount you did not report and the amount withheld tax on the amount you did not report.
Dealing with missing slip-ups
Make sure you file on time to avoid late filing penalties even if you haven’t received all of your 2020 tax information or receipts.
If there are any missing receipts of information or income receipts, contact the issuer prior to filing and request a duplicate. If you are a registered user of the “My Account” service offered by the rating agency, you may be able to view your tax receipts online and save yourself time.
If you cannot find the information you need in time to submit it on time, make a best effort to estimate the missing amounts of income. If necessary, you can request an adjustment to your tax return as soon as the actual receipts or receipts have been received and the amount of income has been confirmed.
Don’t let someone else’s supervision add to your tax burden. Taking the time to manage and collect all of your information receipts and income receipts before preparing and filing your income tax return can help you avoid unnecessary taxes, interest and penalties.
Scott Conner, CPA, CA.
BDO Canada LLP
Scott Conner is an experienced tax advisor and practical problem solver at BDO. As a Canadian Income Tax Partner, Scott has particular specialties in private companies planning estates, trusts and complex transactions. As the personal tax season approaches, Scott and his team understand that personal taxes are as individual as the clients themselves. BDO works closely with clients to understand their specific needs and tailor strategies accordingly. BDO partners and employees take a proactive, practical approach. They closely follow existing and proposed legislation to determine how it will affect each financial objective and provide ongoing guidance.