Income Tax – The Agony and the Ecstasy

It’s that time of year again! Millions of Canadians are preparing to file their annual personal income tax returns. For many, it’s a formidable task which they tend to postpone until the last possible day, which happens to be April 30th of each year. There is no denying that the tax return process can involve a number of forms, schedules, information slips, and yes, a certain amount of frustration. However, in many cases, it is not as complicated as some may think.

Main Components

The basic tax return can be broken down into three main components: income, deductions from income, and non-refundable tax credits. For an in-depth explanation of each of these three components, please see the article “3 Main Components of a Basic Tax Return

Filing Income tax

This article along with the article “3 Main Components of a Basic Tax Return” is a brief overview of the personal income tax return, outlining income sources and the most commonly used and applicable tax deductions and tax credits. Many Canadians choose to prepare and submit their own tax returns, using the Income Tax and Benefit Guide and other supporting information. Increasingly, they are abandoning the paper return and opting to file tax online, using secure computer software.

According to the Canada Revenue Agency (CRA) website, in 2012, almost 66 % of Canadians filed their returns electronically, either on their own or with the help of a tax preparer. Consequently, commencing in 2013 (for the 2012 tax year), CRA has discontinued automatic mail-out of the paper tax return package in an effort to encourage even more Canadians to file electronically. Certainly, such an initiative is both cost effective and environmentally friendly. You can still obtain a paper tax return package at your local post office or Service Canada Office or request one by telephone from CRA. For more information, go to www.cra.gc.ca.

Regardless of whether you submit a paper return or file electronically (See the article “File Tax Online: How to Netfile), be sure to file on time. Late filed returns with balances owing are subject to penalties and interest. If you are entitled to a refund, the sooner you file, the sooner you will receive your money, either via cheque or direct deposit – and the sooner you can relax and forget about the tax task until next time!

Related: Please see the article “Income Tax and Self-Employment

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