Tax. Does that word accelerate your heart rate, send your stress level soaring, and cause your palms to form droplets of water? Why does one word have this ability over us?

Is it hot in here or is it just tax season?

Many Canadians fear the annual event of filing their personal income tax returns. Some put it off entirely until they receive a nice, threatening letter with a demand to file from Canada Revenue Agency (CRA). At Metrix, we work with our clients to take the stress out of tax season. Read on to learn how you can lower your tax bill, why you should file on time, the documents you’ll need, plus key dates for tax season.

How to lower your income tax bill:

Purchase RRSPs. RRSP contributions can be deducted from your taxable income, meaning you could pay less taxes. See HERE for contribution limits and official RRSP information.
Make donations to registered charities and keep the official receipts.
Go to school! Your post-secondary education center will issue a tax slip for your tuition by February 28 of the following year.
Claim childcare expenses from licensed childcare providers.
If you’re not sure what to deduct – ask your accountant!

Four reasons to file your taxes on time:

You may not owe anything. 57% of returns filed in 2022 were refunds and another 17% were NIL returns. This means 74% of taxpayers did not need to worry about a potential balance owing. Source By not filing personal income tax returns, taxpayers are missing out on potential refunds. . (Remember – even if you have a NIL balance owing, you still must file a return.)
You’ll avoid penalties. If you are one of the 26% of taxpayers that had a balance owing to the government, why pay interest and penalties? The prescribed interest rate has increased to 8% in the first calendar quarter 2023. Yes 8%!! Keep your money and make the payment on time.
You could get government benefit payments. Many benefits from the government, such as Canada Child Benefit, GST Credit, Guaranteed Income Supplement, require the filing your tax return. During high inflation and high cost of living many taxpayers rely on these sources of income.
You’ll build RRSP and TFSA contribution room. RRSP and TFSA contribution rooms are established through the filing of the personal income tax return.

In 2022, 74% of taxpayers did not need to worry about a potential balance owing.

Documents you need to file your taxes:

Gather information slips (T4 (Employer) T5 (Investment income), RRSP etc. These usually arrive before February 28. Do you have investment funds (EFT, Trusts)? These may not arrive until after March 31.
Ask for investment statements from your brokerage. Accountants will require a Realized Gain Loss Summary to record any capital gains or losses. Any investment management fees paid are also deductible so save your invoices.
Do you have foreign investments? Ask your brokerage for a Foreign income report (T1135)
Does your child go to daycare? Please get a receipt that provides the child’s name, duration of care and the caretakers business number or SIN on the receipt.
Did you make donations to registered chariteis? CRA requires the official donation receipts with their Charity Number.

Be sure to tell your accountant of any major life events such as getting married, having a child, or buying or selling a home.

You’ll need a handful (not a stack) of documents to file your taxes.

Key dates for 2022 Tax Season:

March 1, 2023 – RRSP contribution deadline
March 15, 2023 – 1st 2023 tax instalment deadline
May 1, 2023 – Tax filing deadline & Tax balance payment deadline
June 15, 2023 – Self-employment filing deadline

2022 – 2023 TFSA Contribution Limits:

The Tax Free Savings Account maximum to December 31, 2022 is $81,500.
In 2023, eligible taxpayers can contribute another $6,500 for a total of $88,000.
Did you know? Your TFSA contribution room is found within CRA’s My Account for Individual or by phoning 1-800-267-6999.

Tax Filing for Entrepreneurs and the Self-Employed

Are you Self Employed? Here are several items you could summarize before submitting the information to your accountant.

Summarize your income and expenses in columns in an Excel or Numbers document.
Provide receipts for large purchase for your business, such as vehicles, computers, equipment, buildings etc.
Do you use a vehicle for your business? We hope you have kept a vehicle log showing the personal and company usage of the vehicle. CRA will require this.
Do you have employees? Provide the T4 summary and T4s, if you prepare yourself.
You may also be eligible to deduct the business use of a home office. Document your home and office square footage, mortgage interest, property taxes, utilities, etc.

Questions? Reach out to us! We L O V E tax and are waiting to help you navigate the world of tax credits, deductions, refunds and more! Contact Us.

ABOUT METRIX GROUP

With five offices throughout Alberta, Metrix Group has over sixty years experience providing accounting and related services to credit unions, rural gas co-operatives, municipalities, school boards, and non-profits. We also serve small to medium sized owner-operated businesses across agriculture, manufacturing, and technology.

How to Breeze Through the 2023 Tax Season