Five key dates to know as tax season approaches
Canadians should also be aware about the risks of filing too early
The only things certain in life are death and taxes, as the old saying goes. And the 2022 tax-filing season is quickly approaching.
There are five key dates Canadians should be mindful of, according to H&R Block, to make the most of their tax file and avoid being charged late penalties or having government benefits interrupted.
This is the first day the federal government will start accepting electronic income tax returns and the first day the government's free tax-filing softwares, NETFILE and ReFILE, are available.
For those looking to get their tax filing out of the way early, H&R Block senior tax specialist Josee Cabral says it might be beneficial to hold off until the end of February to file. That's because employers have until the end of February to issue T4s and financial institutions don't have to issue T3 and T5 documents until the end of March.
"Don't get too ahead of yourself to file your taxes because it's also important to have all your documents in hand to have an accurate result," Cabral told Yahoo Finance Canada.
Employers are required to give tax-related documents to workers by the end of February, or face penalties.
Even if an employee left the company last year, this deadline does not change.
Canadians have until this date to take advantage of their RRSP to reduce their taxable income for the 2022 tax year.
RRSP contribution and deduction limits can be found on the previous year's assessment notice (the 2021 notice of assessment in this case) or by logging into My Account on the CRA website.
The rule of thumb is the RRSP deduction limit is roughly 18 per cent of your pre-tax income or the limit set by the CRA, whichever is lower. Contribution room is specific to the individual since unused room is rolled over.
"It's important that you do not exceed your contribution limit as the CRA can penalize you with 1% interest until you withdraw that exceeding amount," Cabral said.
Last-minute RRSP top-ups can typically boost an individual's tax refund.
Since April 30, the usual annual tax-filing deadline, falls on a Sunday, May 1 will act as the deadline this year.
It's important to note that if an individual owes taxes to the government, compound daily interest will be charged starting May 2. Anyone who is concerned they might owe money will likely be better served to file earlier to determine the outstanding balance and pay it off to avoid interest charges.
If you miss the filing deadline, late-filing penalties are five per cent of the balance owed for 2022, plus an extra one per cent fee for each full month after the deadline, up to a maximum of 12 months.
Filing on time is also crucial to avoid disruptions to government benefits such as the Canada Child Benefit and GST payments, Cabral says.
"If you don't file by the tax deadline, you're taking a risk of a payment interruption, although they will pay out those amounts once you file," she added.
For self-employed Canadians, the deadline to file their taxes is June 15. However, similar to the May 1 general deadline, if any taxes are owed, the CRA will begin charging interest on unpaid balances beginning May 2.
Michelle Zadikian is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @m_zadikian.
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