There is a “long list of tax changes” this year, says local accountant Peter Still – though what people tend to neglect most are some basic tax filing principles.
Donations and medical expenses are two examples.
“People forget to put medical expenses on the lower income spouse. The medical expenses should be on the higher income spouse,” he said.
Additionally, if filing on your own, another point to remember is to split pensions, where the higher income person can split with the lower income, “and it can make a big difference.”
For those using an accountant, make a checklist of what’s needed before handing that envelope off, added Still. “This saves the hassle of a phone call or an email reminding you to send in your T slip or charitable receipts,” he said. “You should really try to gather your papers by the first week of March, so there’s time enough to process and ask questions.”
Apr. 30 is the deadline to file; June 15 for self-employed.
“The things that are going to hit people the most,” said Syd Schatzker, Partner at Steinberg, Schatzker Chartered Accountants, “are investing income and house sales.”
Due to new federal regulation, it is now law to report the capital gain if you sold a house.
“People are buying up condos and flipping homes. They may have more than one in any given year, and it’s unclear which is the principle residence. The government is now auditing this, comparing a change of ownership in terms of title searches,” he warned.
“You have to report a principle residence. Then calculate how many years you’ve lived in it, to know how many years aren’t taxable. There’ll be big penalties if you don’t do it.”
Moreover, for those with youngsters in the house, a point to remember: the Harper-government’s arts and fitness tax breaks for children under 16 will be halved this year, and eliminated next year altogether.
Also to be aware of are new digital forms that are replacing old fashioned snail mail records.
“A lot of investing companies do not send out T5s anymore. People should be aware if they have investment income, they may not be receiving the papers to their home. They may have to go online to print these receipts out,” noted Schatzker.
“If you omit or make a mistake and do not report some income… There’s a very onerous penalty – fifty per cent of the tax.”
And finally, pay especial attention to any specific health expenditures that could be written off. Examples Schatzker noted are installed grab bars in the bathroom for the disabled, or a front ramp for a wheelchair. “A lot of people aren’t aware of this stuff, so it’s important to find out.”