Tell your clients how a little attention to tax rules up front can go a long way to saving time, money and undue complications down the road, says Jamie Golombek, CIBC’s managing director, tax and estate planning.
You know that, but you should remind clients who plan on doing their own taxes.
Canadians had to pay over $1 billion in additional taxes in fiscal 2012 alone, primarily because what they reported on their tax returns didn’t match the dollar amounts provided by employers, financial institutions and other sources, according to CRA. As well, the tax agency rejected almost one in every five tax credit and deduction claims that year.
In addition to collecting additional taxes, the CRA will charge interest, currently at a rate of 5% on any overdue tax amounts, Golombek points out. If your client fails to file his return by the deadline or under-reports income repeatedly, penalties may also apply.
Golombek has some tips for you to pass along to your clients avoid costly errors:
- Double-check that you’ve included all income from all sources;
- Compare information on tax slips to investment statements or other supporting documents to ensure accuracy;
- If you’re missing information, do your best to get it; estimate amounts when information doesn’t arrive in time to file;
- Report all RRSP contributions, even if you’re going to claim the deduction in a later year;
- Determine if you are eligible for a deduction or credit before you claim it;
- Make sure your current address is on file with employers, financial institutions and the CRA so that you receive all tax slips and correspondence;
- Be punctual – file your return by the deadline, which is April 30, 2014 for most taxpayers, and respond to any direct CRA correspondence within the required timeframe.