Tax season is upon us once again, prompting the annual ritual of gathering receipts and hopeful anticipation for a substantial refund check. As the electronic filing service Netfile prepares to open on Monday, it’s time to begin the process of sorting through financial records and preparing for the inevitable.
- Start with the Messy Part:
According to Brian Quinlan, a partner and chartered professional accountant with Allay LLP, the first step in preparing your tax return is tackling the “messy part.” This involves gathering all the necessary information that cannot be easily accessed online, including receipts for medical expenses, donations, child-care expenses, and union dues. While forms like T4s, T4As, T5s, and T3s can typically be found on the CRA website, certain documents may need to be manually collected. - Important Deadlines and Dates to Remember:
The tax-filing deadline for most individuals is April 30, while self-employed individuals have until June 16 to file their returns this year. Even though the deadline is in June, it’s crucial to remember that interest on any taxes owed starts accruing at the end of April, making timely filing essential. Additionally, the deadline for RRSP contributions to reduce your tax bill for the 2024 tax year is March 3. -
Notable Changes for This Filing Season:
One significant change for the current filing season is the deferral of the capital gains inclusion rate hike until 2026. Instead of two-thirds of capital gains over $250,000 being subject to tax, the current rate remains unchanged at 50 percent. As a result of these changes, the CRA’s systems will not be ready to accept tax returns with capital gains or losses until late March, with interest and penalty relief granted until June 2 to allow more time for filing. -
Two-Month Extension for Charitable Donations:
To accommodate the Canada Post strike that disrupted mail delivery in late 2024, Ottawa has granted a two-month extension for charitable donation tax receipts. This means that donations made in the first two months of 2025 can be claimed on either your 2024 or 2025 return. -
Maximizing Credits and Deductions:
When planning your tax return, it’s essential to consider which credits you’re eligible for and how they can be optimized. Some credits can be grouped together, transferred between spouses, or passed from children to parents to maximize returns. It’s crucial not to overlook potential benefits by being a “selfish tax planner,” as collaboration between family members can lead to increased savings.
In conclusion, as tax season kicks off, it’s vital to be proactive, organized, and informed to navigate the complexities of filing your return accurately. By staying updated on changes, meeting deadlines, and maximizing credits, you can ensure a smooth and beneficial tax-filing experience for the 2025 season.
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