Tax Tips - Personal Tax Returns: Installments & Filing Deadlines

Installments must be paid at the lesser of the installment base as advised by Canada Revenue or the tax payable for the current year.

Hint: If your income is going down in the current year, you do not need to make the full installments requested by Canada Revenue.
Note: If you under remit installments, you will be charged interest at the quarterly rates for the current year.
Note: If you make remittances and your income tax is not equal to the remittance so that you have a refund, you will not receive interest on the over remittance for the year.

There are now two filing deadlines for personal income tax returns. The first filing deadline applies to most people and is April 30, of the year following your calendar tax year for taxpayers who have no income from business sources recorded on lines 135 to 143. If you have income from businesses, professions, commissions, farming or fishing, you can file your tax return by June 15.

The different provinces in Canada charge different provincial tax rates. When you move to another province, you will find a change in tax rates. You are a resident of the province for filing your income tax return for that year if your permanent home was in that province as at December 31st of the year and you had permanent residency during the year for more than six months (acquired new provincial drivers licence, health card, etc.).

Prescribed interest rates on taxes owing change quarterly.  The prescribed interest rate is calculated on the average interest rate on 90 day Treasury Bills during the first month of the preceding quarter.  The Treasury Bill rate plus  2% is allowed on amounts owing to the taxpayer, and Treasury Bill rate plus  4% is charged on amounts owing by the taxpayer.  Canada Revenue does not pay interest on any refunds that are paid by it within 45 days after the return was due. On the other hand interest on deficient payments starts on the day the tax returns was due or the installment was due and is compounded daily.

The Goods and Services Tax Credit for yourself and your spouse and each of your dependent children may be receivable if your income is low and you fill out a tax return. Remember that money paid to the government and certain tax benefits are your income. It is important to fill out a tax return to get the refund or the benefit.

You may be required to fill out a tax return even if you have no tax payable for the year. All individuals who have had tax deducted at source in any manner should fill out a tax return to determine if they have a refund of tax payable and to receive the same. Starting in 1997 low wage earners will be able to receive a refund of their Employment Insurance even if the amounts paid are very low. In certain circumstances, Canada Pension Plan may be subject to a refund if you earned less than $3,500. Individuals (particularly mothers of children) are able to receive the monthly Child Tax Benefit if they fill out an income tax return.

If your tax return is assessed and Canada Revenue has adjusted your income tax upwards you still have an avenue of appeal. You may file a Notice of Objection to the tax return within the latter of 90 days of receiving the Notice of Re-Assessment or one year from the due date of the return. It is important ensure that Notice of Objections are filed properly to avoid collection action on the debt while you have the return under appeal. The Notice of Objection one year rule only applies to ordinary items on the income tax return. Often a re-assessment results from an interpretation of the fact of the audit that may not be correct in yo.

Expenses that can be deducted on your return include transfers of disability credits, tuition fees from children, carrying costs on investment income (such as interest and safety deposit box fees and council fees) and moving expense deductions against income earned, especially those for college students returning for summer jobs.

From time to time people make errors on completion of their income tax return or identify further deductions that they may take after they file their return. Canada tax laws allow individuals to file an amendment to their tax return by filing a form T1-ADJ within three years of the date the tax return was first assessed. There are many errors that may be made so you should review your last three tax returns to identify if you have missed any deductions. Areas to look for are full deduction of medical expenses in excess of 3% net income including medical, dental, eyeglasses, prescription drugs, and chiropractor or other medical fees.