Have You Heard The Latest Income Tax Myth?
It's tax season again and what a confusing time for Canadians who have not been keeping up with all the new tax rules and changes
. Filing annual personal income taxes is trying enough, but combine that with the software choices and changes, well, it does not necessarily make for a pleasant experience. Among the many things there are to know when it comes time to file, there are also a few things Canadians need to not know. With so many common tax myths out there, it's hard to know what is what. Here is a brief list of tax myths that will hopefully sort out your tax questions.
Many people think they should be receiving a tax refund every year. This is completely FALSE. Getting a tax refund means that you've overpaid in your employment tax deductions somewhere. A refund can also result in a yearlong RRSP contribution or from childcare expenses. In essence, getting a refund means you've been providing the government use of your money for the past year, interest free. A common belief is that once you get your refund, you are in the clear. This is definitely a FALSE myth. The Canada Revenue Agency will initially assess your return without the supporting documents. However, they do have a right to ask for them in the future, if they suspect errors such as unreported income or miscalculations, receipts or support.
Too many Canadians believe that if they make a mistake on their tax returns, the Canada Revenue Agency will correct it for them, in their favour. This is absolutely FALSE. The CRA will correct mathematical errors that you may have missed, but if you miss any deductions or credits or forget to transfer things to your advantage, the CRA is not obligated to point them out or correct them.
Another common myth among Canadians is that if they make a mistake on their return, it's best to just file a new one. Another resoundingly FALSE myth. If you've made a mistake on your return, it's best to inform CRA by using a T1 Adjustment form (T1-ADJ). You can also add a handwritten explanation and include it with the form. With the tax deadline mere days away, considering these myths may help you prepare a more accurate tax return and reduce any money you may owe. Filing on time is the single best way to avoid paying more than necessary, so what are you waiting for Canada? Get filing.
by: Molly Wider
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