Photo created by rawpixel.com - www.freepik.com
April 30 lost its infamous place in the spotlight this year, given that the federal government has extended the traditional income tax filing and payment deadlines to help Canadians affected by COVID-19.
Most of us get an extra month to file, until June 1, 2020, and an additional four months to pay up, until Sept. 1, 2020, if there are any amounts owing for the 2019 tax year. While returns for self-employed filers are still due June 15, as is the case every year, those with 2019 taxes owing also have until Sept. 1 to remit payment, instead of the usual April 30 deadline.
Still, many Canadians are unclear about the details of these changes. For example, if you take the payment extension, will penalty and interest charges apply? And what’s the deal for self-employed filers who collect and remit GST/HST?
So, we researched the new Canada Revenue Agency guidance and spoke with Nicholas Cheung, CPA, CA, a Toronto-based accountant and financial educator, to get answers on these and other frequently asked tax-filing questions.
If I owe taxes and wait until Sept. 1 to pay, will I be charged any penalties or interest?
So long as you file your return by June 1, 2020, and pay your 2019 taxes by Sept. 1, 2020, you’re good—you won’t face any extra fees.
However, you don’t get your return in by the new deadline and have a balance owing, you’ll be charged penalty fees for filing late. If you file on time but don’t pay by Sept. 1, you’ll avoid the late filing penalties—but you’ll pay daily interest on the amount owing, and it will begin to accrue as of Sept. 2.
Note that these deferrals are for the 2019 tax year only. If you’re behind on your tax returns and/or payments from previous years, the usual fees will apply—although you can appeal to the CRA on a case-by-case basis.
Similarly, if you normally pay by installments, you can wait until Sept. 1 to remit the taxes you owe on the June 15 installment without incurring any penalties or interest fees, but any outstanding amounts owing for previous installments will still be subject to fees.
Are there new deadlines for GST/HST returns and payments as well?
Good news for the self-employed and small-business owners: while the CRA is not changing the filing deadlines for GST/HST returns, it is waiving late filing penalties for returns filed by the end of June. As for payments, any GST/HST installments that are due March 27 through June 2020 can be deferred until June 30, interest-free.
I won’t owe any taxes. Do I have to file a return anyway?
Technically, no, but you still should file ASAP so you don’t leave money on the table, says financial educator Nicholas Cheung. You could have a tax refund coming, or miss out on benefits such as the Guaranteed Income Supplement for seniors, GST credit, Canada Child Benefit, or provincial property and sales tax credits.
“In fact, there probably has never been a more important time to file a tax return ever,” says Cheung, citing this year’s top-up on the GST credit and Canada Child Benefit due to COVID-19, as well as the new Climate Action Incentive credit in some provinces—a refund for the carbon tax we pay on the energy that heats our homes and runs our cars. “And you don’t have to tick off a box or anything, like you used to. The CRA will assess your eligibility for all these programs automatically when you file.”
I’m not sure I have all my T-slips. What can I do?
The CRA should now have copies of all your T-slips (which report income you’ve earned and deductions withheld from that income for the tax year), since the final deadline for providers to send them in this year was May 1 (for T3 Statement of Trust Income and T5013 Statement of Partnership Income), says Cheung. To access information from the slips you’re missing, sign up for My Account through the CRA website. If you find an extra slip after you file, you can amend your return once you receive your notice of assessment.
Should children file income tax returns?
If a child earned income or paid post-secondary tuition in 2019, they should definitely file, says Cheung. That’s because the income included on their return will create RRSP room for them to use when they are older, and they might be able to transfer the tuition credit to a parent. “Even if they didn’t work and are approaching age 19, they should file a return so they’ll be eligible for the GST credit right away, which they can get even if they didn’t have any income,” he adds.
Aside from the new deadlines and enhanced COVID-19 benefits, what else is new this year?
The amount you can withdraw from an RRSP for the Home Buyers’ Plan has increased to $35,000 from $25,000, says Cheung. “Other than that, there really isn’t a whole lot that’s sexy to talk about,” he says.
He does caution, however, that while the enhanced GST credit and Canada Child Benefit are not taxable, payments received from the new Canada Emergency Response Benefit (CERB) are taxable. So, anyone who applied for and is receiving CERB benefits should try to save a portion of those funds, depending on their tax situation, to pay in taxes in a year’s time.
MORE ON TAXES: