It’s just about time for your annual re-acquaintance with the Canada Revenue Agency (CRA). Circle Tuesday, April 30th to get your return and tax payment in, though if you or your spouse runs a business, the return itself may not be due until Monday, June 17th.
Below is a very brief summary of some key federal tax items to look out for. Compared with other years, there are relatively few substantive changes. However, the process of filing tax returns is evolving, with wind-down and elimination of traditional modes and expansion of online capacity as we move further into the digital era.
Substantive developments
While obviously of relevance and value to the affected taxpayers, there are only a handful of substantive developments this year. CRA itself notes these items:
- Family caregiver amount – An additional $2,000 amount for claiming this tax credit where the taxpayer has a dependant with a physical or mental impairment
- Medical expenses – Anti-coagulation therapy now eligible
- Investment credit – Eligibility for the mineral exploration tax credit has been extended to flow-through share agreements entered into before April 1, 2013
- Employees profit-sharing (EPSP) – Plan beneficiaries should consult a tax advisor to determine if a new tax applies to certain employer contributions
- Canada Pension Plan (CPP) working beneficiaries – Rule changes beginning in 2012 could affect premium obligations, pension credits and filing requirements.
The filing process
Filing online with CRA Netfile
In past years a filer required a web access code to reach the Netfile service, but the process has been changed so that a social insurance number and date of birth will suffice. Be aware however that the taxpayer’s personal information and address must be up to date. CRA’s My Account service can be consulted to verify such information and make changes if necessary.
Online filing for 2012 returns has been open since Monday, February 11, and will remain open until Saturday, November 30. Returns must be prepared using CRA-certified tax preparation software or Web application.
According to the CRA website, taxpayers who file online and subscribe to direct deposit may receive their refunds in as little as eight days.
Logging on to other e-Services
Three CRA services have had their logon access made more flexible:
- My Account for Individuals
- My Business Account
- Represent a Client
In all cases, there is a process to create a CRA user ID and password to access the respective service. It involves completing sufficient identification information for the Agency to mail out (in 5-10 days) a CRA security code which can then be used to complete the registration process.
In an effort to seek out and implement more cost‑effective online security systems, the CRA established the Sign-in Partners program. Users of My Account and My Business Account may log in using their online banking information with one of the participating Sign-in Partners: BMO Financial Group, TD Bank Group or Scotiabank. Further information is available on the CRA website or with the respective bank.
Discontinued filing support
As of this filing season, CRA will no longer mail out paper-based tax packages, though paper returns will continue to be accepted. Those wishing to file in this manner may obtain a tax package from Canada Post outlets, Service Canada offices, by download from the CRA website or by calling the CRA at 1-800-959-8281.
Elimination of Telefile
In June 2012, CRA announced that the Telefile service will be discontinued.
The service allowed the filing of simple tax returns over the phone, but usage has declined by about 10% annually in recent years. Based on the trajectory, less than 1% of the $25+ million tax filers would have used the service to file 2012 returns.
Waiting for your refund to come?
Donations to gifting tax shelters
On October 30, 2012, CRA introduced a new policy for a taxpayer claiming a credit by participating in a gifting tax shelter scheme. The schemes in issue are those where a tax receipt may have been issued for a larger amount than the taxpayer’s donation or payment.
The stated purpose of the policy is to avoid the issuance of invalid refunds and discourage participation in these abusive schemes. Assessments and refunds of such returns will be put on hold until the audit of the tax shelter is completed, which may take up to two years. A taxpayer whose return is on hold may be able to have their return assessed by removing the claim.