Most Canadians around this time of the year are stressing about their taxes. If you do not possess an extensive tax background then calculating your personal taxes can be frightening. After reading this article you will discover the best approach to income tax preparation in Toronto.
All Canadians not just Torontonians must file income taxes each year. The T1 General is the basic form a person must complete and file by April 30th each year. Before you begin your income tax preparation you will need to visit a GTA post office to pick up a tax package or purchase tax software online. The package includes the T1 General form and all schedules needed to perform calculations. You can pick up the package at any post office or print all the forms online.
T4- Statement of Remuneration Paid
Every Individual who works will be given a T4 tax slip from their employer, latest by the end of February. When hiring a Toronto tax planning service the first thing they will ask for is your T4 slip. This form tells you and the Canadian Revenue Agency (CRA) how much employment income was paid during the year. It also shows the amount of income tax that was deducted by your employer. Employment income includes:
- Vacation pay
- Taxable allowance
T3 – Statement of trust income allocations and designations
In preparation of your income taxes make sure you have received your T3 slip for trust income. This form will be given to you by your financial administrator and trustee.
Types of Income included in this form are:
- Income received from mutual funds in non registered accounts,
- Business trusts
- Income from an estate for given tax year
You will not receive this form if you do not have the type of income listed above.
T5- Statement of Investment Income
The T5 statement of investment income is prepared by organizations which pay interest, dividends or royalties to provide you with your investment income for the year. Included in the T5 are dividends, royalties, and interest from:
- Bank accounts
- Accounts with investment brokers
- Insurance policies
Choose which method to file your return?
Once you have completed all your tax planning strategies, you must decide which method to complete your income tax.
Options for filing income tax return:
1.) File your taxes online
2.) File them by hand
3.) Hire an accountant to complete them
Filing your taxes online
If you’re planning on filing your own taxes, the most used tax planning software in Toronto is NETFILE. This service is available from February 11 till November 30 but remember taxes are due April 30th or subject to a penalty. NETFILE sends the return directly to the CRA and you will get confirmation of its arrival instantaneously.
To file your return through NETFILE you must first prepare your return with a commercial tax preparation software package. Some software packages available are:
5.) UFile for Windows
Although NETFILE is a free service to all Canadians, you must pay for the tax preparation software packages listed above.
Preparation of income tax by mail
Similar to the online feature this method is available to all Canadians. Its only cost is the stamp. If you are preparing your own taxes and don’t have access to a computer or prefer to fill it out by hand then this method is recommended. You can download or order your tax package including your T1 General and all accompanying worksheets or pick a package up from your local post office. For the list of mailing addresses see the CRA website for details.
Hiring an Accountant
There are many tax planning services in Toronto that will prepare your personal and corporate tax returns. If you’re using a tax planning accountant in Toronto to prepare your personal taxes, they will require the following forms from that are applicable to you:
- T4 slips
- T4A commissions & self employed
- T5013 Partnership Income
- T3 Income from trusts
- T5 Investment Income
- RRSP contributions slips
- Charitable donations
- Medical and dental receipts
- Child care information
- Other receipts you expect to claim
Since most tax accountants in Toronto prepare personal income taxes on hourly rates, having organized information can help reduce your costs of preparation when choosing this method. To find tax planning firm in Toronto search for Toronto tax accounting firms in your area.
How to pay income taxes?
Most employers will deduct income tax off each paycheck for the purposes of paying income tax at year end. If however your employer does not do this or there is not enough saved, there are other methods of payment. Theses include:
- Mailing cheque or attached to paper return
- Online or phone banking
- CRA My Payment Service
- Pay at a Canadian Financial InstitutionM
If you cannot pay the full amount owing in one lump sum, you can pay by installments if your balance owing is greater than $3,000. For more info on how to pay by installments check out this CRA web page.
If you are expecting a refund from your return it may take up to 6 weeks if filed after April 15th. If filed before April 15th a 4 week return is what you can expect. Filing your tax return online returns usually take two weeks or less to be returned. Many tax planners throughout the country are recommending filing your taxes online for this reason. You can check the status of your return through the “My Account” tax feature on the CRA website.
Once you have paid your taxes or received your refund you are done filing your personal return. Make sure you or your tax accountant in Toronto holds on to all receipts or any other documents showing what you have claimed incase you are audited by CRA. If you are a sole proprietor and have business income check out How to complete Form T2125 for a sole proprietor guide.
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.