Here are a few tax gems to help for 2012 tax preparation. If my brief comments spark some interest I encourage you to research further on the Canada Revenue Agency (CRA) website or call a tax professional.
It’s true that the filing due date for proprietorships is June 15. However, if the business has a tax liability it must be paid by the regular April 30 deadline.
Simply assuming the business will have a loss and therefore have no taxes due can prove to be an expensive approach to tax management as the effective date of penalties and interest is April 30. A bookkeeper can help throughout the year to stay on top of this. Of course a strong set of current books may help, but not completing year-end accounting adjustments and ignoring tax law changes can lead to some unpleasant surprises.
The reporting of personal investments for tax purposes can be a challenge.
The volatile economy over the past few years has led some people to dabble in the stock market. If done outside a registered plan, remember to keep the records of all purchases of all stocks because one day when it’s sold, that cost is needed to determine the capital gain or loss.
The same applies to the paperwork associated with the purchase of investment real estate.
Along the same line, I am finding more and more people investing in what is referred to as “flow-thru limited partnerships”. These are quite sophisticated investments. Without going into detail, my point simply is this, if you are one of these investors, when you divest of it, the paper trail is typically confusing and even poor in some cases but nonetheless the onus is on you to report the capital gain or loss.
Shifting gears, medical expenses are a family pooled deduction.
That is, all immediate family members’ expenses can and should be totaled and claimed on one person’s return and that should be the lower income earner’s return since there is a 3% income threshold to surpass before the tax credit kicks in. Those family members such as an adult child, a parent or grandparent, and even brother, sister and others who are dependent on the taxpayer can be included.
Also, what isn’t widely known is that this claim can be made for any consecutive 12 month period. The flexibility to stagger the timing over December 31 is valuable if a costly medical or dental issue arises late in one year and carries into the next.
A word of caution to home net-filers and perhaps to users of some of the store bought software.
If there are changes to your personal information, sometimes these changes are not updated with CRA. Despite the CRA “accepting” an electronically filed return, this doesn’t guarantee these changes are registered so I recommend a visit to the CRA website or call to CRA to find how to register changes.
One final note, CRA has discontinued the “tele-file” service for 2012 returns.
Ron Clarke has his MBA and is a business owner in Trail, providing accounting and tax services. Email him at ron.clarke@JBSbiz.ca. To read previous Tax Tips & Pits columns visit www.JBSbiz.net.