Though the deadline for submitting 2013 tax returns is not until Wednesday, April 30th 2014, finance experts recommend that you submit your tax return to Canada Revenue Agency (CRA) as early as possible.
CRA introduced some changes for the 2013 tax year, including something called the first-time donors’ super credit, and an increase in the family caregiver tax credit. See: Tax changes for 2014.
People often have questions about different savings options and their tax implications.
As its name implies, in a Tax-Free Savings Account (TFSA) you’re not taxed on the investment income you earn or the money you withdraw. You can put up to $5,500 into a TFSA per contribution year (up from $5,000 when TFSAs were introduced in 2009). MoneySense magazine's Jonathan Chevreau comments that "the tax allure of TFSAs is such that it seems a terrible shame to have to actually spend the money." See: TFSAs: Our number 1 tax shelter.
RRSPs (Registered Retirement Savings Plans) are handled differently than TFSAs. Account holders receive a tax deduction for contributions made before the deadline (March 3, 2014 was the deadline for the 2013 tax year). As well, withdrawals of contributions and investment income are taxable. A survey found that a high percentage of Canadians planned to contribute to their RRSPs before the deadline on March 3rd. See: Two-thirds Canada contributed to RRSPs.
Talking with the Taxman
If you have questions about taxes or your individual account details, the best way to contact Canada Revenue Agency is through their online portal system, My Account. The set up process is fairly straightforward, and gives you access to your transaction history as well as support options. See: The CRA wants to help with your taxes – but only online.
What if someone has no history with the CRA because they’re about to file their first tax return? If one of your kids falls into that camp, you can help set the stage for a positive life-long habit of financial stewardship and civic responsibility. See: Tips for passing over the tax baton.
*Before acting on any of the above, please consult with a professional for investment or tax advice based upon your personal circumstances, risk tolerance, and needs.