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  Frequently Asked Questions

Personal Income Tax

When is my T1 Tax Return due?
Generally, your return has to be filed on or before April 30. If you or your spouse or common-law partner carried on a business (other than a business whose expenditures were mainly in connection with a tax shelter), your return has to be filed on or before June 15.

What's the penalty for missing the deadline to file your personal income tax return?
You should always send your tax return by the annual deadline. Even if you'll have a balance owing that you can't pay right away, you should still file on time to avoid the late-filing penalty.
The late-filing penalty is: 5% of the balance owing; and an additional 1% of the balance owing for each full month that your return is late, to a maximum of 12 months.
NOTE: The penalty may be higher if you've already been charged the late-filing penalty in any of the three previous years. If you missed the tax-filing deadline because of circumstances beyond your control, CCRA may waive the penalty and applicable interest.

Do I have to file a return?
You have to file a return if any of the following situations apply:

  • You have to pay tax.
  • We sent you a request to file a return.
  • You and your spouse or common-law partner elected to split pension income. For more information, see lines 115, 116, 129 and 210.
  • You received Working Income Tax Benefit (WTIB) advance payments in the tax year, and you want to apply for WITB advance payments for the following year.
  • You disposed of capital property in (for example, if you sold real estate or shares) or you realized a taxable capital gain (for example, if a mutual fund or trust attributed amounts to you, or you are reporting a capital gains reserve you claimed on your previous return).
  • You have to repay any of you Old Age Security or Employment Insurance benefits. For more information, see line 235.
  • You have not repaid all of the amounts you withdrew from your registered retirement savings plan (RRSP) under the Home Buyers' Plan or the Lifelong Learning Plan. For more information, see Guide RC4135, Home Buyers' Plan (HBP), or Guide RC4112, Lifelong Learning Plan (LLP).
  • You have to contribute to the Canada Pension Plan (CPP). This can apply if, for the tax year, the total of your net self-employment income and pensionable employment income is more than $3,500. For more information, see line 222.
  • You are paying Employment Insurance premiums on self employment and other eligible earnings. For more information, see lines 317 and 430.

Even if none of these requirements apply, you may want to file a return if any of the following situations apply:

  • You want to claim a refund.
  • You want to claim the WITB for the tax year.
  • You want to apply for the GST/HST credit (including any related provincial credit). For example, you may be eligible if you turn 19 before April of the following year.
  • You or your spouse or common-law partner want to begin or continue receiving Canada Child Tax Benefit payments.
  • You have incurred a non-capital loss (see line 236) in the tax year that you want to be able to apply in other years
  • You want to carry forward or transfer the unused portion of your tuition, education and textbook amounts (see line 323).
  • You want to report income for which you could contribute to an RRSP in order to keep your RRSP deduction limit for future years up to date.
  • You want to carry forward the unused investment tax credit on expenditures you incurred during the current year (see line 412).

How long do I have to retain books and records for income tax assessments?
The general rule is that books and records have to be kept for a minimum of six completed years from the end of the last tax year to which they relate. The tax year is the fiscal period for corporations and the calendar year for all other taxpayers.
Some exceptions are:

  • For corporations, records have to be kept for two years from the date of dissolution (in the case of amalgamations or mergers the books and records have to be retained on the basis that the new corporation is a continuation of each amalgamating corporation)
  • Books and records may be destroyed at an earlier time than outlined above if you request and receive written permission from the minister.



How much should I contribute to my RRSP's?
Making the maximum contribution to your RRSP is likely the safest tax-sheltered investment available. The immediate benefits are twofold: tax savings in the year of contribution, and tax-deferral on the income earned by the RRSP investments until withdrawal, hopefully at the time when you retire. Generally, the maximum amount that is tax-deductible is 18% of your previous year's earned income to a maximum of $24,270 (for 2014) plus any unused RRSP room from previous years. Please check your previous notice of assessment for the correct amount. Earned income includes: salaries or wages net of employment expenses claimed; research grants; royalties; net income from self-employment; net rental income from real property; alimony and maintenance received; and supplementary unemployment benefit plan payments.

What happens if I over contribute to my RRSP?
If you contribute more than your contribution limit, you will be subject to a 1 percent penalty tax per month to the extent that the over-contribution amount exceeds $2,000.


What do I deduct from my employees' pay cheques?
You're responsible for deducting income tax, Canada Pension Plan (CPP), and Employment Insurance (EI) premiums from your employees' pay cheques. You are also responsible for remitting this money to Revenue Canada at regular intervals, usually on or before the 15th day of the month following the month in which you deducted it. It's a good idea to remit payroll deductions on time. If your payment is late, you will have to pay a penalty.


Does my business have to register for the H.S.T.?
You need to register for an HST account if you business meets one of the following requirements:

  • Your annual worldwide HST taxable revenues, including the taxable revenues of all of your associates, will be more than $30,000
  • You operate a taxi or limousine
  • You are a non-resident who solicits orders in Canada for goods sent by mail or courier and your annual worldwide HST- taxable sales will be more than $30,000
  • You are a nonresident and you charge admission directly to audiences at activities or events in Canada.

If your goods and services are HST taxable, but your sales are less than $30,000, you may choose to register voluntarily.

What penalties and/or interest are involved with H.S.T?
CCRA charges penalties and interest on:

  • Any net tax still owing after the due date
  • Late or insufficient installment payments
  • Unpaid penalties and interest

The penalty is 6% a year. CCRA charges interest at a prescribed rate that is adjusted quarterly. CCRA calculates the penalty and interest from the day after the due date of the remittance to the day we receive it. The penalty and interest are compounded daily.


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