Disclaimer: Please note this article is not financial advice. The purpose of our blog is purely educational, so please consult a professional accountant or financial advisor before making any financial decision.
For some people, a due date sounds like the end of the world. It is even worse if you haven't started anything yet to meet your deadline. How much more if we talk about income tax and the tax season?
Taxes are very intimidating topics; pair them with due dates, and they become more daunting to discuss. Knowing the due date and accomplishing the requirements ahead of time can absolutely save you from the headaches of procrastination.
This post digs deep into how to prepare your income tax before the deadline. Keep reading to learn more.
Canada’s Income Tax System
Income tax is a form of voluntary contribution imposed by a government to qualified income-generating constituents, including individuals and businesses. Taxes are necessary so that the government can keep providing public services that promote the welfare of its citizens, such as education, infrastructure, and health care.
Every country has its own tax system. Canada has a progressive form of income taxation: as your income increases, so does your tax. In addition, Canadians pay two forms of taxes: the federal tax and the provincial tax. The two have different tax rates.
The Canada Revenue Agency (CRA) manages the tax system and collects the taxes. It has a way of minimizing your taxes if you earn so much, and this is through income tax brackets.
The latest federal income tax brackets are as follows:
| Tax Rate | Income Covered |
| 15% | $49,020 |
| 20.5% | Over $49,020 to $98,040 |
| 26% | Over $98,040 to $151,978 |
| 29% | Over $151,978 to $216,511 |
| 33% | $216,512 and above |
Canada is composed of ten provinces, and each has its own provincial tax rates. Ontario, Canada's busiest province and home to the nation's capital, has the following provincial rates:
| Tax Rate | Income Covered |
| 5.05% | $45,142 |
| 9.15% | Over $45,142 up to $90,287 |
| 11.16% | Over $90,287 up to $150,000 |
| 12.16% | Over $150,001 up to $220,000 |
| 13.16 % | $220,000 and above |
When Is Income Tax Due in Canada?
Most income taxes in Canada are filed and paid every April 30th. If you have an employer, they usually withhold your taxes every month, and you can see that deduction in your payslip.
Even if you are employed and your company’s finance department processes your income tax, you still need to accomplish some paperwork if you want to file your tax on time.
When are income taxes due? It varies depending on the taxpayer's situation.
- If you obtained Employment Insurance benefits or COVID-19 emergency benefits, your deadline to pay taxes is April 30, 2022. However, you should have filed a federal return on April 30, 2021.
- If you are a Québec resident, you have to file on April 30 and pay your taxes on May 31.
- If you moved away from Canada, you still need to file and pay your taxes on April 30.
- If you are self-employed, you can file your tax on June 15, but you need to pay any balance owed on April 30 of the same year. As you can see, the CRA provides an extended filing deadline. The same thing applies to a married couple filing jointly, with only one of them being employed.
- If April 30 falls on a weekend, the CRA moves the deadline to the next business day.
- Self-employed and employed individuals are entitled to pay in installments. If you don't want to pay a massive tax on April 30, you may pay every 15th of March, June, September, and December.
- If you are a representative of a deceased taxpayer, you should remit the final tax of that person to the CRA given the following conditions:
- If the individual died between January 1 and October 31, the due is on April 30.
- If the person died between November 1 and December 31, the tax return is due six months after the date of death.
5 Tips on Accomplishing Your Income Tax Requirements
Preparing and filing your tax for the very first time is quite intimidating: you might know some steps, but not everything! You need to gather information and provide the correct computation of your taxes.
Here are the effective ways to accomplish your income tax requirements before the deadline.
- Collect all your financial and tax documents.
We recommend that you gather all the documents relevant to your tax information. Such documents might come from your employer, banks, brokerage firms, and others with whom you do business.
You may also need the following forms:
- Income Tax Package that contains the Federal Income Tax and Benefit Guide, two copies of Income Tax and Benefit Return, Form 428 for provincial and territorial tax, and other information sheets
- T4 slip if you are employed
- Form T2125 if you are self-employed or own a small business
- Form T4A if you are an independent contractor or a freelancer
- Form T5013 if you are in a business partnership
Don't forget to secure a copy of receipts that will help you lessen your tax. These receipts can be for charity purposes, medical costs, and other investment-related expenses.
- Enumerate your personal information.
Provide your personal information as well as the information of your dependents if applicable. You might also have properties you acquired or sold. Keep a record of how much you paid or received from all legal business transactions.
- Think about your tax refund.
If you get a refund, you have to put it to good use. You can use it as a deduction to your next taxes or save it.
- Get a copy of your previous tax return.
A copy of your previous tax return, if you have it, is essential for the tax preparer to compute your taxes accurately and efficiently. Do not forget to keep a copy of your previous tax returns if you pay your taxes regularly.
- Hire the right professional and make an appointment.
Hiring income tax consultancy services is a smart move because they know how to file your taxes and when income tax is due for business. They can also help you avoid penalties for delayed tax filing and payment, which is the last thing you want to happen.
Select a tax preparer or firm and make an appointment. Set a date and time that best suits you and your chosen accountant. Usually, the appointment takes place in the office of your selected firm. You can also choose an online meeting if COVID-19 cases are still high in your area.
You can submit your income tax forms and other pertinent documents via mail or electronic filing.
Penalties for Late Tax Payment
The CRA imposes penalties on late filers, and preparing your tax on time or ahead of the deadline means avoiding them. What are the penalties if you do not make it to the deadline?
You will have a five-percent late filing penalty on your balance owed and an additional one percent every month until you pay your due. The said penalty is immediately effective on the day after your due. If your deadline is April 30, the penalty is imposed on May 1.
Get Expert Tax Support
Preparing your taxes can be too much for you. You need to keep all your essential personal and financial documents, transaction receipts, and tax forms to avoid confusion and interruptions. If you miss the deadline, you have to pay penalties, an extra charge that you cannot afford.
Hire an accountant's professional service today to make the process easier and less stressful. We at Unloop work in partnership with tax professionals to help you get things done ahead of the tax deadline.
Call us at 877-421-7270 today, and we will help you with your tax preparation.