How Can the Next Two Weeks Reduce Your Tax Burden?

As part of the federal response to this unprecedented pandemic, while everyone is reeling from all the changes in our world, Canada Revenue Agency (CRA) has further extended the deadline for income tax returns and installment payments until September 30th. This includes waiving debt interest for the past 6 months.

It’s an unusual move, reflecting the government’s understanding that—while dealing with all the other issues, closings, family worries, and other stresses—many Canadians have not been able to focus on remitting their taxes.

The extension gives everyone a bit more breathing room. There will be no late filing penalty or extra interest charged, provided you file by the deadline. So, take that breather; then build your financial literacy with strategies you can use right now, and into the future.

See what additional tax planning you might be able to fit in.

Here are two ideas: during this extension period, investigate opportunities to claim additional tax credits; or perhaps do some short term, high yield investing with the money you haven’t yet remitted and the interest you are saving.

During this extension period, CRA is waiving arrears interest for existing tax debt on personal, corporation and trust tax accounts. This includes self-employed individuals and their spouses’ returns, and the attendant administrative documents which would normally be filed with an income tax return such as designations, information returns, elections, and information requests.

The interest grace period for your tax debt extends from April 1 to September 30, 2020. For GST/HST owed, there also was an interest grace period from April 1 to June 30, 2020.

If you are a business owner. Your tax situation may be changing. Use this grace period to take stock, and plan. Changes in cash flow, abnormal losses, additional costs to protect employees’ safety and welfare, or operating expenses related to accommodating Covid-related safety guidelines, are all factors you can consider.

It’s great the feds have realized the stress we are all experiencing. But it could be an opportunity as well. To learn more about this grace period, and how you might turn it to your advantage, give us a call.