Changes to Paper Filing Disempowering

Last tax season, only 7% of all Canadian tax filers filed on paper. The CRA is pushing for zero. It continues to steer the holdouts to digitized filing by adding lots of obstacles. Most recently, it is removing almost all the schedules from the tax return package it mails. This seems unfair to people who paper file because they can’t afford a computer and internet, distrust the security of online filing and those who are neither tax or computer literate. Here’s what they are up against:

The 2019 Federal Budget proposed an annual cap of $200,000 on stock options granted to employees by "large, long-established, mature firms."  This cap is on the value of the shares at the time the options are granted. More details were set to be delivered in the 2020 Federal Budget, including information from the consultations with Canadians. It's information we're still waiting for, however, the government did recommit to its implementation during yesterday's Throne Speech. Here’s what we know now:

When the new Canada Recovery Benefits become available later this month, it will come with a cost.  If the recipient’s net income for the year from other sources exceeds $38,000, they will be required to repay 50% of the lesser of the CRB received and their net income in excess of $38,000. 

Financial and insurance advisors, lawyers, accountants, bookkeepers, tax practitioners and gift planners…

According to a September 11 report from Stats Canada, households increased holdings of financial assets and reduced non-mortgage and consumer debt during the second quarter this year. The household debt service ratio, which is the total obligated payments of principal and interest on credit market debt over household disposable income, had the largest decline on record. It dropped from 14.54% to 12.40%.  Incredibly, there was only $1.58% of credit market debt for every dollar of household disposable income. But, is the good news temporary?

The extended September 30 filing deadline hasn’t arrived yet. But, according to the most recent processing statistics from the CRA, there are still 2019 returns outstanding.  And, with this unusual tax season soon to be behind us, top-of-class tax and financial advisors must start immediately to help Canadians manage tax debts, maximize remaining social benefit payments and plan to reduce taxes payable in 2020. It’s a tall order.

U.S. tax filers, including American Citizens living in Canada, will have received Economic Income Payments (EIP) based on income levels reported on their 2018 and 2019 tax returns filed in the U.S. Now CRA has confirmed in a technical bulletin issued August 31 that there is more good news:  the payments will not be taxable to residents in Canada.