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:

It’s really surprising how many people don’t know when the tax filing deadline is. CRA often mentions two dates: May 2 and June 15. Which is it for you? 

It’s time to get those T4s and T5s out and here’s another reason from CRA to go paperless: Those who issue more than 50 T-slips for a calendar year on paper instead of by Internet file transfer or Web Forms, will be subject to huge penalties this year. All T-slips must be filed with the CRA by February 29, with the exception of T3 slips and T5013s, which are filed by March 31.

The most recent statistics on the Underground Economy (UE) in Canada are from the year 2012, released in April 2015. The total underground activities were valued at $42.4 billion or about 2.3% of gross domestic product (GDP). A high of 2.7% was reported in 1994 and this fell to a low of 2.2% in 2000. However, after a brief uptick in the early 2000s the proportion remained relatively stable between 2.3% and 2.4%.

At this time of the year, tax advisors and their clients are familiarizing themselves with the indexing changes that have been applied to tax brackets, and refundable and non-refundable credits. Indexation is based on the consumer price index, but different formulas apply to different provisions.

Tax treaties between nations serve an important purpose: They ensure that the taxpayer is not left in the lurch when multiple countries each want to tax the same income. Canada currently has 92 tax treaties in effect with other countries, to protect taxpayers from over-taxation. Most recently, on January 15, Canada and Taipei signed an Arrangement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, based on standards developed by the OECD for the exchange of tax information.

“We can’t solve problems by using the same kind of thinking we used when we created them.” - Albert Einstein