Critical Pointers in April Tax Discussions

Evelyn Jacks

There are a number of issues to discuss as tax season is now in full swing.  To begin, it’s more expensive to owe money to the CRA this quarter and tax and financial advisors will want to advise their clients of important – and potentially expensive - tax filing milestones coming up in the second quarter.   There is good news, however, for seniors.  Here’s what you need to know:

Prescribed Interest Rates Rise April to June:  The prescribed interest rate is up again, as follows:

• 9% - this is the interest rate charged on overdue taxes, Canada Pension Plan contributions, and employment insurance premiums. With the average balance due clocking in just under $5000, that means clients who owe will want to pay promptly to avoid these high interest charges, which compound daily as of the balance due day.
• 7% - this is the interest rate CRA will pay individual taxpayers on their refunds. A good reason to file early is that CRA will only pay interest on the later of the date of the overpayment, the 120^th day after the end of the tax year if the return is filed on time or the 30^th day after the date the return was filed, if filed late.
• 5% - this is the interest rate to be paid on corporate taxpayer overpayments.
• 5% - this the interest rate used to calculate taxable benefits for employees and shareholders from interest free and low-interest loans, including inter-spousal investment loans.

OAS Benefits Increase.  Both OAS and GIS (Guaranteed Income Supplement) benefits have increased.  For those receiving a full OAS pension – age 65 to 74, the monthly amount will rise to $691.10 in April to June, from $687.56 per month from January to March.  For those age 75 and older, the amount is $760.10, an increase from $756.32 in the prior three months.  However, those who postponed their OAS to age 70 will 36% receive more:  $939.76 if under age 75; $1033.74 if 75 and older.

Note that OAS will be fully clawed back when net income exceeds an estimated $142,000 and partially clawed back when net income exceeds $86,912.

Second Quarter Tax Filing Milestones:  Discussion Checklist for your Clients

April

• Apr 1:  Prescribed interest rates rise for the 2^nd quarter, as do OAS and GIS benefits  
• Apr. 1 FHSA Contributions May Start. Open account to maximize 15-year funding period.  Annual maximum $8000; Lifetime limit $40,000
• Apr 5:     CWB Advance, GST/HST Credit payments
• Apr 14:   Climate Action Incentive Payment
• Apr 15:   US tax filing deadline.  US persons in Canada Tax filing, Form 8938, 4868.  The 2023 deadline:  April 17
• Apr 17:   Claim for Canada Emergency Sickness and Caregiving Benefits can be made for Period 82
• Apr 20:   CCB payment
• Apr 26:   CPP, OAS, GIS benefits payment date
• Apr 27:   Canada Veterans’ Disability Benefit payment date
• Apr 30:   Usual T1 individual tax filing deadline; 2023 deadline: May 1.
  • File Form T1135, Foreign Income Verification Statement
  • Late elections for pension income splitting for 2019 expire April 30, 2023
  • T400A: Notice of Objection File on the later of one year after filing due date or 90 days after receipt of Notice of Assessment or Reassessment or Determination
  • New CRA Service Feedback Form RC193 – Submit a complaint or suggestion online: canada.ca/cra-service-feedback

May

• May 1:     T1 Tax Filing Deadline for 2023 - Individuals
• May 2:     Interest is charged on tax balance due – note 9% prescribed interest rate
• May 19:  CCB Payment
• May 24:  KB CE Summit: Retirement & Estate Planning – plus March 2023 Detailed Budget Analysis
• May 29:  CPP, OAS, GIS benefits payment date          
• May 30:  Canada Veterans’ Disability Benefit payment date       
• Prepare - Will and estate planning review

June

• June 15:  T1 proprietorship filing deadline, quarterly tax instalment remittance, Closer Connection Exception Statement for Aliens (IRS Form 8840); extension to file US tax return (IRS Form 4868)
• June 16:  KB Specialized Credentials - Summer Semester Begins
• June 20:  CCB Payment
• June 28:  CPP, OAS, GIS benefits payment date
• June 29:  Canada Veterans’ Disability Benefit payment date
• June 30:  Form RC243 TFSA Return and RC243-Schedule A – Excess TFSA Amounts