Evelyn Jacks: March is Tax Literacy Month

Tax literacy is important. Why? Because the tax return is the most important financial document of the year for most Canadians and many changes have recently made it more probable that they will do their returns incorrectly the first time. 

There are three types of change taxpayers are dealing with: changes in the tax filing process, recent changes in technology, and numerous changes in the lives of taxpayers.

Changes in Tax Law and Administration. Many Canadians are unaware of or cannot grasp the changes to tax law or the administration of that law that apply to them. It does not help that tax law changes every year with federal and provincial budgets, indexing and CRA administrivia. Knowledge Bureau Report is dedicated to interpreting it all and so are books like Jacks on Tax and Canadians and the IRS.

Changes in Technology. CRA is not mailing tax returns anymore so for millions, filing a tax return is no longer a tangible event. Financial institutions are going online, too, so taxpayers likely will not get all documentation in the mail; chances are at least some of it will be electronic, meaning it’s easy to forget something or be unaware. The assumption by government and big business that every taxpayer has access to a computer and printer is also incorrect.

Despite the seductive simplicity of technology,  tax software and electronic filing processes, millions of Canadians still find filing a tax return very intimidating; interactions with CRA even more so. 

This is not without reason: tax law is very complex and that makes compliance difficult and prone to errors. Understanding electronic financial transactions and how to apply them to tax filing obligations is also difficult for many.

Changes in People’s Lives. Things change. There may be a new birth or a death in the family; a new job or a severance package; a marriage or a divorce. 

More baby boomer taxpayers may be away over the winter months, making tax record collection more difficult. There may be a disabled person or someone with complex medical needs for the first time.

But, for many, errors on tax returns happen because they are filing too soon. With average tax refunds hovering at over $1600, Canadians simply need their money sooner and waiting for those last T3 slips to arrive in April is much too long. Filing early helps to pay bills, even if an adjustment to a tax return is required for a missing slip later. 

It’s Your Money. Your Life. Be more tax literate: be sure to file the most correct tax return for your family unit. Waiting for all the documentation is important to minimize errors. In the meantime, do work on understanding all the tax changes that apply to you and your changing life events.

Evelyn Jacks is president of Knowledge Bureau and author of 51 books on tax and personal wealth management. Her newest book Jacks on Tax: 2014 Edition is now available. She is also the founder and director of the Distinguished Advisor Conference (DAC). The theme of the 2014 three day think tank in Horseshoe Bay, Texas Nov 9-12 will be “Think BIG: Find the Sweet Spots in Wealth Management”  Follow Evelyn on Twitter at @EvelynJacks.