June 15: Tax Season Comes to an Official Close

Evelyn Jacks

Proprietors – unincorporated self employed people – must file their personal tax returns by midnight June 15 to avoid paying late filing penalties.  Unfortunately, those who owe will already be incurring high interest charges.   What does post-tax season planning mean for those who owe and those who received their refund?  You can provide guidance – some ideas follow:

Those who owe:  The average balance due is $6,990 this year and that’s a heavy load for taxpayers struggling under the weight of high inflation and high interest costs.   In fact, interest payable to CRA on balances due is exorbitant – 9% compounding daily can quickly add up.  If taxpayers have a lower interest rate on lines of credit or other sources, they should pay up CRA first. 

That’s because that taxman is powerful.  Aside from the expensive penalties and interest costs - CRA can garnishee wages and seize assets if requests for payment are ignored. 

It’s also possible to make an arrangement to pay CRA off over time if cash flow is short. CRA even provides a worksheet to calculate your monthly net income and expenses to determine how much you can afford to pay. 

Here are the debts for which CRA will consider a payment arrangement: personal, corporate, GST/HST debt, debts due to payroll deductions, excise duties, fuel charges and partnerships.  Most important for average Canadian businesses, debts to CRA due to the Canada Emergency Wage Subsidy (CEWS).

Those who got a refund. Did you know the average refund for the 2023 tax season as of June 12 is $2,150?  There are many ways to leverage this money into new tax savings:

1. Pay off tax debt
2. Pay off credit card debt
3. Pay down your mortgage
4. Save for emergencies in your TFSA
5. Shelter next year’s income by topping up your 2023 RRSP
6. Invest in the new First Home Savings Account (FHSA) if you qualify
7. Take a much needed vacation and use your Climate Action Incentive and Grocery Rebate to keep the fun off the credit cards

Those who haven’t filed yet. Don’t delay. Get it done, make sure you collect your tax refunds, your government benefits like the Old Age Security (OAS), your refundable tax credit and, avoid penalties and interest if you owe. It’s a great way to really enjoy the rest of the summer, with tax filing season finally in the rear view mirror!

Bottom Line:  The time in now. Consult a DMA-Tax Services Specialist to help you file those missing tax returns.  It’s an investment worth making this week.