May 2 Tax Deadline: Four Big Reasons to File On Time

April 30 falls on a Saturday this year, so midnight May 2 is the deadline for filing the T1 General Tax and Benefits Return.

It’s important to comply with that date to avoid late-filing penalties if you owe CRA money on your personal taxes, and to avoid interest charges if you owe taxes on your proprietorship (although you have until June 15 to file in that case). But May 2 is an important filing deadline for three other reasons.

First, for low earners, the first of the advance payments of Working Income Tax Benefits (WITB) is in April. Next up are seniors: be sure to look back and optimize your pension income splitting on form T1032, Joint Election to Split Pension Income, if you think you didn’t do it well in 2012, 2013 or 2014. Finally, for those of you with offshore properties worth more than $100,000 Canadian, this is the month to file the T1135 Foreign Income Verification Statement.

The WITB is available to taxpayers who earn a relatively small amount from employment or self-employment. Taxpayers must have been resident in Canada for the whole year and not a full-time student for 13 weeks or more and not in prison for 90 days or more in the year. In most provinces, taxpayers must earn at least $3,000 (thresholds vary in AB, BC, QC, and NU) but less than $18,292 if single and less than $28,209 if they have a spouse or dependent child. The maximum credit for a single taxpayer is $1,007 and $1,829 for a family. An additional credit is available for taxpayers who are disabled.

Taxpayers who anticipate qualifying for the 2016 Working Income Tax Benefit may apply for a pre-payment of 50% of their anticipated credit by completing and filing Form RC201 Working Income Tax Benefit Advance Payments Application before September 1, 2016. Any advances received will be added to taxes payable on their 2016 tax return.

If you qualified to claim the pension income amount on Line 314 and you have a spouse, it is possible to split pension income. However, optimizing all the transferrable deductions and credits after pension income splitting is elected is as important as the election itself. For those reasons, taxpayers should take advantage of the opportunity to correct or adjust returns filed in prior years.

Dig out form T1032 from the previous three years if you think you may have messed up your pension income splitting. You have until May 2   this year to correct filings from 2012, and you might as well look at 2013 and 2014 too while you are at it.

Finally, be sure to get your foreign income verification filings right. That’s especially important if you own a vacation property for which the use is primarily (more than 50%) for rental purposes with a reasonable expectation of profit. For 2013 and subsequent tax years, the reassessment period for CRA to audit errors and omissions was extended from three years to six years. CRA will reassess taxes payable if the taxpayer failed to report income from a specified foreign property and Form T1135 was not filed on time, or if a specified foreign property was not identified properly on the form. The penalties for non-compliance are extremely expensive.

Filing your T1 return by the May 2 deadline is important to avoid costly penalties and interest on any taxes due, but remember to take care of these other forms as well if they apply to you; missing the May 2 due date could mean a huge missed opportunity to save money on your taxes or to avoid the sting of penalties from CRA. Your local DFA-Tax Services Specialist^TM can help you with filing your return, correcting past mistakes or properly reporting your foreign assets.

Evelyn Jacks is President of Knowledge Bureau, Canada’s leading educator in the tax and financial services, and author of 52 books on family tax preparation and planning.

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