Missed Filing Past T1s? 12 Reasons to Do It Now

It pays to file outstanding tax returns as soon as possible and certainly before May 1, this year’s tax filing deadline.  Here are 12 reasons why:

1. File for your Refunds! Put your money to work for you instead of the CRA.  It’s important to recover refunds CRA owes you for obvious reasons:  you will receive no interest payment from the government as it holds onto your money. Leaving this money in their hands means it’s being eroded by inflation, but you are also missing out on opportunities to maximize tax-efficient investment opportunities for your retirement.
2. File to record the Canada Training Credit you are entitled to if over 25 and under 66.
3. File to increase your tax free income and collect refundable tax credits like the Canada Child Benefit, the GST/HST Credit and the Canada Worker’s Benefit or Refundable Medical Expense Supplement.  Eligible educators can collect on their  refundable tax credit too (25% of up to $1000 in qualifying expenditures).  
4. File a return to earn unused RRSP contribution room.  Otherwise you’ll understate your eligibility to build a tax preferred retirement fund.
5. File to record capital losses incurred in a non-registered savings account.  This will help you recover taxes paid on capital gains in the current tax year, the previous three years and indefinitely into your future tax filing years.
6. File to avoid penalties on principal residence dispositions.  If you have disposed of any capital property in the year you must report them.  But since 2016 filing requirements have included a principal residence, even if the gain is tax exempt.  It requires the filing of form T2091 Designation of a Property as a Principal Residence by an Individual (Other Than a Personal Trust).
7. File to repay OAS (Old Age Security) or EI (Employment Insurance) benefits to the government.
8. File to repay HBP (Home Buyer Plan) or LLP (Lifelong Learning Plan) amounts to your RRSP.
9. File to make required contributions to the CPP or elect not to contribute.
10. File to report the holding of offshore properties with a cost of $100,000 or more using form T1135 Foreign Income Verification (whether or not you file a return).
11. File to pay an Underused Housing Tax if required.
12. File if you owe CRA.  You’ll want to minimize paying rising interest charges.   Be sure to catch up immediately for the current and immediately preceding three years to avoid a gross negligence penalty. This is the normal statute of limitations for CRA. However, if CRA expects fraud, they can go back a full ten years. This is really important if you  have taxable income and must pay federal or provincial income tax, CPP premiums or clawbacks of OAS (Old Age Security)  or EI premiums. You will also be charged a late filing penalty - plus interest of course!  Things can add up quickly into a big tax headache.

Bottom Line:  Never procrastinate when it comes to filing your tax returns.  Canadians who don't file their income tax returns may be shocked to find out how much money they're owed by the federal government for years of missed refunds and refundable tax benefits. But those who owe will be dismayed by how quickly the bill can grow when interest and penalties are added to it.  See a DMA-Tax Services Specialist for help

Additional Resources: Online Tax Courses: DMA™ Personal Tax Services Specialist Designation Program.

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Evelyn Jacks is Founder and President of Knowledge Bureau, holds the RWM™, MFA ™, MFA-P™ and DFA-Tax Services Specialist designations and is the best-selling author of 55 books on tax filing, planning and family wealth management.  Follow her on twitter @evelynjacks.

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