Tax Season 2021: Unprecedented Statistics

Beth Graddon

Nearly 56% of Canadians have yet to file their tax returns, according to CRA’s April 12 processing statistics,  so there is a lot of work left to do for the tax filing community.  We’re also seeing some new trends:  with over 13 million returns processed, average refund are down and so are average balances owing.

This year, the average refund for Canadians is $1,789 compared to $1,850 last year – demonstrating that the tax and income repercussions of the pandemic and emergency response benefits may be taking an anticipated toll on the cash flow of Canadians.

Similarly, those who owe appear to have a much smaller amount due this year. At $3,269 on average balances owing, that’s a 50% decrease over last year, which may indicate that many small business owners have seen their income levels take a big hit in 2020. However, many small business owners have still yet to file.

Paper returns are also nearly obsolete – less than 7% of returns are currently arriving that way. EFILERs are also seeing a significant hike in their business as close to 55% of all taxfilers are choosing that route.  Netfiled returns by the do-it-yourselfers represent only 38% of all returns this year.  Here are the rest of the details available so far:

Filing an audit-proof tax return is going to be very important this year for anyone who has received a government benefit.  This includes small business owners who are likely to experience more audit activity than usual as a result of receiving the CEWS, and CEBA loans.

Come summer and early fall, the CRA could well be looking at financial statements, ledgers, journals, invoices, bank statements and personal records - all are fair game in an audit. Not to mention, CRA can ask for input from your accountant, bookkeeper and/or employees about the quality of the books and records.

Bottom Line:  It’s an important year to seek assistance from a tax professional, and current tax filing trends are indicating a potential banner year – albeit an exhausting one – for those on the front lines of the tax filing industry.

Need help deciphering the April 19, 2021 federal budget set to come down in the busiest week of tax season?  Share the news with your colleagues:  invite them to sign up for an email subscription to Knowledge Bureau Report, and they’ll receive the Special Federal Budget Issue coming on April 20.

For a more detailed analysis for professionals:  be sure to register for the May 20 CE Virtual CE Summit to learn more about the impacts of the Federal Budget on retirement planning.