It seems like we just got through the process for the 2016 tax time and here we are again, turning our attention to taxes for 2017.
The Walsh King tax team will be providing a range of quick tax tips over the next few weeks.
Today, we want to touch base on a few things that are standard, but we want to make sure you are aware of them.
INTEREST AND LATE-FILING PENALTIES
If you do not pay your 2017 taxes by April 30, 2018, CRA will charge compound daily interest starting May 1, 2018, on any unpaid amounts owing.
Additionally, if you owe tax for 2017, and do not file your 2017 return by the due date, CRA will charge a late-filing penalty, which could be significant.
Significant penalties and interest will also be applied if required quarterly tax instalments are deficient and/or paid late.
MISSING INFORMATION SLIPS AND CRA PENALTIES
An area of ongoing concern is the increase in CRA reviews related to unreported investment income slips, most notably T3’s and T5’s. These reviews can result in significant penalties and interest charges being assessed by CRA. We urge you to be very diligent in ensuring that all T-slips are received by you and provided to your accountant and to make enquiries if you believe any slips are missing.
Contact your investment advisor(s) if you believe you are missing slips you would ordinarily expect to receive. If any slips are received or found after your return has been filed, please notify your accountant immediately so that they can take steps to file an adjustment to your return so as to minimize the possibility of penalties.
TAX FREE SAVINGS ACCOUNT (“TFSA”)
The annual TFSA contribution limit for 2017 was $5,500. If you have never made a TFSA contribution, your cumulative contribution room at December 31, 2017, would be $52,000. The annual limit will remain $5,500 for 2018.
A TFSA can invest in the same types of investments as an RRSP. Unlike an RRSP, contributions to a TFSA are not tax deductible. However, the income earned in the TFSA is tax-free, even when it is withdrawn.
Your TFSA contribution room is increased for any withdrawals made in prior years. It should be noted that contribution room is not increased on withdrawals until the year following the withdrawal. For example, a withdrawal at any time in 2017 will not increase your TFSA contribution room until January 1, 2018. Contributions in excess of eligible amounts are subject to a tax equal to 1% of the highest excess amount per month.
Financial institutions currently eligible to administer an RRSP are generally permitted to administer a TFSA to applicants with a valid Social Insurance Number.
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