It’s that time of year that people either look forward to or dread: tax time. If you’re a Canadian senior or in a position where you are helping a family member out at tax time, here are a few tips to ensure that you are getting the most out of your tax return.
1. Canada Revenue Agency – Actually Very Customer-Service Friendly
If you have any kind of question about your taxes, Canada Revenue Agency (CRA) representatives are extremely helpful and usually can give you a quick and precise answer. They also have a useful section for seniors on their website. Be sure to refer to the CRA’s website over any other source of information as it will always be the most up-to-date. If you end up owing money, they will work with you to create a payment plan that works for your budget. Be aware that there are phone scams where the con artist will claim to be from the Canada Revenue Agency – a CRA representative will never bully you or demand immediate payment via credit card or bank transfer.
2. Consider an Accountant for Complex Returns
If you are just filing a usual tax return that includes withdrawals from your RRIF, a T4, or other simple items, you can usually fill out your return yourself. Where it may be worth a few hundred dollars to hire an accountant is if you have a situation that’s more complex than that.
For example, if you have multiple investments, a business, and/or secondary real estate investments, an accountant may actually save you more money than you end up paying them. Accountants with a professional designation, such as a Certified Professional Accountant (CPA), will give you a better result than most tax filing services (unless of course those services employ CPAs). A CPA has years of training in the Canadian tax system, where a tax preparer at a filing service may have just had a few weeks of training.
You may also want to consider an accountant for the first filing year after your retirement (e.g. when you start living off of your retirement savings) to ensure you are getting all of the benefits you are entitled to. You can then use that return as a template to file taxes for the remainder of your retirement if it is a simple return – just make sure you are staying on top of new developments on the CRA’s website each year that you file.
3. Be Aware of New Changes for 2015
Last year’s budget introduced a number of measures specifically designed to help seniors, including reducing minimum RRIF withdrawal rates, the Home Accessibility Tax Credit, and an increase to $10,000 deposits for TFSAs. While the $10,000 limit for TFSAs will likely be scaled back by the Liberals in their 2016 budget, this limit still applies for the 2015 year. See this article from MoneySense for more information on changes for the 2015 tax year that could affect you.
If you have any questions about your taxes, contact your accountant or the Canada Revenue Agency directly.