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Your income tax return is due on April 30th of each year, unless you or your spouse ran a business in that year. If that is the case, your income tax return is due on June 15th of each year. However, if you or your spouse ran a business and you owe money on your taxes, the CRA will charge interest back to April 30th.
Penalties and Interest on Late Filing
The CRA charges a late penalty charge of 5% of your balance owing, and in addition will charge you a penalty of 1% of the balance owing for each month to a maximum of 12 months. Interest is charged at a rate of 5% compounded daily on outstanding balances AND penalties.
Gratuities and Taxes
The CRA has been really clear on gratuities, which are to be included in your income. There are two different types of gratuities: Controlled Tips and Direct Tips. Controlled Tips are tips added to the invoice by the employer, and these tips are to be included in box 14 of your T4. Direct Tips are tips paid by the customer directly to the employee without any intervention from the employer. These tips are to be included on line 104 of your tax return. The CRA expects you to keep track of your Direct Tips in a journal, rather than estimating or using a percentage of your reported income. You should have proper documentation in case of an audit.
New Tax Savings
Teachers can now claim school supplies they purchase for their classes as well. To qualify for this new deduction, you must be a teacher of an elementary or secondary school. Currently, the tax limit for supplies is $1,000.00 per year with receipts.
For more information or to find out if you qualify, contact the NRGH Accounting Services Ltd. office today.