Dollars and Sense: Tax Time Countdown!
On this bright but chilly morning, I’m thinking I can hardly wait until April 30th has come and gone. Remember, most of you will have to file and pay your personal income taxes by that date.
However, you may not have all your information yet. This is because entities such as trusts (including mutual fund trusts) and partnerships don’t have to file their information returns until March 31, 2007. As the end of March fell on a Saturday this year, the filing and mailing date for this information is actually Monday, April 2, 2007.
How do you know if you have information still to come? The best source is your last year’s income tax return. When I review personal tax returns, this is one of the first things I look at. If you’re preparing your return using tax preparation software, many of them will have a comparison worksheet where you can look at this year’s versus last year’s summary of income. Have a look at last year’s slips and make sure you either have the same ones this year or there is a reason you don’t expect to receive the same information.
I’ve described some of the more familiar slips you may see below:
"T4" – Includes employment income, commissions and taxable allowances and benefits.
"T4A" – Includes pension payments received, superannuation, lump sum payments, annuities and fees or other amounts for services.
"T5" – This slip reports investment income such as interest and dividends. A T5 is issued where you own the property such as shares and that property is producing investment income.
"T3" – Like a T5, a T3 reports investment income such as interest and dividends. Unlike a T5, a T3 is issued where a trustee is looking after the property on your behalf. This would be the case with some mutual funds.
:T5013" – A T5013 reports partnership income.
What happens if you have already sent in your 2006 tax return and you get another information slip in the mail? Don’t ignore it. The Canada Revenue Agency gets a copy of all the various slips that you get. They have a program where they match their slips to your tax return to ensure you have reported that income.
All you have to do is send the slip in with a short letter to your closest tax service office explaining the slip was inadvertently excluded from your 2006 personal tax return. They will eventually reassess your tax return and issue a request for payment or a refund based on this additional information you have provided. Don’t be surprised if this takes several weeks or even a few months. You’ll need to be patient because this is a busy time for the Canada Revenue Agency as they are processing personal income tax returns.
Sheila Nelson is a Chartered Accountatant and Partner in Chan Foucher LeFebvre LLP
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