The Canada Revenue Agency (CRA) is again reminding taxpayers to be wary of scams from individuals pretending to be from the CRA. These scams range from e-mails which claim a taxpayer can receive a tax refund if they click on a link, to harassing phone calls demanding a payment on a tax account. The CRA will only send out deposits by cheque or by direct deposit. They will never send out a refund by e-transfer.  They will also never ask to use a cash card or Western Union transfer to make a payment. The CRA has provided these general guidelines to follow if a taxpayer should be contacted by someone claiming to be from the CRA.
• The CRA will not send emails containing anylinks.
• The CRA will not request personal information of any kind from a taxpayer by email or text message.
• The CRA will not divulge taxpayer information to another person unless formal authorization is provided by the taxpayer.
• The CRA will not send emails in English or French only: all communications are in both official languages.
• The CRA will never request information about a person’s passport, health card, or driver’s licence.
In addition, the CRA will not leave any personal information on an answering machine. Fraudulent callers can be very intimidating. They can
insist that a taxpayer make a payment to the CRA immediately, and will tell the taxpayer that they will be sending the RCMP to their home if they do not comply.
If somebody is concerned that a caller is not from the CRA, they can advise the caller that they would like to verify their number first. They can check on the authenticity of a CRA telephone number by contacting the CRA directly, at 1- 800-959-8281.

Instalments Required on Taxes

If you owed over $3,000 when you filed your 2013 tax return, and you owed over $3,000 in either 2011 or 2012, you will be required to make instalment payments.

You will receive a letter in late July if you are required to make these payments.

In the first year, you will be required to make payments equal to one half of the tax owing in September and December, and then one quarter in March and June of next year.

You will be charged interest if you miss your instalment payment, or do not pay the entire amount, at the CRA’s current rate of interest. The interest will be charged from the date the instalment was supposed to have been made.

There are no direct penalties for missing an instalment payment. However, if the interest owing on your instalment payments is over $1,000 for the year, the government will charge you a penalty based on the amount of interest you ended up owing.

If you have underpaid one instalment, you can reduce your instalment interest by paying a future instalment early.

Deadline Extended for 2013

The government introduced a new measure for the 2013 tax year, requesting that additional information be provided regarding additional information on investments held outside of Canada. For many Canadians, the reporting of this information has proven difficult, and the government has extended the deadline for filing this information to July 31, 2014. The deadline for future years will be April 30th.

Did You Know… Old Age Security and Wages

As a senior, you can receive up to $3,500 of wages without affecting the amount you receive from the supplement to Old Age Security. This can be a useful tool to consider if you have a senior who is residing with you and is helping out with your farm or business. This amount would be tax free to the recipient, but could be a tax deduction to the farm or business owner.

Student Tax Reporting

Students must file their tax returns in order to get full advantage of credits available to them.

Students must file their tax returns in order to get full advantage of credits available to them.

With the start of the university year approaching, many parents with children entering post secondary institutions for the first time are unsure how to report their child’s education expenses on their tax return.

It is not necessary to save receipts from the school in order to claim deductions to report on your tax return. Virtually all of the allowable expenses related to post secondary education can be determined using the T2202A form that is issued by the institution in February of the following calendar year.

You may want to retain the receipts which break down the largest payments to the institution, as they may be used to report a medical credit for the extended health benefit plan in which the students are enrolled.

Tuition credits can add up very quickly for a student. Eligible tuition fees are calculated using the actual dollars paid for your tuition and the other deductible expenses paid on enrolment.

Additional credits are available for the number of full time or part time months of attendance at school. If you attend school full time, you are eligible for an education and text book credit of $465 per month for each month of attendance. If you attend part time, you are eligible for a credit of $140 per month.

Because they can only transfer $5,000 of tuition credits to their parent or grandparent, it is important that students file their own tax returns each year to ensure they receive the remaining credit in future years.

If you attend school full time for eight months, the education credit alone is $3,720, before even considering the cost of tuition. Not filing a tax return every year could result in thousands of dollars of lost credits.

You can deduct expenses to move your child to university against taxable scholarships received. However, most scholarships to attend post secondary school are now tax free, particularly for full time students, so often times, this moving expense is not usable.