The Canada Revenue Agency (CRA) has officially opened its online tax form service for Canadians, marking the commencement of the tax filing season. Canadians have until April 30 to file their submissions, and most forms are now readily available on the CRA website. Those who utilize the NETFILE service to file their taxes online by March 24 will receive their Canada Carbon Rebate as early as April 15, according to CHCH News. Late filers can expect the rebate to arrive six to eight weeks following their assessment.
Key changes to the tax system this year have been outlined by the Chartered Professional Accountants of Canada, highlighting areas taxpayers should be mindful of. Notably, the federal government has deferred the planned hike to the capital gains inclusion rate until 2026. This means only 50 percent of all capital gains remain taxable, unchanged from the 2023 tax year. Taxpayers, especially those with investments, will also appreciate the increase of the home buyers’ plan withdrawal limit from $35,000 to $60,000 for withdrawals made after April 16 last year. This enhancement aims to help more Canadians achieve home ownership.
During the tax filing process, wealth advisor Renee Rebelo reminds Canadians of the many potential deductions and credits they may be eligible for. “Many tax filers often forget to claim investment fees,” Rebelo notes. She also points out the March 3 RRSP contribution deadline, emphasizing it as another significant date for Canadians to keep on their radar. For individuals who are self-employed, the deadline is extended to mid-June, giving them additional time to prepare their filings.
While tax responsibilities are at the forefront, employment-related issues have also made headlines. A recent ruling from the Federal Public Sector Labour Relations and Employment Board clarifies the agency's position on prorated performance awards for workers on medical leave. The Board confirmed such prorations are not disciplinary but part of consistent policy applications, providing reassurance to employees concerned about how their leave could impact compensation.
On another front, Canadians learned this week about the consequences of financial secrecy as the Tax Court ruled against a Calgary mining engineer who tried to conceal funds from his spouse by maintaining a secret Swiss bank account. According to Blacklock's Reporter, Judge Edward Cook stated, “His sole purpose in having the Swiss bank account was to hide funds from his wife.” This case reveals the importance of transparency when it concerns tax responsibilities, as Cook noted the taxpayer failed to disclose the account to tax authorities.
The judge emphasized the clear question on personal income tax returns about foreign property totaling over $100,000 posed to taxpayers, remarking, “Even a cursory reading of the question should have made the issue clear.” The ruling underscored the foundational principle of foreign income disclosure within Canadian income tax law. This taxpayer's mishap demonstrated what the court termed “neglect or carelessness,” even if the intention was merely to keep the account under wraps from his wife.
Curiously, under the Income Tax Act, auditors normally check only the last three years of returns and collect unpaid debts within ten years. Nonetheless, the reach of audits can extend much longer if tax authorities suspect carelessness or purposeful neglect, reflecting the stringent approach the CRA takes with compliance. Judge Cook's ruling serves as a stark warning for those attempting to sidestep their obligations.
The issue of extended auditor powers has come up again following Parliament's passage of Bill C-47, which enables GST audits dating back to 1991. This law has drawn criticism, with the Canadian Bar Association advising the Senate finance committee of the risks posed to taxpayers, who may not know if their past transactions will face additional tax scrutiny.
Canadians preparing to file their taxes this season must navigate the newly implemented policies carefully. With the deadline looming, they should take full advantage of the deductions, understand their filing responsibilities—particularly concerning foreign assets—and remain aware of how employment law can affect their compensation, especially during medical absences.
With tax season upon us, both the CRA and taxpayers have significant roles to play to maintain compliance and transparency, ensuring both parties work together to navigate the complex financial regulations successfully.