TORONTO —
When most people think about making a mistake on their tax return, their fears often revolve around checking the wrong box or missing key facts that might lead the Canada Revenue Agency (CRA) to audit them.
But, according to experts, the costliest tax mistakes made by Canadians are usually related to missed deductions and a lack of understanding about whether they need to file.
Here are five costly mistakes to avoid when putting together your return this year:
NOT FILING AT ALL
If you didn’t make a single dime during the tax year, failing to file a tax return will only leadto more money being left on the table.
“One of the most common mistakes is not filing because you don’t think you have enough income, or you didn’t have an income at all,” Lisa Gittens, senior tax professional at H&R Block, told CTVNews.ca by phone earlier this month.
“As long as you are living in Canada you should be filing.”
According to Gittens, students, young adults, stay-at-home parents and the unemployed are the most prone to this mistake, which prevents them from claiming certain tax credits and benefits that all Canadians are entitled to, regardless of their income bracket.
You can also claim things like medical expenses, educational expenses, and child care expenses if you didn’t make any income. And, as Gittens notes, the more expenses you can write off, the greater chance you’ll get a refund.
Gittens notes that it’s especially important for students to file their returns in order to build credit with the CRA.
“Many students don’t file because they have no income, but once they graduate and start earning income, they have no credit with the CRA,” she explained.
NOT CLAIMING MEDICAL EXPENSES
Medical expenses not covered by provincial health services or benefits plans are another commonly neglected area, especially for low- and middle-income Canadians.
“When your medical expenses are high in comparison to your income you get a medical expense supplement that refunds a portion of the medical expenses you claimed,” said Gittens.
This type of expense can include eye exams, dental expenses not covered by insurance, medical supplies and travel expenses. This year, certain cannabis products are now considered eligible for the medical expense tax credit, if you have a prescription.
From your total medical expenses, the eligible amount is 3 per cent of your income or the set maximum for the tax year ($2,352), which ever is less.
For future tax years, Gittens recommends completing all of your miscellaneous medical exams and yearly check-ups towards the end of the year to capitalize on the return and make it easier to organize your receipts.
“When you get all of those eye exams and dental exams taken care of at the end of the year the receipts are all there for you to claim on your taxes,” she said.
MISREPORTING INCOME FROM YOUR SIDE JOB
Whether you are making extra money by driving an Uber, hosting people at your Airbnb, or earning a little side cash online, you want to make sure you are recording those earnings as self-employed income.
“You’ll want to be sure that you’re also contributing to the Canada Pension Plan based on those earnings,” notes Gittens.
If you plan on claiming any expenses related to that income (i.e. expenses related to your vehicle, house, or travel expenses), make sure that you have the receipts to back it up.
MISSING INVESTMENT INCOME
Before filing, make note of your investment streams and make sure you have received a statement for each of them. These annual statements should show the total income you earned during the tax year and the total expenses incurred, such as investment advisor feeds (which are deductible).
“Income sometimes gets missed because people don’t understand how much they’ve earned on their investments each year,” Armando Minicucci, tax specialist at Grant Thornton, told CTVNews.ca by phone.
“This is generally the most common area where individual tax payers are reassessed.”
FILING TOO EARLY
The early bird doesn’t always get the worm, especially when it comes to taxes.
“Those early filers who are hoping to get their refunds right away tend to miss certain documents, whether it be T4’s from their employers or investment slips from the bank,” Michael Davis, senior tax specialist at H&R Block, told CTVNews.ca by phone.
Not only could this cause you to make an amendment to your return, it could put you at risk of incurring penalties for misreporting your income if you make a habit of it.
“If you fail to report the same kind of income in back-to-back years it could result in penalties,” said Davis.
April 30 is the last day to file your 2019 income tax return. If you owe the CRA money, it must be paid by this date. Otherwise, you’ll face a late-filing penalty and daily interest chargeson your balance.
If you are self-employed, you have until June 15 to file your return. But keep in mind that if you owe taxes, you’ll still be required to pay your balance by the April 30 deadline.
Demands for government intervention in Air Canada labour talks could negatively affect airline competition in Canada, the CEO of travel company Transat AT Inc. said.
“The extension of such an extraordinary intervention to Air Canada would be an undeniable competitive advantage to the detriment of other Canadian airlines,” Annick Guérard told analysts on an earnings conference call on Thursday.
“The time and urgency is now. It is time to restore healthy competition in Canada,” she added.
Air Canada has asked the federal government to be ready to intervene and request arbitration as early as this weekend to avoid disruptions.
Comments on the potential Air Canada pilot strike or lock out came as Transat reported third-quarter financial results.
Guérard recalled Transat’s labour negotiations with its flight attendants earlier this year, which the company said it handled without asking for government intervention.
The airline’s 2,100 flight attendants voted 99 per cent in favour of a strike mandate and twice rejected tentative deals before approving a new collective agreement in late February.
As the collective agreement for Air Transat pilots ends in June next year, Guérard anticipates similar pressure to increase overall wages as seen in Air Canada’s negotiations, but reckons it will come out “as a win, win, win deal.”
“The pilots are preparing on their side, we are preparing on our side and we’re confident that we’re going to come up with a reasonable deal,” she told analysts when asked about the upcoming negotiations.
The parent company of Air Transat reported it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31. The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
It attributed reduced revenues to lower airline unit revenues, competition, industry-wide overcapacity and economic uncertainty.
Air Transat is also among the airlines facing challenges related to the recall of Pratt & Whitney turbofan jet engines for inspection and repair.
The recall has so far grounded six aircraft, Guérard said on the call.
“We have agreed to financial compensation for grounded aircraft during the 2023-2024 period,” she said. “Alongside this financial compensation, Pratt & Whitney will provide us with two additional spare engines, which we intend to monetize through a sell and lease back transaction.”
Looking ahead, the CEO said she expects consumer demand to remain somewhat uncertain amid high interest rates.
“We are currently seeing ongoing pricing pressure extending into the winter season,” she added. Air Transat is not planning on adding additional aircraft next year but anticipates stability.
“(2025) for us will be much more stable than 2024 in terms of fleet movements and operation, and this will definitely have a positive effect on cost and customer satisfaction as well,” the CEO told analysts.
“We are more and more moving away from all the disruption that we had to go through early in 2024,” she added.
This report by The Canadian Press was first published Sept. 12, 2024.
