Friday 24 January 2014

Taxes 2014: Compendium of Links & Resources for Filing 2013 Income Tax

Tax season is starting. The Canada Revenue Agency will soon open up the NETFILE online electronic tax filing service to receive returns electronically. It's time for Canadian investors to start getting ready for filing their 2013 income tax return. There can be a multitude of slips and receipts to assemble, not to mention older records to dig up and preliminary calculations to do in order to be ready in time for filing on or before the deadline of April 30. We therefore present a collection of resources that should cover the tax information and tools needs of Canadian online investors.

Tax-specific Websites

Key Dates -  see complete CRA list of dates for individuals
 
January – mid CRA pdf tax forms for printing available for download 
February - 10 CRA online filing service NETFILE starts accepting 2013 tax returns; last day is January 16, 2015
March – 3 RRSP contribution – last day for making contribution applicable to 2013 tax year
April – 30 CRA – last day to file 2013 return and pay amounts owing to avoid penalties
June – 15 CRA – last day to file 2013 return for self-employed though amounts owing deadline is still April 30
December – 31 RRSP – last day for making an RRSP contribution in the year you turn 71
continual CRA issues tax refunds, often within days, if return is filed electronically
TFSA contributions anytime during year for 2014 or missed past years since 2009

CRA dates are rigid; be late even by a day and you will miss out or suffer penalties. On the other hand the tax documents below relating to the 2013 tax year flood in progressively from mid-January to the end of March. There can be weeks or more of variation amongst companies that issue the slips and receipts.

Checklist and guide for interest, dividends and capital gains
 
If your investing involves … look for these documents … from these organisations ....



Borrowed money to invest Investment interest expense on statements from broker for margin, or bank for loan
Canada Savings Bond interest T5 slip (min $50 interest) from broker if held in a broker account or from Bank of Canada if bought directly from BOC;
GIC interest T5 slip (min $50 interest) from broker if held in a broker account or from bank or trust company if bought directly
T-Bill and Stripped Bond interest Annual summary of security transactions Interest = redemption/sale amount – purchase cost; for details see http://howtoinvestonline.blogspot.co.uk/2011/03/how-to-calculate-interest-and-capital.html

T5 does NOT show it, even when over $50 e.g. http://www.rbcds.com/TaxReporting/tax-information-checklist.html
Mutual fund distributions T3/T5 slips mailed directly by Mutual fund companies, NOT brokers, even when fund is held in a brokerage account
Mutual fund capital gains (sales) Annual summary of security transactions from broker if held in a broker account 
or,
from mutual fund company if held directly with the mutual fund company  click on links to fund companies at FundLibrary.com and then look for tax or Distribution info

see http://howtoinvestonline.blogspot.co.uk/2009/01/etfs-and-mutual-funds-calculating.html
Bond interest T5 slip (min $50 income) broker
Bond capital gain or loss (sale or maturity) Annual summary of security transactions broker provides statement at purchase year and at maturity or sale; for how to calculate see http://howtoinvestonline.blogspot.co.uk/2011/03/how-to-calculate-interest-and-capital.html
Stock dividends T5 slip (min $50 income) broker
Stock capital gain or loss (sale) Annual summary of security transactions broker provides statement at purchase year and at maturity or sale
ETF and REIT distributions T3/T5 slips broker
ETF, REIT, Income Trust, Closed End Fund capital gain or loss (sale) Annual summary of security transactions + own records broker for trading transaction summary

Investor must track own adjusted cost base – see http://howtoinvestonline.blogspot.com/2009/01/etfs-and-mutual-funds-calculating.html

ETF providers publish tax breakdown of distributions on their website. ETF providers in Canada list and links at http://www.tmxmoney.com/en/sector_profiles/exchange_traded_funds/funds/funds.html


Income Trusts and Closed-End Funds - ACB Tracking Inc has a pay service that simplifies the tracking
Split Corporation income T5 broker

Checklist and guide for account withdrawals, contributions
 
If your investing involves … look for these documents … from these organisations ....



RRSP contributions RSP Contribution Receipt RRSP account trustee, be it broker, bank, mutual fund company
RRSP contribution room various see four ways to find out - http://canadaonline.about.com/cs/rrsps/qt/rrsplimit.htm
RRSP / RRIF / LIF / LRIF withdrawals T4 RRSP / RRIF slip RRSP/ RRIF account trustee
RRIF / LIF / LRIF withdrawal limits Evaluation letter or phone call broker
Annuity payouts T4A and T5 slips mailed by insurance companies, both for registered or non-registered annuities
RESP withdrawals T4A Educational Assistance Payment or Accumulated Income Payment slip brokers or financial institution where RESP is held
Non-resident taxpayer NR4 slip broker
TFSA interest, dividends, capital gains, contributions and withdrawals none None – happy days! No tax reporting to do
TFSA contribution room and contribution or withdrawal history phone call or online Canada Revenue Agency – see http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/cntrbtn-eng.html

Tax News, Tips and Blogs - to remind us of the latest developments, the implications, the gotchas and possible strategies to legitimately minimize what we pay
 Books - buy them online, read them offline at leisure

Software - to prepare and NETFILE income taxes electronically; the best packages guide you and make suggestions to optimize your taxes

HowToInvestOnline Tax-related Posts - our most popular and presumably most useful tax posts

Tax Calculators - for tax planning, what if scenarios and estimation
  • Taxtips.ca Canadian Tax Calculators - a Basic version, an Advanced version for all provinces except Quebec, one for Quebec, with all the tax credits and a special Investment Income version that compares different types of income, especially useful for retirees.
  • Ernst & Young - ultra-simple, enter your taxable income and it shows you by province total tax (using the basic personal tax credit only) as well as marginal rates on ordinary income/interest, capital gains and dividends;  very handy when you have a taxable and tax-sheltered investment accounts to see which types of securities should go in which account
  • RRIFMetic - sophisticated tool (not free, costs $99) for planning and optimizing for retirement income including taxes on types of accounts (taxable, RRIF, LIF, TFSA, RESP) and types of income (dividends, interest, capital gains) plus factors in non-investment cash flows; helps decide how much to take from which account during retirement.
Tax Discussions - read what other people are grappling with and learn from their experience or register and you can take part, ask questions and perhaps get good answers
These resources will make it easier to pay your taxes quickly with minimal frustration at the very least and probably to pay less as well.

Disclaimer: this post is my opinion only and should not be construed as investment or tax advice. Readers should be aware that the above comments are not an investment recommendation. They rest on other sources, whose accuracy is not guaranteed and the article may not interpret such results correctly. Do your homework before making any decisions and consider consulting a professional advisor.

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