Module 1: The Cdn Tax System

Question 1

Who must file a tax return?

Answer 1

• if you have a tax liability
• withdrew from RRSP
• CRA request letter
• earnings subject to CPP
• sold imvestments
• claimed a reserve

Question 2

Why file a return?

Answer 2

• expecting a refund
• Benefits
• have a loss to claim
• entitled to refundable tax credits
• income for RRSP
• tuition credits for students

Question 3

Tax filing deadlines

Answer 3

Individual: retuns and pmts by APR 30

Self employed: returns by june 15 //pmts by apr 30

Deceased: returns by the later of: Apr 30 yr of death OR 6 months after death

Trusts: estate return 90 days after yr end of trust

Question 4

Late filing penalties and interest

Answer 4

1st time: 5% of balance owing + 1% each month (max 12 mths) –> 1yr approx 17% + interest

2nd time etc.. : 10% balance owing + 2% balance owing each mth (max 20 mths) –> 1 yr approx 50% + interest

Question 5

Instalment payment due dates
(4)

Answer 5

March 15
June 15
Sept 15
Dec 15

Question 6

Efiling: who can file?

Answer 6

• all canadians EXCEPT non residents and bankrupt

Question 7

Efiling: documents

Answer 7

Keep all documents + receipts for 7 yrs

Question 8

Marginal tax rate system

Answer 8

• 15% on fiest $50,197
• 20.5% btwn 50,197 - 100,392
• 26% btwn $100,392 - $155,625
• 29% btwn $ 155,625 - 221,708
• 33% $221,708 and over

Question 9

Tax deduction vs tax credit (??)

Answer 9

Tax deduction:
- deducted from total income to reduce taxable income
- i.e: RRSP contributions, child care expenses, moving expenses

Tax Credit:
- ???
- i.e: basic personal amount, age amount, tuitikn credits , disabiloty tax credits, pension amount, medicsl expenses