Tax season is in full swing. You need to file your Canadian tax return.
Here’s why Working Holidaymakers should act fast!
Typical isn’t it?
There you are living the dream on your working holiday in Canada. And then suddenly, out of nowhere, tax season comes along to burst your bubble!
The simple fact is that every working holidaymaker is required to file a return before the 30 April each year.
But let’s face it, nobody wants to spend their time filling out boring tax forms.
With this in mind, it’s no wonder that so many working holidaymakers put their tax obligations on the long finger and don’t file their return until the last minute.
Tempting as it may be, in life it’s rarely wise to kick the can down the road.
And believe it or not, when it comes to Canadian tax, there are actually some benefits to ditching procrastination and acting right away.
In this blog we’ll take a look at why you shouldn’t leave your tax return to the last minute and detail how you can file your return as easily as possible.
1 – You’ll avoid late filing fees and penalties
Having to file a tax return is bad enough! Do you really want to pay fines and penalties as well?
Nah! Best to get your return filed early.
If you owe tax and you file your return after the deadline, the CRA will charge you a late-filing penalty. This penalty is at least 5% of your tax liability, plus 1% of the amount you owe for each month your tax return is late (to a maximum of 12 months).
Even if you can’t pay your full tax liability before the deadline, you can avoid the late-filing penalty by filing your return on time.
2 – You’ll be compliant with the CRA
Most working holidaymakers want to spend as little time as possible worrying about/dealing with their tax return.
But by filing your tax return weeks before the deadline you can have peace of mind that, should any complications arise, you have sufficient time to resolve them.
Filing your return early and staying in the CRA’s good books is actually a pretty smart idea generally -especially if you have plans to stay in Canada after your working holiday or to apply for permanent residency.
Do you really want an old tax return to be the reason your visa application was denied?
Didn’t think so!
3 – You’ll get your tax refund sooner!
The earlier you file your tax return, the earlier you’ll receive your tax refund.
‘You mean I can get back some of the tax I paid to the Canadian Government?’
And you could be due quite a significant amount of money back.
In fact, the average tax refund that a Canadian working holidaymaker receives is a massive $998.
There are many reasons why you may be due a tax refund. The most obvious reason is that you overpaid on your tax bill. And many working holidaymakers are also entitled to claim tax back on the cost of certain common expenses (examples listed below).
Note: If you intend to claim any of the below expenses on your tax return, it’s vital that you keep all your related documents in a safe place.
You can claim tax back on certain medical expenses you have paid for.
Examples of eligible medical expenses include:
- Doctor consultants
- Nurses’ fees
- Prescription drugs and medications
- Premiums paid to private health insurance
- Costs related to purchase of gluten-free food for coeliac
- Orthodontic work
The total eligible medical expenses should be reduced by 3% of your net income or $2,268, whichever is less. The tax credit is then 15% of the amount remaining.
If you are self-employed in Canada you may be able to claim a number of business expenses on your tax return.
In general, it’s possible to deduct any reasonable expense you incurred in order to earn your business income. However, personal expenses are not eligible.
Some common examples of business expenses include:
- Legal and accounting fees
- Telephone and utilities
- Meals and entertainment
- Property taxes
- Motor vehicle expenses
If you study in Canada you can claim eligible expenses as a tax credit. Generally, a course qualifies if it was taken at the post-secondary level or (for persons 16 years of age or older at the end of the year) if it develops or improves skills in an occupation and the educational institution has been certified by Employment and Social Development Canada. In addition, you must have taken the course within the tax year you are applying for.
To qualify, the fees you paid to attend a Canadian educational institution must be more than $100.
You can claim donations either you or your spouse or common-law partner made. All the eligible amounts of your donations to registered charities and other qualified donees made during the tax year plus donations made in any of the previous five years that have not been claimed before can be claimed on your tax return.
4 – Leaving Canada soon?
Trying to organise your Canadian tax return from your home country can be a bit of a nightmare.
So if your working holiday is coming to an end before the deadline, it’s definitely a good idea to file your return early.
On the other hand, if you’ve already left Canada and you have to file a tax return, Taxback.com can help you.
They’ll can take care of all of the boring tax paperwork for you and even transfer your refund to your bank account anywhere in the world!
5 – It’ll all be over before you know it!
Filing your tax return is actually a lot easier than it seems.
So why put it off any longer?
Yes you can choose to file your tax return yourself directly with the CRA.
But if filling out boring tax paperwork sounds like the last thing you’d like to do you could always enlist the help of a registered agent like Taxback.com.
By applying with Taxback.com you can enjoy a fast and stress-free service.
Their tax experts will review your personal circumstances to see if you’re eligible to claim any tax deductible expenses. They will then handle all of the tax paperwork, ensure you receive your maximum legal tax refund and guarantee that you remain compliant with your visa conditions.
And the best part? You can get a free tax refund estimate before you get started.