You woke up on May 2^nd with a vague feeling that something was a bit off. It wasn’t until two bites into your sandwich at lunch that you realized what it is: You forgot to file taxes, even though the deadline was on April 30^th.

Your head is reeling with nightmarish fantasies about what will happen to you because you failed to file on time. It might have even taken a bit of gumption to keep reading this post.

Fear not, procrastinating taxpayer. The reality of not filing your taxes on time is a lot less severe than you might think.

Interest & Penalties

Everyone hears the term “penalties” applied to CRA late payment, but few know precisely how they work. There are two kinds of additional costs that the CRA issues when you file your return late:

Late filing penalties are issued when you owe tax for 2011 and don’t file your return on time. The Canada Revenue Agency will charge you 5% of your 2011 balance owning plus 1% of your balance owing for each full month that your return is late to a maximum of 12 months.

Interest penalties are issued on outstanding balances. The Canada Revenue Agency will charge you compound daily interest on any outstanding balances starting on May 1^st (for the applicable tax year). The CRA has set prescribed interest rates that you can view [here] and they are subject to change every three months.

What To Do If You Haven’t Filed

In a word: file!

Filing a return late is as simple as filing one on time. In fact, you can continue to NETFILE your return until the October deadline. If you are owed a refund, there will be no difference between filing on time and filing late, provided that you file within three years.

If you owe the CRA, you will owe penalties as stated above, however if you contact the CRA, they will be willing to work with you. You can submit a request to waive penalties & interest if you had extraordinary circumstances. The CRA will also work with you on alternative payment arrangements. The CRA customer service representatives are incredibly professional and want to help you pay what you owe.

The Importance of Filing on Time

Even if you can’t pay what you owe, you should still file to avoid paying the late filing penalty. While it’s unlikely that you’re going to land in jail for filing a return late, it’s in your best interests to file a return on time. If you owe, you will owe more by filing late.

Still, as the deadline has passed for this year, that might not be an option for you. In the event that you missed the filing deadline, file as quickly as possible afterward. Your bank account will thank you.

This Sunday is Mother’s day and mother’s everywhere should be given love and appreciation for all the hard work they do. Here are four tax tips to help out all mom’s who always give so much, get more back during tax time:

1) Apply for the Universal Child Care Benefit. The universal child care benefit (UCCB) is a social benefit that provides $100 per month per child, regardless of your income, until your child turns six years old. You can apply for UCCB as soon as your child is born. To apply, complete the Canada Child Benefits application on the Canada Revenue Agency website.

2) Get a receipt from your child care provider. Child care expenses that are incurred for you earn an income or go to school are an eligible tax deduction to be claimed as a child care expense on your income tax return. Even having your neighbor watch your children would count! You’ll need a receipt in to support your deduction, so ensure that you ask for a receipt to help lower your tax bill.

3) Include your maternity & paternity benefits on your income tax return. If you receive maternity or paternity EI benefits, those amounts are considered income. Including these amounts on your return will help you avoid a surprise re-assessment from the CRA by including these amounts on your income tax return.

4) Sign up for direct deposit with the Canada Revenue Agency. With busy lives, direct deposit will not only save you a trip to the bank, but it will also help you avoid any delays in receiving your UCCB, CCTB & GST/HST amount. It is easy to sign up – all you need to do is visit the Canada Revenue Agency to sign-up.

Have you filed your taxes yet? In honor of all you tax procrastinators out there, here’s our annual list of the Top 10 Procrastinating Cities in Canada.

There’s just something about buying your produce at the local Farmer’s Market that makes it taste that much fresher.   And it’s not just limited to summer now, either.  Many communities now feature year-round farmers’ markets, which in many cases have turned into much-loved community gathering spots.

And certainly, the movements around eating local and supporting local farmers have heightened awareness of the importance of preserving and celebrating local agriculture.   Yet it’s really the best and worst of times for our farmers.    While local farming has enjoyed a revival, there’s still a lot of volatility with gas prices and instability on the world markets, among other issues.

Fortunately in Canada, there are a variety of tax incentives for farmers – all of which depend on certain factors, including whether or not farming is a full or part-time occupation.  For example, many farmers can qualify for farm business expenses deductions including interest on loans; investment tax credits or capital gains exemptions are also often available.  The Federal government also offers a joint business risk management programs with the provinces and territories called AgriStability and AgriInvest.  These help protect farms from drops in income.

In many cases, the family farm can be rolled-over to children tax-free.   But take note:  being a hobby farmer doesn’t count (sorry, growing a patch of carrots in your backyard does not make you a farmer, at least in the eyes of the Canada Revenue Agency).   In other words, if you don’t have an expectation of profit, you have a hobby – not a business.

Despite the positives though, there’s no question that farmers are subject to a variety of circumstances that are beyond their control – everything from the weather to government policy.  And it’s important for farmers to be aware of all of the resources available to them to ensure they’re maximizing their returns.

So the next time you’re enjoying the Farmer’s Market, think about the risks they take to bring you the food you love.  And who knows – a little thanks may even net you a baker’s dozen on your next produce purchase.

You reach for your wallet only to realize it’s missing.  After frantically searching your car, your house – anywhere it could possibly be – you realize you must have dropped it somewhere between the store and home.  After retracing your steps and coming up empty handed, you start to panic.  All of your ID, your SIN card…everything was inside.  What if it’s fallen into the wrong hands?

This exactly what happened to me (and what was going through my mind) when I lost my wallet a few years ago.  Oh – and might I add that after immediately calling my credit card company, the thief had already racked up $500 in charges at an electronics store!

While everything ended up being ok, for many Canadians, losing their wallet or having their identity stolen by some other means can be a major nightmare.  In fact, in 2009 alone, the Canadian Anti-Fraud Centre received identity fraud reports from 11,095 Canadian victims, totaling a loss of more than 10 million dollars.

Beyond the financial loss, identity theft can be a real risk to your personal information too.  The Canada Revenue Agency (CRA) has the following tips on their website to help keep your tax information safe:

• Do not communicate personal information by email.
• Send the CRA your change of address when you move.
• Use a reputable tax preparer.
• Shred unwanted documents or store them in a secure place. Make sure that documents with your name and SIN are secure.
• Do not carry your SIN card on your person and do not provide your SIN to others unnecessarily.
• Do not share your passwords, user IDs or access codes.
• Beware of scam emails and telephone calls.
• Ask a trusted neighbour to pick up your mail when you are away or ask that a hold be placed on delivery.

But what if you’re already victim?  Be sure to contact the CRA immediately if you feel your tax information may have been compromised.  The Canadian Anti-Fraud Centre also has some excellent information on how to recognize report and stop fraudulent activity.

Have you ever been a victim of identity theft? How did you handle it?

A few weeks ago, one lucky couple in a sleepy city in the Greater Toronto Area realized the ultimate “I thought it could never happen to us” moment when they won a $50 million lottery. We’ve all dreamed about early retirement via the big lottery win, living a life of luxury and taking vacations at any time, to anywhere. With that said, let’s take a look at what winning the lottery means in terms of taxation for any lucky winners. It turns out, Canadians are fairly lucky when they hit the jackpot!

After the news sank in, the winners were photographed holding a novelty cheque for $50 million. In the U.S., this stunt is nothing more than a promotional photo opp. If the $50 million was won by a resident of one of the 50 states, about 38 per cent (or $19 million!!) would go to the tax man. Luckily, lottery winnings are not taxable in Canada. This couple really did get $50 million to deposit into their bank account!

But that’s exactly when the tax breaks ended.  Everyone with savings accounts or investments can expect to earn interest – a perfect case of money making more money – and when you have $50 million, this can add up really fast. This still sounds great, right? Well here’s the catch: lottery winnings are tax-free but the interest earned on them is not. This counts as taxable income on your return and must be reported on a T5 form. In the grand scheme of things, this is a problem I wouldn’t mind having.

While we all want to hit it big with the lottery, even if we don’t, we still come out a winner; a large portion of lottery proceeds go back to the province, helping fund public services and, ultimately, lower the amount of taxes residents pay. In Ontario, for example, the Ontario Trillium Foundation is entirely funded by OLG proceeds.

So cross your fingers, rub that magic rabbit foot, pray to the lottery gods and be hopeful that it could be you. Good luck!

So you filed your tax return & you discover an RRSP contribution receipt that would have made all the difference to your refund. So frustrating! If you’ve missed out on a deduction or have another change you’d like to make to your return, you’re in luck. It’s easy to let the Canada Revenue Agency (CRA) know you need to include additional information on your tax return.

If you need to make a change to a return that you’ve already filed with the CRA, all you need to do is file a T1-Adjustment Request form to request an adjustment to your income tax return.

How to File an Adjustment Form

There are two ways you can file an adjustment to your income tax return:

1)      By Internet: You can make changes to your income tax return using the online My Account Service from the CRA. Once you are in My Account, you simply click on the Change My Return option and then enter and submit any changes to your most recent income tax return or returns from the previous two years. Once you select Submit, your changes will be sent to the CRA.

2)      By Mail: You can complete and print a T1-Adjustment form and mail it into the CRA. If you choose to submit your adjustment request via mail you will need to include the receipts or supporting documents for the changes you wish to make & the supporting documents for your original claim (if applicable), in addition to the completed adjustment request.

Where to find an Adjustment Form

The T1 Adjustment Request form is included in all desktop versions of TurboTax.  Here are the instructions on how to find the form in TurboTax desktop: {here}

Use TurboTax Online or file with paper? The T1 Adjustment Request form can be downloaded from the CRA website here.

When to file an Adjustment Form

If you need to file an adjustment form, wait until you receive your Notice of Assessment from the Canada Revenue Agency. This will ensure that they have processed your last return and will be able to process the adjustment form with no confusion.

Where to send your Adjustment Form

If you choose to mail in your adjustment, send your completed form and supporting documentation to your designated tax center. You can find the address for your tax centre, based on your location, {here}.

How far back can I make a change?

You can file an adjustment request for a tax year ending in any of the 10 previous calendar years (not tax years). For example, a request made in 2012 must relate to the 2002 or a later tax year to be considered.

What happens next?

The CRA will review your adjustment request and send you a notice of reassessment once they have completed their review. The Notice of Reassessment will include any changes made to your return and a letter of explanation if they did not accept your change.

Taking public transit isn’t only good for the environment; it can be good for your wallet too! You can claim the cost of a monthly (or longer duration) public transit pass on your income tax return to help reduce your taxable income. Here are some details on what you’ll need to claim this deduction and how to enter your receipts into TurboTax.

What are eligible passes?

The pass must be for unlimited travel within Canada on

• Local buses
• Streetcars
• Subways
• Commuter trains or buses
• Local Ferries

One-time purchases of public transit are not eligible.

What kind of receipt do you need to claim the Public Transit Amount?

In order to claim the Public Transit amount on your income tax return your receipt must include the following information:

• an indication that it is a monthly (or longer duration) pass;
• the date or period for which the pass is valid;
• the name of the transit authority or organization issuing the pass;
• the amount paid for the pass; and
• the identity of the rider, either by name or unique identifier.

If your pass does not include all of this information, you will also need to keep your receipts, cancelled cheques or credit card statements, in addition to your passes, to support your claim.

If you purchased a U-Pass as part of university tuition, you can also include that amount in your claim for the public transit credit. You should receive a separate receipt from the university with the amount for the U-Pass to support your claim.

Here is a video that shows you how to claim the Public Transit Amount in TurboTax:

If you need more help, here is a detailed FAQ on the steps you need to take in TurboTax to claim the public transit amount on your tax return: How to claim the public transit amount FAQ.

You’ve filed your taxes and eagerly await your return. Any day now, right? Then the assessment comes – you owe money. What happened?

Scenarios like this and many others occur in Canada each year. They can happen for many reasons, most commonly because of errors or misconceptions that still exist when it comes to filing taxes.

According to CRA spokeswoman Caitlin Workman in a response to Ellen Roseman’s column on Dealing with the Canada Revenue Agency, it’s important to remember that the onus is on taxpayers to ensure their tax obligations are met.

Here are some tips to help you make sure your taxes are done right the first time:

-  Be sure to use all the resources available to you – the CRA offers a number of ways that taxpayers can connect with them – phone, internet, in writing and in person. There are also a number of forms and publications that are available to help taxpayers understand and fulfill their tax obligations.

-  Keep your address updated – If the CRA mails an assessment to you and you don’t receive it, it’s your problem, not theirs. The lesson here? Immediately update your address with the CRA whenever you move or leave the country for an extended period of time.

-  If you realize you’ve made a mistake, know how to fix it – If you need to make a change to a return, don’t file another return for that year. Wait until you receive your notice of assessment before requesting a change to a return that has not been processed. The good news? You can request a change to a return for a tax year ending in any of the 10 previous calendar years.

-  If you still don’t agree – If you’ve contacted the CRA and you still don’t agree with their assessment or decision, you have the right to a formal review. The next steps vary depending on your dispute.

-  File your taxes right the first time—Use tax software like TurboTax – which is NETFILE-certified and listed by The Canada Revenue Agency. It not only ensures you’re filing correctly, but guarantees you maximize your tax refund.

Personal income tax returns for tax year 2011 must be filed on or before April 30^th, 2012.

Individuals with self-employment income must file their returns on or before June 15^th, 2012 but if the self-employed individual has a balance owing on his or her return, the balance must be paid on or before April 30^th, 2012.

Filing your income tax return on time will ensure that you don’t pay any late penalties or interest on amounts that may be owed and ensure that there is no disruption in receiving the GST/HST credit, Canada Child Tax Benefit payments (CCTB) and Old Age Security benefit payments.