It’s my favorite time of the year: with the beauty of fall comes the opportunity to arrange your affairs within the framework of the law to pay only the correct amount of taxes in 2013—no more.
Right now is the right time to do that planning. There are two important starting points:
Review Prior Filed Tax Returns for Errors and Omissions. One of the first things to discuss with your tax advisors at year end is whether all tax returns are up-to-date. Under CRA’s Taxpayer Relief Provisions, a taxpayer may recover taxes paid or refundable credits due to errors or omissions on prior filed returns for a 10 year period.
This year do make adjustments to the 2003 tax return before December 31, 2013, as a minimum. That’s important because if you miss filing this return, you’ll be unable to recover and use unclaimed capital losses for 2003, deductions for carrying charges, creating unused RRSP contribution room on your earned income, or those missed carrying charges, moving expenses, medical expenses, and so on.
Then, go ahead, request adjustments for missed provisions—or to file delinquent returns—for tax years 2004 to 2012. If the CRA owes you money, you’ll be more than set for Christmas. But if you owe, do pay on time, or make arrangements to pay over time.
Review Quarterly Instalments: Is the December 15/31 Payment Required?
If your income sources dropped in 2013 from their prior levels, you may not have to make the December 15 quarterly instalment payment. You should check that out with your tax advisor immediately. If it’s true, you can reserve that extra cash for RRSP, TFSA or other investment opportunities before year end.
Farmers and fishers make one tax instalment payment on December 31 for the entire year. Once again, professional advice is a good idea.
It’s Your Money. Your Life. Complete a preliminary tax return now to ensure that the final tax instalments of the year are required and take the time to also review prior filed returns to optimize your rights and preserve them, too, in cases where you have not yet filed. If you do it first, before CRA asks you, you’ll avoid expensive penalties.
Evelyn Jacks is President of Knowledge Bureau and author of 50 books on tax and personal wealth management. She is also the founder and director of the Distinguished Advisor Conference (DAC). The theme of this year’s three day think tank in Ojai, CA Nov 10-13 will be “Back to the Future – Collaborative Wealth Management.” Follow Evelyn on Twitter at @EvelynJacks.