March Madness isn't about basketball. For me, and many Canadians it's about tax time.
That dreaded period when we gather all receipts, start wondering if we should have done more and start hypothesizing for what we can do this year.
Here are my tips for 2021:
1) Keep your receipts in a folder, (online or paper) all year. Take about 30 min. every month to organize them so it's easy at year-end. If you are nodding and saying 'already done' good for you. For the rest of us, keep trying. Maybe 1 year it will get easier.
2) Taxes are far more complicated now than they were years ago. And many more things must be added to the tax return, such as real estate sales. Yes, even selling your house is required to be added on the tax return. This means it is a bigger task. Therefore, using an accountant if you have anything that goes beyond a few tax slips can be a great stress reliever. On the other hand, the software available now is very helpful, but not foolproof. If you feel confident using it, that's great. But keep in mind many items aren't easily accomplished with the software. An example would be the special treatment of rental property.
3) Base all your tax/investment decisions on what we know and what is logical. This year I had many people ask about how to plan for the pending budget, with many rumours about tax rates changes, capital gains rates changing. It's great to plan, but if gains were triggered that weren't needed, and the rate doesn't change, you lost one of the best opportunities for savings: tax deferral. Work with what we know and can be confident about moving forward.
4) If you want to make changes, in saving more, spending less, being more organized, then start now. That's the only way it will happen. Want help, reach out. We have many tips to get you on track, so this time next year will be far less stressful.
5) Remember, T5008's are now a part of non-registered accounts, and track all transactions. Ensure the information is correct as sometimes cost-base, or other factors can be recorded incorrectly. For example, if you own Evolution, a privately managed account program that incorporates re-balancing, then the transactions are recorded on the T5008, but also in the Personal tax package provided. Ensure you do NOT double count these.
6) All the CERB, and other income from the government due to Covid19is taxable. Keep that in mind when you are filing.
Good luck in getting through Tax season. Especially good luck to the accountants who help us manage through this and do more work in the next 45 days than we can imagine!