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Back to Basics at Tax Time

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The April 30 tax filing deadline is quickly coming into view. Are your clients prepared? As an advisor you might not think it essential to remind clients about the basics, but it’s often appreciated. Not to mention Canadians are often unaware of changes to the tax code. The help you can provide cements relationships by letting clients know you’re always looking out for them.

When to file early

Anyone who expects a refund for overpayment of taxes should obviously consider filing as early as possible. After all, if a refund is expected and filing is delayed, it’s like giving the government an interest-free loan. Equally, the CRA is not as busy early on and will likely to process a refund faster.

I would go so far as to say that any client who is expecting a large refund may well be guilty of poor tax planning. A client with a large refund in successive years should be encouraged to ask their employers to reduce tax withholdings. This is done by filing CRA form T1213-Request to Reduce Tax Deductions at Source.

The CRA does pay individuals interest on overpaid taxes. Interest does not begin to accumulate until May 30 at the earliest or 30 days after the return was filed. The CRA currently pays interest at a rate of 3% on overpayments.

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