H&R Block Insight

For most Canadians, once the tax deadline has passed, they don't want to think about taxes until next year. But what if you filed your tax return on time and you forgot something?

There are a number of situations where you may need or want to file an adjustment to your tax return. The most common is you filed your tax return and another slip arrived in the mail the next day. Or, you found medical receipts you really wanted to claim.

If you are amending your income, it is to your advantage to get your adjustment in to the Canada Revenue Agency (CRA) as soon as possible. An amendment to income could result in a balance owing and the CRA will charge interest on the outstanding balance from April 30, 2008. When you amend items such as medical expenses, donations, or moving expenses this will generally result in more refund and more money in your pocket.

Filing an adjustment to your tax return requires a T1 Adjustment (T1-Adj) form, and the information you would like to have adjusted. You will need to provide an explanation for the amendment and include all of your supporting documentation. The T1-Adj and its attachments must be mailed in and you should expect to wait four to six weeks for a reply.

An adjustment can be filed for any previous tax year, suffice as long as your have the supporting documentation. Registered Retirement Saving Plan (RRSP) contributions are becoming a one of the common reasons for amending a previous year's tax return.

In recent years, the CRA has ruled that RRSP contribution receipts have to be claimed in the appropriate tax year. For example, contributions receipts for March to December 2007 and contributions receipts for the first 60 days of 2008 must all be reported on your 2007 tax return. Even if you don't intend to claim the receipt until next year, you must report in the proper year.

Also, you will have to adjust a previous year's tax return if you have found RRSP receipts from a few years past. Unfortunately, you can not just include them in another year. When you adjust your tax return to include RRSP contributions the result will be a refund, which is always a welcome surprise.

So if you find a slip after you mail your taxes, there is still time to take advantage of the potential tax savings. Remember to keep all your documentation and file your adjustment as soon as possible.

And to prevent the same problem next year, start a 2008 tax envelope and keep it handy. Anytime you have a tax-related slip or piece of paper, slide it into the envelope so you have everything you need next year.

Self-employed people do have a little bit longer to file a tax return - until June 15. However, if you owe the government money and file after April 30th, they will start adding on the interest. As you prepare your paperwork for your tax return, here are some deductions to keep in mind:

Working from home is an easy commute in the morning and since it is your principal place of business, you may be able to claim some of your home expenses. Depending on the amount of space you use for business and/or client meetings, you can claim a prorated portion of your utility payments, property taxes, mortgage interest and maintenance costs. It is important to remember, only mortgage interest is deductible - not your mortgage principal.
Office supplies like paper and staples are fully deductible. Bigger items such as computers and office furniture must be depreciated over a number of years according to the Capital Cost Allowance (CCA) rules. CCA rate for computers and computer equipment was increased to 55% effective March 19, 2007. Don't forget you can only deduct half the annual rate in the first year. So if you purchased a computer for $1,000, you would only be able to deduct $275 against your business income in the first year. In the second, you can deduct 55 per cent of the balance remaining, or $398.75 (calculated as $725 x 55 per cent).
You are allowed to claim a portion of your auto expenses that relate to the business. This includes gas, maintenance, auto club membership, license fees and insurance. It is important to document vehicle use for both personal and business travel so invest in a log book or record system to keep track. The rules may change for 2008 based on the last Federal Budget.
There are limitations on how much you can claim for luxury vehicles. The ceiling on CCA claims for 2007 is $30,000 plus GST and PST. And if you want to lease, the ceiling is $800 per month plus GST and PST.
Insurance and health benefits are another concern for self-employed people. If you opt to pay for a private health service plan, you may be able to deduct the premiums as a business expense. To qualify, either your self-employment income must be 50 per cent of your total income or your income from other sources must be $10,000 or less. The maximum deduction is $1,500 for yourself, $1,500 for your spouse or common-law partner, and $750 for each or your children under 18.