Top 4 tax myths debunked
Taxes can be confusing, we know. With the tax filing deadline quickly approaching, you’ve likely had a barrage of friends and family giving you advice on how to file and when to file. But, a lot of this advice may be more fiction than fact. It’s not the fault of your caring companions; they may genuinely believe these tax myths because they don’t eat, sleep and breathe taxes (like we do!).
Fret not! We’re here to confirm or debunk the four most common tax myths of 2019 once and for all.
Myth #1: If you receive a Notice of Assessment (NOA) after filing, it means the Canada Revenue Agency (CRA) has closed the books on your return and you won’t be hearing from them about this return again.
An NOA can be considered a type of receipt that the CRA sends to you confirming they’ve reviewed or “assessed” your completed return. However, this doesn’t mean you’ve reached the end of the road with the CRA when it comes to this particular tax return – this actually sets the beginning of a three-year period during which the CRA can reassess your return at any time. After this three-year period has expired, they can only reassess you if you committed fraud or were negligent in the preparation of your return.
Often, however, receiving an NOA is not cause for alarm. The NOA will merely include the amount of your refund or, if you happen to owe taxes, the amount you need to pay.
You should pay attention to see if your numbers match the CRA’s. Mistakes happen to the best of us, and sometimes the CRA needs to either add or remove claims you missed or submitted. If there are changes, your NOA will include an explanation and no further action needs to be taken on your end (unless there are penalties or interests that occurred as a result of the change).
Myth #2: If you’ve received a NOA, it’s too late to change your tax return.
If you have the paperwork to support your claims, you can go back up to 10 years to request adjustments.
Let’s say you found old donation slips that forgot to claim. That doesn’t mean you missed your chance to claim them. You’re able to file a T1 Adjustment Request form and get your tax situation sorted.
Maybe you notice there was an income slip like a T4, T4A or T5 you missed reporting. You can follow the same procedure and request an adjustment. Just make sure to do so as soon as possible because the longer you wait, the more interest you’ll be charged.
Myth #3: The CRA doesn’t care if your circumstances make it difficult to pay or file your taxes.
As much as you like to believe the taxman is heartless, he really isn’t. If you’ve lost your job, or there is some other circumstance preventing you from filing, you can ask to have the late-filing penalties and interest waived. You can disclose your financial situation with Form RC376 and provide your request with Form RC4288.
Myth #4: You have to pay fees and taxes to the CRA before you can claim your winnings from a lottery or sweepstakes.
Hit the jackpot and can’t wait to start rolling money? Congratulations! But do you actually have to pay taxes on your moola before you can touch it? Great news, you don’t! Lottery winnings are not taxable in Canada.
However, now that you do have this new-found fortune, you may find yourself investing in stocks or buying material assets. If so there may be filing implications. When you need help filing those taxes, don’t forget about your friends at H&R Block. We won’t ask for a share of your winnings, we just want to help sort out your tax situation! Find an office near you.