Tax Season 2022 in Canada

Estimated reading time: 6 minutes

Tax Season 2022 in Canada starts tomorrow i.e. 21 February 2022. Individuals will be able to file their taxes online or via a tax consultant starting tomorrow onwards until May 2, 2022. Unlike countries like U.A.E. where personal income is not taxed, Canada boasts itself as a country with a moto “Serve and be served”. Annual income from all sources have to be reconciled and tax return submitted for all individuals in the household during a time frame set by the Canada Revenue Agency.

There are multiple options available for an individual to correctly submit their income tax returns. Tax filing is easy and simple and doesn’t necessarily mean that you have to be an accountant. Taxes can be done personally or you can use a tax consultant to file your returns. The tax season for 2021 in Canada is already here so are you ready?

Tax Calculations:

Taxes don’t get calculated on a whim and don’t just submit themselves to the CRA. You have to reconcile and confirm that a certain amount was your annual income and you didn’t earn more than that from any other source. Also note if the income had tax deductions at source or not. What does that mean?

In simpler terms, income generated in Canada is deducted taxes on source i.e. by the employer. Or the tax is calculated during submission of tax returns. The software used or accountant will let you know if you owe taxes to the Canada Revenue Agency (CRA) or if you are owed a refund. I personally like it when CRA has to refund me those extra dollars that got deducted during the span of the year.

Documents for Tax Returns Submission:

For an individual, there are certain documents that need to be in their possession. Plus, make sure that your memory is functioning at an optimal level. You would need to remember your income and where you earned it from if you are a hard worker. Which I am assuming you are if you are reading this!

Following are a few important documents that you would require prior to starting the tax return filing process:

• SIN Number or Tax ID Number
• T4 – Statement of Remuneration Paid (Provided by Employer(s))
• T4A – Statement of Pension, Retirement, Annuity, and Other Income (Provided by the CRA)
• T5 – Statement of Investment Income (Generated by the Investment Business)
• Other Income – Total Dollar Amount received – Cash, Bank Deposit etc.
• Medical Bills – All Medical Bills paid out of pocket during the fiscal year (Jan1 to Dec31).

There might be other documents required depending on your answers using the Net File software or by your accountant who will be filing on your behalf.

Tax Return Submission Sources:

Tax returns can be submitted through different sources. Following are a few sources that you could use when you are ready to file your annual tax returns for the tax season 2021 in Canada.

Tax Consultants:

Majority of the population in Canada use a Tax Consultant who file taxes on behalf of the applicant. Tax Consultants are well versed in Canadian Tax Laws and use the Net File software to submit taxes on behalf of the applicants. They have to keep in touch with the Canadian tax laws and changes that happen over the previous year. This in turn helps them to ensure that they are correctly filing taxes for the 100s of people that flock at their offices to file tax returns.

One important thing to keep in mind about this resource, they are liable to CRA for any mistakes in your tax submission if you did provide them the correct details. This in turn makes this service expensive. They tax consultants charges start from $30 and up. Multiple T4s can garner the exact amounts over and over. E.g. 1 individual with 3 T4s might be paying C$90 for personal tax submission.

Using the right Tax Consultant is important and charges differ from consultant to consultant. Choosing the right one will help ensure that you have the right individual accountable if any mistakes do occur in your submissions. One of the prominent organization helping Canadians in Tax submissions in H&R Block.

Tax Software:

Using a Tax software is easy, simple and cheap. As Tax Consultants up their tax law knowledge annually, so do these software. They record changes in Tax Law during the year and annually release the latest version of the Tax Return software. The tax law changes are incorporated so well that you rarely see an update missed in these tax software. They also have tax consultants available (obviously for a nominal fee) if you want a real person to review and answer your questions.

I would never recommend a free tax software as I don’t think they are very reliable. There are two software that are leading the industry and they are TurboTax by Intuit and UFile by Thomson Reuters.

These software are available at a very reasonable price. E.g. TurboTax for common returns that files 4 is charged at C$ 19.99 plus GST/HST. Do keep in mind that if you are a family of 4, you will be using 2 Adult returns at a time along with 2 minors. Being a big family, I always go for the Standard License and it costs me C$34.99 plus GST/HST per year only.

What is the best part of these software? Information is digitally stored and you can just import your old data year over year. It gets easier to file taxes annually. Using SIN Number and CRA login details T forms get directly imported from the CRA websites. It is safe and secure so you don’t have to worry about entering all details manually against each field in the tax return submission.

My Experience:

Coming a country where the word tax was never heard, this is definitely overwhelming. When I landed in Canada, I was told to visit a Tax Consultant by a friend. Paid C$60 for myself and my wife for filing our tax returns. I got to know that I could have just used a Net File software and filed myself to keep it cheaper and in the house.

Well, the next year onwards, I have always used TurboTax to file our own taxes and just end up paying a meager C$39.54 for filing 8 Adult tax returns. And yes, I have that one friend who asks me to file taxes for him and his wife annually, because I offered, didn’t want to waste those two returns that I have pending under my license annually. Keeping it halal for TurboTax.

So are you ready to file your 2021 tax returns? Coz we earned so much with the COVID-19 slowdowns. Just Kidding!! You should be getting your T4s from your employers by end of February or beginning of March 2022. Keep an eye out for the mail and do keep bugging your employers for the T4s. I am waiting for one T4 too, received the rest though. Giddy up employers.

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