Tax season has started and that means British Columbians are trying to make sense of the changes for the 2015 tax year. The Chartered Professional Accountants of British Columbia (CPABC) have put together a series of tax tips for the 2015 tax year and here are five general filing tips from CPABC:
- Why should I file a tax return if I have no taxable income for 2015?
You might be eligible for the federal GST/HST Credit and the BC Sales Tax Credit. An individual is required to apply for the GST / HST Credit annually by filing a personal income tax return. Low-income seniors can also re-apply for the Guaranteed Income Supplement by filing an annual personal income tax return. In addition, you will be able to recover any money owing to you for the year, such as an overpayment of income taxes, Canada Pension Plan contributions (CPP), or Employment Insurance premiums.
Even if you have no taxable income, you might still be required to file a tax return and pay CPP if your net self-employed income is in excess of $3,500. You might also want to report your taxable income on a tax return in order to build your RRSP contribution room and become eligible for greater RRSP deductions in a future year.
- What are the deadlines for filing my personal income tax return?
The general deadline for filing personal income tax returns and paying any taxes owing is April 30 of the following year. However, if you are self-employed, the filing deadline for you (and your spouse or common-law partner) is extended to June15 of the following year.
Taxes you owe are still due by April 30, so make sure you pay your taxes by that date to avoid arrears interest charges. If you owe taxes and your return is late, you will be assessed a penalty and interest on the unpaid balance of tax due.
- I was unable to use my tax credits from the 2014 tax year, can I apply them in my tax return this year?
If you are unable to use certain deductions or tax credits in a particular tax year, you might be able to use them in a future year. Common carry-forward items include:
- Non-capital losses: business losses arising in taxation years ending after 2005 may be carried forward 20 years (previously ten years for losses arising in taxation years ending from March 22, 2004 to December 31, 2005, and seven years for losses arising in earlier years);
- Net-capital losses: losses on the disposition of capital property may be carried forward indefinitely and applied against capital gains realized in the future;
- Foreign business tax credits: unused foreign business tax credits arising in taxation years ending after March 22, 2004, may be carried forward 10 years (previously seven years) and applied against Canadian income taxes arising on business income from the country in which the foreign income taxes arose;
- Charitable donations: unused charitable donations may be carried forward five years;
- Tuition, education, and textbook credits: unused tuition, education, and textbook amounts may be carried forward indefinitely;
- Interest on student loans: unused student loan interest expenses may be carried forward five years; and
- Home office expenses: excess un-deducted home office expenses of an employee or a self-employed individual may be carried forward indefinitely and applied against income from the same office or employment or from the same business.
- Can I transfer some income tax credits to my spouse?
You can transfer some income tax credits to your spouse or common-law partner. Transferable credits include the age credit, disability credit, pension income credit, your own education and tuition fee credits, and the textbook tax credit. If you are able to reduce your taxes payable to zero without using all of your available credits, you might consider transferring some of these unused credits to your spouse’s return. Don’t let your credits go to waste.
- Can I contribute to a Tax Free Savings Account?
Since 2009, individuals 18 or older who are residents of Canada for income tax purposes can contribute amounts to a Tax Free Savings Account. The amounts that can be contributed each year have varied. For 2016, the contribution amount is $5,500.
Contributions to a TFSA are not tax deductible and the contribution room can be carried forward indefinitely. Investment income and capital gains earned in the TFSA will be tax-free and you can make tax-free withdrawals from a TFSA at any time. When you make a withdrawal, the amount withdrawn will be added to your contribution room for the following year and can be re-contributed in the future.
The Canada Revenue Agency only tracks TFSA contribution room for eligible individuals who file personal tax returns, which means you should file a return if you are 18 or older even if you do not have any taxable income.