FAQs

As long as you have once filled a tax return with the CRA in the past, you can still file it using NETFILE. If you have done it earlier, then the CRA should have your actual personal information on file. If you would like to submit tax returns for the past years as well, then you have to prepare them using prior-year tax software.

No.  The NETFILE service accepts just one return per person. Each person has the right to submit only their personal information at a time.

You are required to report the over contribution amount to the government and pay additional taxes due. The penalty for excess contributions in the RRSP is 1% of the difference between the deduction limit and the actual contribution, calculated per month.

The CRA criteria in selecting tax returns for review is totally independent of the way the return was filed.

Business managers are entitled to management fee as compensation for their services. However, only reasonable management fees can be deducted as business expense. This is where the Canada Revenue Agency does not explicitly state what is considers as reasonable in this regard. It is understood that a reasonable management fee should not significantly exceed the amount payable to a third party to perform the same services.  Furthermore, management fees based on hours of work should be substantiated by detailed record of hours worked multiplied by a reasonable hourly rate.

Three conditions must be met:

• You must be an individual who is over the age of 18
•  You must have a Canadian social insurance number, and
•  You must be a resident of Canada

There are certain records that you have to keep for a long period time but generally speaking, you should keep your supporting documents for 6 years.

Mistake #1

You withdraw money from and make a contribution to your TFSA in the same year without regard to your TFSA Limit. For example, assume that you have always contributed the maximum annual amount of $5,500 to your TFSA and you have no contribution room carried-forward from a previous year. If you contribute $6,000 in 2019 (annual maximum allowable contribution in 2019) to your TFSA in January 2019 and withdraw $3,000 in June 2019, then you will not be allowed to re-contribute to your TFSA in 2019. You must wait until 2020 to make a contribution to your TFSA again. However, in 2019, your TFSA contribution limit will be $9,000 ($6,000 annual contribution room + $3,000 amount withdrawn from previous year).

Mistake #2

You have more than one TFSA and you don’t keep track of your contributions. In the situation where you have more than one TFSA account (e.g. you have TFSA accounts with different banks), it is your responsibility to keep track of the amount of contributions that you make. Remember that if you over-contribute, you will be charged penalties on the over contribution amount.

Most of tax preparation software in the market can handle the tax situation of most individuals. However, depending on the complexity of the return it make sense to have a professional prepare the return. that being said, you can find a list of the CRA approved tax software here.

Well, it depends on the type and amount of income. For example, with employment income of say $60,000 and investment income of about $70, it is unreasonable to deduct accounting fees against such a small amount of investment income. However, accounting fee is deductible from self-employment income regardless of its amount.