TAX TIP What you should know during times of financial uncertainty
Wednesday, 02 December 2020 12:00.PM
Did you know?
November is Financial Literacy Month in Canada. Financial literacy means having the knowledge, skills and confidence to make responsible financial decisions at any stage of your life. This year, we want to help Canadians learn how to manage their finances during challenging times. The Canada Revenue Agency (CRA) recognizes the importance of giving Canadians the information and skills they need to make informed financial decisions, and is proud to support Financial Literacy Month during these times of uncertainty.
Financial literacy tips
- Do your research - Knowledge is power. Are you going to be making an expensive purchase? Thinking about opening a savings account, an RRSP, TFSA, or RESP? Before making a major financial decision, make sure you ask questions, compare different options, read the fine print, and get a second opinion. Exploring all of your options is always less expensive than learning through experience.
- Get access to benefits and credits you may be eligible for - Filing your taxes could mean more money in your pocket! Even if you don't have an income, by filing your income tax and benefit return, you could join the millions of Canadians who automatically qualify for tax credits and benefits like the Canada child benefit, the GST/HST credit, and provincial and territorial benefits and credits. Visit our web page to learn more about benefits and credits. Already receiving benefits? You can now set up CRA direct deposit through many Canadian financial institution websites!
- Get free tax help - Doing your taxes can be scary, but you need to do them to get any benefits or credits. If you have a modest income and a simple tax situation, there are tax preparation clinics all over Canada where volunteers can do your taxes for you, for free! To find a tax preparation clinic, call 1-800-959-8281 or visit www.canada.ca/taxes-help.
- Have a plan to repay a COVID-19 benefit payment, if you later realized you weren't eligible - Did you receive a COVID-19 benefit payment for a period for which you later realized you weren't eligible? It's best to repay it by December 31st, 2020 so your tax slip is correct. As COVID-19 benefits are taxable, you will receive a T4A (for benefits issued by the CRA) and/or a T4E (for benefits issued by Service Canada) tax slip in the mail with the information to enter on your return. Make sure you have funds set aside to prepare for tax season and that you repay any applicable amounts so that the CRA doesn't issue a T4A for that payment. You can repay the CRA via My Account, online banking or mail. If your return is not accurate, your benefits and credits could be miscalculated. Make sure you've reviewed the eligibility criteria and learn more about how you can make a payment.
- Keep accurate records - You can't manage what you don't know. One of the most important parts of financial planning is making sure you have all the information you need. By keeping accurate and up-to-date books, records and documents, you can confirm when you paid certain bills and track things like your income and expenses. When it comes to taxes, individuals and businesses should keep receipts and supporting documents for six years following the year they report in case the CRA needs to see them. If your books and records were lost or destroyed due to circumstances beyond your control, we might be able to help.
Take advantage of the CRA's educational resources – Having a good understanding of how taxes work is a key part of financial literacy. Check out our website for educational programs that explain the basics of the Canadian tax system, why you pay taxes, and how to complete a simple tax return online.
- Protect yourself from fraud – Don't become a victim of fraud or tax scams. If you get a call or email that sounds like a scam, it probably is! The CRA will never:
- use text messages or instant messaging such as Facebook Messenger or WhatsApp to communicate with taxpayers about tax-related issues under any circumstance
r - equest prepaid credit cards or gift cards
- ask you for information about your passport, health card, or driver's license
- leave personal information on your answering machine or voicemail or ask you to leave a message with your personal information
- ask you for personal information by email
- send or request e-transfers of any kind
Financial Consumer Agency of Canada
Financial tools and calculators
Financial literacy self-assessment quiz
COVID-19: Benefits, credits and financial support
SOURCE: Canada Revenue Agency
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