Does the CRA have up-to-date information on all your customers?
Taub said many Canadians don’t even know they can set up a “My Account” with a CRA, which includes information on their assessments, tax refund status, registered retirement savings plan and how much they still put in tax-exempt. Savings accounts, and where CRAs can directly submit their tax returns.
If advisors can remind their clients to do so, and then keep it up to date with the status of their partner or child, clients will receive the most recent benefits as soon as they are entitled. This includes Canada Child Benefit and tax credits for an eligible dependent (usually a child) and income they may be entitled to if their relationship breaks up and their single income is less than their previous family income.
“The problem is if your status changed earlier in the year and you didn’t tell the CRA, you might not be getting all the benefits you’re entitled to,” Taub said. “Maybe they’re sending you the wrong amount because you didn’t tell them on time.”
TurboTax Canada recently conducted a study that also showed that 55% of Canadians did not know whether married, or common law (defined as being in a marital relationship for 12 months or having a child together). For example, Canadian couples can transfer their non-refundable credit to their spouse or partner to reduce their tax liability. The other 30% did not know that parents could add together to submit various medical and childcare costs as expenses on their tax returns.
A couple can add or transfer their medical expense, charity, tuition, or child care cost credits to get the best tax effect for one member of the couple. This sharing can allow a portion to reduce its net income in order to pay less tax.