Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Countdown Begins: File 2020 Income Tax in 10 Days and Avoid CRB Delays

Stock MarketsApr 21, 2021 14:15
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
Countdown Begins: File 2020 Income Tax in 10 Days and Avoid CRB Delays

The countdown has begun. You have 10 days to file your 2020 income tax returns and secure your $2,000/month Canada Recovery Benefit (CRB). Yes, you read it right. Last week, the Canada Revenue Agency (CRA) warned that delays in 2020 tax filing could delay your CRB and other COVID-19 benefits by two months.

Co-relation between the income tax return and CRB delays The CRA uses your income tax return to determine your eligibility for the various government benefits. The COVID-19 recovery benefits are a replacement for your income. Hence, the primary qualification for these benefits is you should have earned at least $5,000 in 2019 or 2020.

For these recovery benefits, the CRA uses up-front verification and security measures to expedite the claims in three to five business days. In order the system to declare you eligible for the CRB, it needs your 2019 and 2020 income details, which can only be input from your income tax returns.

If the income data is blank, the CRA will ask the applicant to provide supporting documents to prove their eligibility. This entire process could take up to eight weeks. Hence, the CRA is requesting all Canadians and residents of Canada to file their income tax returns by April 30. If you are self-employed, you have until June 15 to file your returns.

Although accountants have filed a petition to extend the deadline and Quebec has also extended it until May end, the CRA has not budged till now.

How to file your income tax returns in 10 days Don’t hope for the CRA to extend the deadline. You can still file your returns online. All you need is the T4 slip and other forms and documents if you are claiming tax deductions and credits. For instance, if you are claiming the home-office-expense deduction, you need to fill the Form T777S.

Take help from the tax clinic volunteers, your accountant, or use the auto-fill option if you are a low and mid-income earner. There are many tax filing software to help you with the process. Submit your returns before April 30. If your 2020 taxable income is less than $75,000 and you have received a COVID-19 benefit, the CRA will give you a one-year interest relief. This means you have until 12 months to clear your tax dues without incurring interest.

With the on-time filing, you can avoid a 5% penalty. You can also secure up to $456 in Goods and Service Tax (GST) refund.

An effective tax planning goes a long way Rather than fire-fighting and asking the CRA for a deadline extension, do tax planning from the start. Use your Tax-Free Savings Account (TFSA) to create a small tax fund. Make it a habit to contribute $100 every month in this fund and put that money in resilient stocks or dividend stocks. This way, you will accumulate $1,200 every year, and this money won’t move much with resilient or dividend stocks.

Consider BCE (TSX:BCE)(NYSE:BCE) stock for its 6% dividend yield and its 12-year history of paying an incremental dividend. In these 12 years, it increased its dividends at a compound annual growth rate (CAGR) of 8%. If I do the math, a $1,200 investment will lock $72 in annual dividend. If BCE maintains its legacy of increasing dividend even at 6% CAGR, the $72 dividend income will grow to $92 by 2025.

While it may look like a small number, your dividends will take of the increase in your tax bill. Looking at BCE’s future in the 5G revolution, there is a possibility that it might even increase dividend growth rate as 5G cash flow starts coming.

Final thoughts Don’t leave your income tax for the last minute. The CRA introduces many tax benefits. If you keep yourself updated, you can leverage these benefits and bring significant tax savings. Just an hour every month in tax planning can save you thousands of dollars in taxes. These tax savings can be better utilized in the TFSA.

The post Countdown Begins: File 2020 Income Tax in 10 Days and Avoid CRB Delays appeared first on The Motley Fool Canada.

Fool contributor Puja Tayal has no position in any of the stocks mentioned.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2021

This Article Was First Published on The Motley Fool

Countdown Begins: File 2020 Income Tax in 10 Days and Avoid CRB Delays
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email