Tax season is starting. The Canada Revenue Agency will soon open up the NETFILE online electronic tax filing service to receive returns electronically. It's time for Canadian investors to start getting ready for filing their 2014 income tax return. There can be a multitude of slips and receipts to assemble, not to mention older records to dig up and preliminary calculations to do in order to be ready in time for filing on or before the deadline of April 30. We therefore present a collection of resources that should cover the tax information and tools needs of Canadian online investors.
Tax-specific Websites
- Canada Revenue Agency - the official source, with forms, bulletins, guides, helpful videos like a primer on the filing process, due dates, info on tax credits and deductions and what is new in 2014, to keep in mind when preparing a return, instructions on NETFILE to submit a return electronically with list of approved software; good search tools, FAQs and topic directories
- Taxtips.ca - rules, tips, tax rates, federal/provincial budgets, accounts (RRSP, RRIF, TFSA etc), glossary, calculators, tax professionals
Key Dates - see complete CRA list of dates for individuals
| January - mid | CRA pdf tax forms for all tax years 1985-2014 available to download and print |
| February - 9 | CRA online filing service NETFILE starts accepting 2014 tax returns; last day is January 16, 2016 |
| March - 2 | RRSP contribution – last day for making contribution applicable to 2014 tax year |
| April - 30 | CRA – last day to file 2014 return and pay amounts owing to avoid penalties |
| June - 15 | CRA – last day to file 2014 return for self-employed though amounts owing deadline is still April 30 |
| December - 31 | RRSP – last day for making an RRSP contribution in the year you turn 71 |
| continual | CRA issues tax refunds, often within days, if return is filed electronically TFSA contributions anytime during year for 2015 or missed past years since 2009 |
CRA dates are rigid; be late even by a day and you will miss out or suffer penalties. On the other hand the tax documents below relating to the 2014 tax year flood in progressively from mid-January to the end of March. There can be weeks or more of variation amongst companies that issue the slips and receipts.
Checklist and guide for interest, dividends and capital gains
| If your investing involves … | look for these documents … | from these organisations .... |
| Borrowed money to invest | Investment interest expense | on statements from broker for margin, or bank for loan |
| Canada Savings Bond interest | T5 slip (min $50 interest) | from broker if held in a broker account or from Bank of Canada if bought directly from BOC; |
| GIC interest | T5 slip (min $50 interest) | from broker if held in a broker account or from bank or trust company if bought directly |
| T-Bill and Stripped Bond interest | Annual summary of security transactions | Interest = redemption/sale amount – purchase cost; for details see http://howtoinvestonline.blogspot.co.uk/2011/03/how-to-calculate-interest-and-capital.html T5 does NOT show it, even when over $50 e.g. http://www.rbcds.com/TaxReporting/tax-information-checklist.html |
| Mutual fund distributions | T3/T5 slips | mailed directly by Mutual fund companies, NOT brokers, even when fund is held in a brokerage account |
| Mutual fund capital gains (sales) | Annual summary of security transactions | from broker if held in a broker account or, from mutual fund company if held directly with the mutual fund company click on links to fund companies at FundLibrary.com and then look for tax or Distribution info see http://howtoinvestonline.blogspot.co.uk/2009/01/etfs-and-mutual-funds-calculating.html |
| Bond interest | T5 slip (min $50 income) | broker |
| Bond capital gain or loss (sale or maturity) | Annual summary of security transactions | broker provides statement at purchase year and at maturity or sale; for how to calculate see http://howtoinvestonline.blogspot.co.uk/2011/03/how-to-calculate-interest-and-capital.html |
| Stock dividends | T5 slip (min $50 income) | broker |
| Stock capital gain or loss (sale) | Annual summary of security transactions | broker provides statement at purchase and at maturity or sale |
| ETF and REIT distributions | T3/T5 slips | broker |
| ETF, REIT, Income Trust, Closed End Fund capital gain or loss (sale) | Annual summary of security transactions + own records | broker for trading transaction summary Investor must track own adjusted cost base – see http://howtoinvestonline.blogspot.com/2009/01/etfs-and-mutual-funds-calculating.html ETF providers publish tax breakdown of distributions on their website. ETF providers in Canada list and links at http://www.tmxmoney.com/en/sector_profiles/exchange_traded_funds/funds/funds.html CDS Innovations database of free downloadable spreadsheets by year at http://services.cds.ca/applications/taxforms/taxforms.nsf/Pages/-EN-LimitedPartnershipsandIncomeTrusts?Open Income Trusts and Closed-End Funds - ACB Tracking Inc has a pay service that simplifies the tracking |
| Split Corporation income | T5 | broker |
Limited Partnerships | T5013 | broker |
Foreign income, capital gains or assets | Exchange rate to Canadian dollar | Bank of Canada average rate for 2014 e.g. USD to CAD multiply CAD by 1.1044664, or rate on the particular day, per http://www.bankofcanada.ca/rates/exchange/; for T1135 Foreign Income Verification Statement, use rate on day of purchase for capital gains, use rates on day of purchase and of sale |
Checklist and guide for account withdrawals, contributions
| If your investing involves … | look for these documents … | from these organisations .... |
| RRSP contributions | RSP Contribution Receipt | RRSP account trustee, be it broker, bank, mutual fund company |
| RRSP contribution room | various | Canada Revenue Agency - http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/cntrbtng/lmts-eng.html |
| RRSP / RRIF / LIF / LRIF withdrawals | T4 RRSP / RRIF slip | RRSP/ RRIF account trustee |
| RRIF / LIF / LRIF withdrawal limits | Evaluation letter or phone call | broker |
| Annuity payouts | T4A and T5 slips | mailed by insurance companies, both for registered or non-registered annuities |
| RESP withdrawals | T4A Educational Assistance Payment or Accumulated Income Payment slip | brokers or financial institution where RESP is held |
| Non-resident taxpayer | NR4 slip | broker |
| TFSA interest, dividends, capital gains, contributions and withdrawals | none | None – happy days! No tax reporting to do |
| TFSA contribution room and contribution or withdrawal history | phone call or online | Canada Revenue Agency – see http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/cntrbtn-eng.html |
Tax News, Tips and Blogs - to remind us of the latest developments, the implications, the gotchas and possible strategies to legitimately minimize what we pay
- Grant Thornton Domestic Tax Service - accounting firm provides tax news with tips for individuals
- Ernst & Young Managing Your Personal Taxes 2014-15 - includes a section on investing, covering basics plus investing offshore, US tax for Canadians, Canadian tax for non-residents
- Journalists/ Authors - Tim Cestnick, an accountant, author and columnist at the Globe and Mail, who did a series of tax planning videos on YouTube starting with episode 1, Jonathan Chevreau (MoneySense), Larry MacDonald (Canadian Business), Jamie Golombek, also an accountant author and columnist at the Financial Post, Canadian Couch Potato, Jim Yih (Retire Happy, Evelyn Jacks on TMX Money
- Accountants / Lawyers - Canadian Tax Resource, The Blunt Bean Counter, Hull & Hull, Estate Debate
- Tax Planning for You and Your Family 2015 by KPMG accounting professionals from Carswell Publishers - intermediate level; about a third of the book deals with investment-related topics
- Personal Tax Return Guide, 2014 Taxation Year, Paula Ideias - advanced level, as 1230 page bulk suggests, but its only $59
- Tax Guide for Investment Advisors, 2015 Edition by John R. Mott, also from Carswell - advanced level, dense and detailed; everything most investors would want or need to know, short of becoming an accountant
- Many starter-level titles are available at Indigo or Amazon
- Canadians Resident Abroad 2015 by Gary Duncan, from Carswell - investments are among tax topics covered for non-residents or the many Canadians who have interests in the USA
- The Boomers Retire - A Guide for Financial Advisors and Their Clients, 4th ed., Lynn Biscott
Software - to prepare and NETFILE income taxes electronically; the best packages guide you and make suggestions to optimize your taxes
- List of CRA-certified programs with links to the companies - old list from last year as of date of posting; certification is on-going through January and February, so check the link to each provider to see if it is certified yet.
- Wikipedia - basic details on costs, versions, price, limitations, freebies
HowToInvestOnline Tax-related Posts - our most popular and presumably most useful tax posts
- How to Calculate Interest and Capital Gains for Tax on Bonds, T-Bills, GICs, CSBs
- Save Tax by Income Splitting with RRSP, TFSA, Loans and Pension Income
- ETF and Mutual Fund Distributions Explained
- ETFs and Mutual Funds - Calculating Capital Gains
- Light at the end of the ACB Tracking Tunnel for ETFs?
- Income Trust Tax Issues for Investors
- Taxes on Foreign Investments
- Tax Loss Selling Explained: What, Why and How
- The Annual Investment Review: Part 2 - Tax Matters (tax planning ideas)
- Five Tax Tips for Investor Couples and Families
- Five Tax Tips for Investors: Capital Gains, Foreign Investments and Charity
- Five Last Minute Tax Reducers for Investors
- How Your Province, Income Level and Investment Choices Affect Your Income Tax
- The Mystery of Fund Capital Gains in 2008 Explained
- ETF Asset Allocation across RRSP, TFSA and Taxable Accounts
- How to Calculate Capital Gains and Other Income Taxes on ETFs
- Comparing Tax Characteristics of US Equity ETFs
- Income Tax on Dividends: How to Cope with the Myths and the Realities
- Tax-Adjusted Asset Allocation
- Return of Capital - Examples of Good and Bad among ETFs
- Foreign Income & Assets - Avoid Nasty T1135 Trouble
- Saving Taxes on Investments at Death
- Tax Planning for Investors in or near Retirement: Age Credits and OAS Clawbacks
- Tax-efficient Fixed Income for Non-registered Taxable Accounts
Tax Calculators - for tax planning, what if scenarios and estimation
- Taxtips.ca Canadian Tax Calculators - a Basic version, an Detailed version for all provinces except Quebec, one for Quebec, with all the tax credits and a special Investment Income version that compares different types of income, especially useful for retirees.
- Ernst & Young - ultra-simple, enter your taxable income and it shows you by province total tax (using the basic personal tax credit only) as well as marginal rates on ordinary income/interest, capital gains and dividends; very handy when you have a taxable and tax-sheltered investment accounts to see which types of securities should go in which account
- RRIFMetic - sophisticated tool (not free, costs $99) for planning and optimizing for retirement income including taxes on types of accounts (taxable, RRIF, LIF, TFSA, RESP) and types of income (dividends, interest, capital gains) plus factors in non-investment cash flows; helps decide how much to take from which account during retirement.
- Financial Webring Tax Forum - active contributors have banded together to produce finiki, a Canadian financial wiki, which covers tax issues amongst financial and investment planning topics
- Canadian Money Forum Tax Thread
Disclaimer: this post is my opinion only and should not be construed as investment or tax advice. Readers should be aware that the above comments are not an investment recommendation. They rest on other sources, whose accuracy is not guaranteed and the article may not interpret such results correctly. Do your homework before making any decisions and consider consulting a professional advisor.
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