Personal Income Tax -> Plan ahead for next year's tax return
Tax Planning - Start Early!
You should plan ahead so that you are prepared to file your tax return next year without too much difficulty. If you have a business or are a high-wealth individual, tax planning should always be on your mind, and you should be getting professional tax advice from a Chartered Professional Accountant (CPA) who is a tax specialist (this doesn't apply to all CPAs). Tax planning should never be an afterthought.
One of the most important things to do during the year is to store all tax-related documents in one place. Our preference is to retain electronic versions of all documents, and we have a "folder" for each tax year, with subfolders for tax slips, donation receipts, etc in each tax year. Any electronic files should always be backed up! If you don't retain records electronically, just on paper, then if you have a filing cabinet, have one or more folders for these documents, including:
If you don't have a filing cabinet, pick a drawer or two in which to store these records, or get a multi-pocket expandable file folder, preferably legal size.
If you are an employee, make sure that the TD1 form filed with your employer is up to date. Review the amount of income taxes, Canada Pension Plan contributions and Employment Insurance Plan premiums being withheld from your wages. See our article on take-home pay calculators.
If you have investments in non-registered accounts, see the following:
- Foreign Asset Reporting - Form T1135 Foreign Income Verification Statement - VERY important!
If you use spreadsheet programs, it can be very helpful to have an investment continuity schedule which has beginning of year balances, purchases and sales during the year, and end of year balances, with capital gains being calculated in the worksheet for any investments sold.
Now is the time to look for a tax professional if your financial situation is getting more complicated. Don't wait until next tax season, when they are all extremely busy. Our Directory has links to accounting, bookkeeping and financial planning organizations in Canada.
Use our Canadian Tax Calculator to project what your tax situation will be for this year, and let it help you to determine how much to contribute to RRSPs during the year.
Use our Investment Income Tax Calculator to see the big difference in taxes for different types of investment income.
Tax Tip: Nobody plans to fail - they just fail to plan!
Revised: April 11, 2021
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