Paul Delean: Last-minute tax questions on filing deadline day

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Another tax season in Quebec and the rest of Canada draws to a close on May 2.

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For those who still haven’t gotten around to getting their taxes done, remember today (May 2) is the deadline for filing your 2021 federal and provincial returns. As another tax season draws to a close, let’s take a look at some of the questions raised by readers in recent weeks as they pondered their tax documents.

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Q: I filed my return on March 24 electronically. I have yet to receive my assessment and owe money. What if it doesn’t come before (today’s) deadline? Will Quebec charge me interest? And will they deduct the $500 (which taxpayers with net earnings below $100,000 receive for filing their 2021 returns) from the $900 I owe or require me to come up with the $900 first?

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A: Because you filed your return after the announcement of the $500 credit, it should be applied to any outstanding debt you might have to Quebec, including any 2021 taxes due. Your notice of assessment, when you get it, should reflect that. Although Quebec could charge interest as of May 2 on any outstanding balance, there’s usually a grace period of a couple of weeks for small amounts, since a lot of taxpayers opt to wait until the notice arrives to actually pay up. If coming up with the money is a hardship for you, consider contacting the tax department to work out a payment plan. They’ve been more receptive to such arrangements during the pandemic.

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Q: Are spouses required to give the same province of residence on their tax returns? My wife and I own homes in Quebec and Nova Scotia, where my wife was born. She spends about half the year there. That province has introduced a non-resident tax that almost tripled the municipal tax bill on the property. It represents a large share of our annual income. Since she spends so much time there, can it be her province of residence for tax purposes?

A: There is no rule that states specifically spouses cannot reside in different provinces, but it probably will pique the curiosity of the tax department if you go that route. The questions are right there on Page 1 of the federal tax return: what was your province or territory of residence on Dec. 31, and what is your current province or territory of residence if it’s different than on the mailing address you put on the tax return. Canada Revenue Agency says you should use the tax package of the province where you have “the most important residential ties” on Dec. 31. It’s not just a question of owning property. Where your spouse or common-law partner and dependants live is a key consideration. So is where you bank and earn income. Which province is providing your health-care coverage and driver’s licence? Where is your vehicle registered? All these elements are taken into account. When in doubt, CRA says to consult a local tax office.

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Q: The financial company that managed my RRSP (now a RRIF) sends me an annual report that includes a financial statement outlining the management fee, plus taxes. Can I deduct this amount from my taxes?

A: Unfortunately, no. That’s for information purposes only. Management fees relating to registered accounts such as RRSPs, RRIFs and tax-free savings accounts are not tax-deductible as carrying charges in Canada.

Q: I applied for CERB (the Canada Emergency Response Benefit) in 2020 and received $10,000, which I reimbursed to Canada Revenue Agency in December of that year because of a misunderstanding. They returned the $10,000 in 2021. I received a T4A slip for the amount this year, but it says 2020 on it, not 2021. Should I apply this to my 2020 tax return or does it count for 2021?

A: You have to declare the payment in the tax year you originally received it (2020).

The Montreal Gazette invites reader questions on tax, investment and personal-finance matters. If you have a query you’d like addressed, please send it by email to Paul Delean at [email protected] 

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