Tax Tip: What You Need to File an Audit-Proof ReturnPosted: April 06, 2018 By : Knowledge Bureau Staff
Posted in: Strategic Thinking, tax preparation, Tax Planning, Financial Literacy, Financial Planning, CRA, knowledge bureau, Canada Revenue Agency, tax returns, Evelyn Jacks, tax filing, tax audit, tax courses, tax advisor, tax education, T4, online education, tax receipts, proof of income, Personal Net Worth statement, T1 tax returns
The clock is ticking! Do you have everything you need to file your taxes before the April 30 deadline? Rushing through the tax preparation process can cause you to miss important steps, putting you at risk of an audit. This is your guide to the basics, and Knowledge Bureau’s Tax Documentation Checklist will take you the rest of the way in preparing an audit-proof return. Be sure to contact us for your copy, or click on the link provided!
It goes without saying that you’ll need the back-up documentation that verifies your income – everything pertaining to employment, self-employment, investments, rental property, bursaries, scholarships and other scholastic awards, taxable spousal support, foreign pensions and so on. In addition, you’ll need the receipts for discretionary deductions like child care and moving expemses.
However, to do the tax filing job well, there’s more. In order to ensure financial peace of mind – now and in the future – a sound financial assessment is required. At Knowledge Bureau, we refer to this as a Real Wealth Management planning strategy. It focuses on the creation of tax-efficient income and capital. Professional advisors with the prestigious RWM™ credentials can guide you through this process and help you review, complete and update the three key financial documents that this strategy comprises:
- The PNW - Personal Net Worth statement
- The T1 Tax Returns - in the tax compliance period
- The Financial Plans - for the near term (2018), medium term (5 years out to 2023) and long term (10 to 20 years)
Also remember that your tax compliance period extends beyond just the current tax year. Ask your professional advisor about tax savings over the following periods:
- The current tax year
- Up to 10 years back - to tax year 2008
- The next tax year - 2018
- The carry-forward years, for specific claims like unused donations, capital cost allowances or capital or non-capital losses
For taxpayers who own a proprietorship or are shareholders in a private corporation, business lifecycle planning is also a factor that must be considered. This becomes an important new concept in light of significant tax reforms already introduced by Finance Canada for family income sprinkling and the taxation of passive investment income. Discuss these new rules with your Master Financial Advisor – Business Services Specialist. Or, plan to attend Knowledge Bureau's CE Summit this May for a complete update.
Additional educational resources: Interested in learning more about Canada’s tax system to act as your own advisor? Start with courses Intermediate Tax Preparation, T3 Basic Tax Preparation, or take a free trial. The new Essential Tax Facts by Evelyn Jacks is also your guide to making the right tax moves and preparing audit-proof returns.
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