Preparing Taxpayers Not to Pay

Many people are preparing to pay their March 15 quarterly instalment and worrying about their April 30 tax liabilities, while they watch their portfolios languish in turbulent times. You should be preparing not to pay, especially if it hurts the portfolio further by generating withdrawals that are not required. Check out Tax Tips 1 and 2, the first in a new ongoing series of information tips now forming part of Your News. Add your own tips too, as you make it through tax season 2008.

Two things to know before you overpay instalments or avoid your obligations on April 30:

• You can avoid the March 15 and June 15 quarterly instalments if your income is expected to drop in 2009. Simply request that instalments be based on an estimate of 2009 taxable income by writing a letter to CRA. However, note that interest will be charged if instalments are deficient when you file your 2009 tax return.

• You can avoid late filing, gross negligence and tax evasion penalties if you file on time, but then make arrangements with the collections department at CRA to pay over time. Interest will be charged as CRA waits for its money, but that's a much better wayóand ultimately less expensive way--to handle the issue than the Ostrich Approach.