Financial LiteracyIncome Tax and Benefits

Presenter: Alana Mangold

Note: Tax Rates and Amounts are based on 2013 tax year unless otherwise indicated.

Source: Canada Revenue Agency and Stats Canada

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Information provided by participants will be confidential. Feel free to discuss and share your experiences.

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Financial Literacy Series: Tuesday March 3rd: OSAP 101

Wednesday March 4th: Budgeting

Monday March 9th: Banking

Wednesday March 11th: Tax 101

Location: Thomas Lounge

Disclaimer

• The information provided are tips, suggestions and options that can be utilized by individuals in order to enhance their financial literacy skills.

• WoodGreen is not responsible for any repercussions that may come about from an individual acting upon the information presented.

• This is information can be accessed by the general public and can be found on various validated websites.

• For more information call the CRA at 1-800-959-8281 or visit www.cra-arc.gc.ca

Agenda

1. Why File a Tax Return2. Personal Income Tax in Canada3. Options for Tax Help4. Break Time5. Government Pensions and Benefits for

Seniors6. Tax Tips 7. Discussion and Review

Personal Income Tax in Canada• In Canada, tax is based on residency and total world

wide income from all sources.– Note that you are a resident for tax purposes by living

in Canada, even if you do not have immigration status or SIN number

• It is a mandatory self-assessment system using different tax rates according to how much income you make (called “tax brackets”).• Each taxpayer is allowed to determine how much tax they owe (if any) by using all available credits and deductions that are allowed.

Why file a tax return?Most Common Reasons:• The CRA asked you to file• You owe tax on income or property• To claim for any refunds• To apply for benefits, or to continue receiving

benefits (GST/HST Credit, Ontario Trillium Benefits)

• Contribute to social benefit programs that you may need in future: i.e. EI, CPP premiums

• You can carry-forward tax credits from your student years to future taxable income years

A great reason to file your tax return: Ontario Trillium Benefit

A refundable tax credit that combines the following three :

• Ontario Sales Tax Credit• Ontario Energy and Property Tax Credit• Northern Ontario Energy Credit

If you are living on a low to moderate income, you are likely eligible.

• Basic benefit is $281/year • Maximum benefit is $3372/year

Great reason to file your tax return: GST/HST Credit

• Basic credit is about $60 every 3 months

• Maximum amount is about $300 every 3 months

A quarterly payment that helps individuals and families with low or modest incomes offset all or part of the GST or HST that they pay

When are Taxes Due?

• Personal: By April 30th of the following year

• Self Employed: By June 15th of the following year

What are the Late Filing Penalties

• If you owe taxes, the penalty is an extra 5% of outstanding balance owing, plus an extra 1% for each month overdue– Have options if you cannot pay (discuss later)

• If you do not owe any taxes, there aren’t any penalties. You just won’t receive any benefits until you file.

Note: Potential $100 penalty for not providing valid SIN number on your tax return (if you have one)

How to Prepare and File Taxes

• Use Ryerson Tax Clinic (free)

• Use another Community Volunteer Income Tax Program (free)see www.cra-arc.gc.ca/volunteer/ for a list of agencies

• Do it yourself (on paper or on the computer)

• Use a professional tax preparer (cost)

Documents you will needYour tax return can only be completed properly if you

have the necessary documents.

You will need:

• Previous year’s Notice of Assessment

• All Information Slips received by you

• Receipts for any expenses and deductions to claim (e.g. rental receipts, property taxes paid, receipts for medical expenses, charitable donation receipts)

• Details regarding family members (spouse, dependents)

CRA can mail you new copies1-800-959-8281(no fees)

How is Tax Calculated? (simplified description)

Total Income

Taxable Income

Net Federal and Provincial Tax

Balance Owing Refund

Subtract non taxable income and deductions

Multiply this by your personal tax bracket (e.g. 15%)

Subtract tax already paid and tax credits

Refund or Balance Owing• Refunds – issued 4 – 6 weeks for paper

returns– Issued in 8 days for

electronically filed returns* Can be sent to you by direct deposit to your bank account or by cheque (until April 2016)

• Balance Owing– Due by April 30th

– You have options if you can’t pay

If you owe tax, what should you do?

• File your return on time to avoid late filing penalties – If you file late and owe taxes, immediately fined

an extra 5% of the amount owing, plus an extra 1% for each extra month overdue

• Pay the amount owing by April 30 to avoid interest charges

If you can’t afford to pay your taxes

Options:• Make a payment arrangement by calling: 1-888-863-

8657OR• File the Tax Payer Relief Request RC376 form – Available at www.cra-arc.gc.ca– May need to submit supporting documents

Don’t be afraid to call the CRA to discuss your options! They are friendly and helpful

1-800-959-8281

Tax HelpError in taxes? Being audited? Other issues? • Can handle it on your own with CRA help:• Call the CRA at 1-800-959-8281 • Visit CRA website at www.cra-arc.gc.ca

• Contact Ryerson Tax Clinic 416-979-5255 • Get professional help

Need assistance to communicate with CRA?• Can give permission for a friend/family member to

communicate with CRA on your behalf (can be cancelled later)• Form T1013 to Authorizing a Representative • Available at www.cra-arc.gc.ca• Great option if dealing with language barrier

Where are my benefits?• If you filed your taxes, you can find out when you

should expect your benefits by calling:

– Ontario Trillium Benefit Line: 1-877-627-6645

– GST/HST Credit Line: 1-800-959-1953

– Canadian Child Tax Benefit Line: 1-800-387-1193

Frequent Questions

• If I have no income is filing necessary?

• What about tax slips and receipts, lost or not received?

• What about filing for prior years?

• What files to keep and for how long?

• What to do with receipts and documents after filing electronically?

Break Time!

Cartoon

Tax Tips • To maintain benefits, file a tax return each year!

• Direct Deposit saves time ensures timely deposits of benefits or

refunds (cheques no longer issued in April 2016!)

• Charitable donations can carry forward for 5 years

• Be sure that taxes are being deducted off of paycheck, this is a good way to manage taxes payable, as you won’t owe a lump sum upon filing

Employment Income • Employment income – many students have a part

time job – you will need to bring your T4 to file your return

• When preparing a tax return all persons are eligible for the minimum basic tax credit which for 2014 is $11,138

• Therefore, if you make less income than this from a part time job, you should not have to pay tax on this amount

Scholarship Income • Scholarships, fellowships, bursaries, study

grants – are considered for the scholarship exemptionScholarship exemption1. If you are enrolled full time – these

amounts are not taxable up to the total amount required to support you in the program

2. If you are enrolled part time – the amount is not taxable up to the total amount of tuition and costs incurred for program-related materials

Schedule 11• This is the schedule you will need to fill out

for all the post secondary related amounts. • It is the tuition, education and textbook

amounts schedule

• Will calculate your education tax credits that can be used to carry forward to future taxable years and can be applied to directly reduce the amount of tax payable

• There is both a federal Schedule 11 and a provincial S(11) to be completed

Tax credits for Students

Tuition • The school will issue a T2202A-

which will contain the number of months of full or part time education and the amount of tuition paid

• The amount of tuition paid in the calendar year will go on schedule 11 and be used to calculate the total federal tax credit

Education Amount

• Tax credit meant to compensate for the living costs of full or part time study

• Education credit amount: –Full time study: $400 per month of

enrollment

–Part time study: $120 per month of enrollment

Textbook Amount

• Tax credit meant to compensate for the costs of purchasing textbooks while enrolled

• Textbook credit amount: –Full time study: $65 per

month of enrollment –Part time study: $20 per

month of enrollment

Example • Joey started at Ryerson in September 2014 as a

full time student in his first year of study • He took a total of 5 courses for $500 a course• His T2202 issued from Ryerson indicated he paid

$2500 in tuition and 4 months of full time enrollment

• He does not work and has no taxable income in 2014

• Joey’s Mother was very generous and saved up enough money to help Joey pay for his tuition. Joey loves his mother and wants to help her save money on taxes, he will transfer the portion of his credits related to tuition to his Mother.

00 00

2500 00

00 00

4

4

1600 00

260 001860 00 1860 00

4360 00 4360 00

4360 00

00 00

11,138 00 00 00

00 00 00 00 00 00

00 00

00 00

4360 00

4360 00

00 00

4360 00 00 00

4360 00

2500 00

1860 00

Student Loan Interest• In order to claim interest paid on your

student loan the loan must be received under:– The Canada Student Loans Act – The Canada Student Financial Assistance Act – or similar or territorial government laws

• You cannot claim interest on:o Student lines of credit o Student loans from another country o Student loans combined with other types of

loans (such as debt consolidation loans)

Student Loan Interest• Only the student may claim the interest

on the student loan – this credit cannot be transferred

• If you have no taxable income in the year, the interest paid on the student loan may be carried forward for up to 5 years

• Do not claim interest paid until it can be used to offset taxable income

• Example; interest paid in 2014, can be carried forward to 2019; interest paid in 2015 can be carried forward to 2020.

Ryerson Income Tax Clinic

Volunteer Tax Clinic

When: March 16-20, March 23-27 Where: Student Centre 3rd floor computer lab

• Booking Site (Instructions and documentation to bring is all on the site)

https://rsucesartax2015.simplybook.me

ResourcesAgency or Department Telephone Website or formCanada Revenue Agency (personal tax)

1-800-959-8281 www.cra.gc.ca

Service Canada CPP OAS GIS Benefits & calculators

1-800-206-72181-800-277-9914

http://www.servicecanada.gc.ca

GST/HST Credit Inquiries 1-800-959-1953 www.cra.gc.ca Guide RC 4210

Ontario Trillium Benefit Inquiries

1-877-627-6645 www.cra.gc.ca

Canada Child Tax Benefits Calculator & Inquiries

1-800-387-1193 http://www.cra-arc.gc.ca/benefits-calculator/ General Income Tax Benefit

Guide (Very helpful & free)1-800-959-2221 Guide 5000-G

ResourcesAgency / Department / Title Telephone Website or formMinistry of Finance, Ontario 1-866-668-8297 http://www.fin.gov.on.ca/Ministry of Finance, OntarioCredits, Benefits and Incentives

1-877-627-6645 http://www.fin.gov.on.ca/en/credit/index.html

Ontario Disability Supports Program (ODSP)Toronto Central Office

416-314-5700http://www.mcss.gov.on.ca/en/mcss/programs/social/odsp/

CPP Pension Sharing Forms(Fact Sheet available upon request)

1-800-959-2221 ISP1002Fact Sheet (mail only)

New Comers to Canada Pamphlet

1-800-959-2221 Guide T4055 (2012

International Tax Services Office

1-855-284-5942

Financial Literacy Series:Tuesday March 3rd: OSAP 101

Wednesday March 4th: Budgeting

Monday March 9th: Banking

Wednesday March 11th: Tax 101

Location: Thomas Lounge

Any Further Questions?Please feel free to contact:Financial Wellness Program

416-645-6000 Ext. 1330fw@woodgreen.org

Thank You!