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Personal Finance - WHY Does My Accountant Need This?

Posted by Derek Isaman on
I can almost hear the groan on the other side of the phone I will get in April when I call and ask for yet MORE documentation, but I promise it is for your benefit! To follow up on last week’s blog about the kind of documents we need for your personal taxes, and to prove that there are really no groans necessary, I have compiled of list of WHY we ask for the things that we do. My hope is that this will have you skipping and whistling happy songs as you go to put together all your documents this year, but I will settle for you finding our follow up calls pleasant! Haha
Here goes . . .

The Big Why’s

Why do you want a copy of my house sale documents?

This one is two-fold. The first, and most important, is that if you owned a rental property or a vacation home the sale of that property can have tax consequences.

The second is that back in 2016 the CRA implemented a question on all personal tax returns that asks, “Did the taxpayer sell a home in the tax year and want to claim a principle residence exemption?” So even if you sell your primary residency, it needs to be reported on your tax return.

Why do you want my kids birth certificates?

Believe it or not, it is common for the CRA to request proof when you start claiming a child on your return. If you provide us with this information in April, when the CRA makes that request we already have the information on hand. No CRA interruptions to your stress-free summer should the CRA come asking.

Additionally, it is important that you let us know when your child (regardless of age) is set up with a SIN.

Why do you care if I moved in with someone? Or split up with my significant other.

This is a big one. While everyone still files separate tax returns in Canada, there are changes that occur when you live together. Common-law is not an opt-in or out type program. What constitutes a common-law relationship (for tax) is defined by the CRA. In addition, there are several benefits to the returns being prepared jointly. From medical expense credit optimization to child benefit calculations, all the way to pension splitting. These things can apply to common-law couples as well as married persons.

It is just as important for us to know if you become separated or divorced during the year too. Things like spousal support (alimony) can mean a drastic difference to your tax situation. In addition, we need to make sure that credits and expenses related to children are not being doubled up. Providing us with the agreement you have in place will save time sending information to the CRA as well.

Why are you asking if I support a political party?

Everyone knows to keep donation receipts for giving to charities. But what can be easily forgotten is that donations to your favored federal or provincial political party are also a tax credit. So, if you give, keep that receipt.

It is my first time using Colby Steckly – why do you want my taxes from last year?

We want these for two reasons; it helps us get a better understanding of what to expect on the current year and gives us a chance to check the return for possible oversights. When you sign the authorization form that allows us to become your representatives with the CRA it gives us online access to what was filed, but some things are only summarized (i.e. business income, rental income) so we are not quite getting the full picture.

If you have some questions about what to bring in this year for your tax return as well as why we need it, please feel free to reach out to our team and we will happily get you ready for a smooth and stress-free personal tax experience.

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