In Canada, the tax season officially ends on 30 April. By then, unless they are self-employed, taxpayers are expected to have filed their personal returns for the year up to the preceding 31 December. The self-employed have until 15 June, although they will need to pay any tax due by 30 April.
In the best of times, it can be an extremely busy, and occasionally stressful, period for tax advisers. Inevitably, some clients leave everything until the very last moment and then wonder why their accountant cannot complete the filing on time.
Last year was very different. In 2020, the Canada Revenue Agency (CRA), the government body responsible for collecting taxes, extended the filing deadline by two months to 30 June 2020.
‘If you add on even a marginal piece of extra work, accountants can’t meet the deadline’
That extension has so far not been repeated by the federal government this year, raising fears that many taxpayers will miss the 30 April 2021 deadline as a result of a surging third wave of Covid-19 and face penalties and the possibility of missing out on vital benefits and tax refunds.
‘There has been a lot of pressure to extend the deadline, and my last conversation with the CRA indicated that it had appealed to the government to extend,’ says Shafi Yakub FCCA, proprietor of Yakub & Associates in Toronto. ‘The CRA is itself pressured and overwhelmed, but the government has so far not been accommodating in extending the deadline.’
Yakub says some of his own clients are now ‘stressed’ over their 2020 filings, which have become more complex as a result of various government initiatives during the pandemic.
‘In addition to the normal regular employment slips, last year there were programmes such as the emergency response benefit, which has been declared by the CRA as taxable income,’ he says. ‘The whole dynamic and position for tax in 2020 has changed.’
Stress and confusion
Yakub says he is spending a great deal of time speaking to his clients as a result of the confusion. It has been particularly hard for his self-employed clients, who are understandably highly focused on keeping their businesses alive.
One solution is for tax agents and their clients to send in whatever information they have so that a preliminary assessment can be made, and then make a subsequent adjustment as and when more information becomes available.
The filing process has been helped by the fact that everything is now digital; paper returns can cause processing delays, especially with more people working from home, including those in the CRA, which has said that such returns could take up to 12 weeks to process. But Yakub has concerns over whether or not the CRA’s IT systems will hold up during the last-minute dash to file.
Yakub advises other tax practitioners to be proactive in getting those clients who have straightforward tax affairs to file early, with an option to make amendments if necessary.
He is not alone in expressing his concern. Thousands of accountants have reportedly signed an online petition calling on the federal government to grant a filing deadline extension. Some accountants say they are physically and mentally exhausted after a year of non-stop work.
Hugh Woolley, an independent tax consultant who started the petition, told Canada’s CityNews programme: ‘Small accountancy firms have really struggled and been overwhelmed during the past year with helping their clients prepare a lot of new material in addition to the work they usually do. Wage and rent subsidies are very high priority because they can be a lifeline.
‘During April, it is 18-hour days for some accountants. If you add on even a marginal piece of extra work, they can’t meet the deadline.’
However, there have been some concessions. Quebec has suspended penalties for the month of May, although it is still urging taxpayers to file on time if they receive Covid-related benefits. Failure to do so could result in payments of sickness benefit, rent subsidy, caregiving benefit and the like being stopped.
‘Taxpayers are scared they may receive penalties if they don’t get their returns filed in time, and accountants are scared that clients will then blame them for failing to do so,’ Woolley said.
‘Our government will continue to support Canadians through the current public health crisis,’ national revenue minister Diane Lebouthillier said earlier this year. ‘With the CRA’s commitment to putting people first, they will ensure that Canadians are treated fairly and with respect this filing season.’
Steps the CRA has said it is taking to help those facing difficulties with their tax filings include:
- hiring more call centre agents and extending opening hours to give taxpayers more time to have their tax and benefit questions answered
- providing a targeted interest relief for Canadians who received Covid-related income support benefits, giving them more time and flexibility to pay
- expanding payment arrangement parameters to provide more time and flexibility to repay a tax debt
- helping employees cope with the impacts of the Covid-19 pandemic by making the deduction for home office expenses more accessible and easier to claim
- supporting community organisations that offer free virtual tax clinics to help individuals with modest income and a simple tax situation complete their submissions