Tax season tends to arrive faster than expected. The good news is that a little preparation goes a long way. Gathering your documents early gives you time to spot anything that is missing, ask questions and avoid a last-minute scramble.
Start with your slips
Most income is reported on slips issued by employers, financial institutions and government agencies. Colleges, universities and some other schools also issue tuition slips to their students. Watch your mailbox and online accounts starting early in the new year, and keep the slips together in one place as they arrive. Common slips include:
- Employment income slips from each employer you worked for during the year
- Slips for interest and other investment income from banks and brokerages
- Slips for pensions, government benefits and other payments
- Tuition slips from your school, if you were a student
Track what your slips don’t show
Keep your own records of any income that does not come with a slip, such as rental income, foreign income paid to you directly and payments for side jobs or other work. If you sell or give away property or investments, keep records of what they cost you, including later costs such as improvements to a property, because any slip you receive for the sale may not show this. If you are self-employed, record your business income and expenses throughout the year rather than piecing them together at the end.
Collect your receipts
Many credits and deductions depend on having proper receipts. Common examples include medical expenses, charitable donations, child care costs and retirement savings plan contributions.
Note any life changes
A move, a new job, a change in marital status (including starting or ending a common-law relationship), a new child, a home purchase or the start of a business can all affect your return. Make a short list of anything that changed during the year so your accountant can take it into account. Some changes, such as a new child or a change in marital status, can also affect benefit and credit payments, so check whether and when you need to tell the Canada Revenue Agency about them rather than waiting for tax season.
Know how long to keep your records
The Canada Revenue Agency can ask to see supporting documents after a return has been filed. Keep your slips, receipts and other records organized in a safe place, on paper or digitally, for at least six years from the end of the last tax year they relate to. If you own a home, other property or investments, keep the records of what they cost you for as long as you own them and for at least six years from the end of the year you sell or give them away. For a return filed late, the six years for its records start from the date it was filed. If you are unsure, ask your accountant before discarding anything.
Ask early
If something is unclear, it is much easier to sort out early in the season than close to a deadline. A quick conversation with your accountant can confirm what you need and help you avoid surprises.
This article is general information only and is not tax, accounting or legal advice. Before acting on it, please get advice about your own situation.