“When rates were lower, people would be a little more casual about making payments on their taxes or making their instalments on time,” said Burkett. “Given that it’s now 8%, people will want to pay attention to those deadlines and make sure they make their payments in advance of when they’re required to avoid attracting interest at that higher rate.”
Advisors should also touch base with clients who may have received COVID-related programs. Some programs stretched into 2022, so clients need to note whether they received, or must repay, those.
There was also more latitude in claiming work-from home expenses during the pandemic, which has been continued into 2022. The government is allowing those who have worked from home to claim $2 per day, up to a maximum of $500. Previously, employers had to fill out T2200 forms saying they had granted their employees the right to work at home and the kind of work they did, so Burkett noted that few people qualified for that tax deduction.
If the clients are going to file their income tax early, before the end of March, they should also be aware that they may not have received all of their T3 investment income slips yet. They won’t even be in the government’s electronic system yet for clients to file electronically. That concerns Burkett because, while clients get one free pass for missing one T3 slip, they will be charged 10% of any subsequent T3s that they fail to file. The penalties – such as 10% of $1,000 creating a $100 fine – can quickly add up. “So, your clients want to be very careful that they have all of their T3 slips,” he said.
Burkett also pointed out that many of the items on clients’ personal tax returns are indexed to a 6.3% inflation and have increased for 2023. He noted that it’s important for advisors to let their clients know “even if the tax rates are the same, they’re now benefiting from higher thresholds”.