It's a common tax season frustration: You file your tax return in March hoping to get an early refund, only to have more tax slips show up in April.
Edward Steger, chairman of Stetron International Inc., knows the feeling well. Last year, Mr. Steger and his accountant had to redo his tax return several times as various investment receipts and amended tax slips arrived, one as late as July. "Both of us were very frustrated about the whole thing," Mr. Steger said.
Mark Goodfield, a tax partner at Cunningham LLP in Toronto and author of the Blunt Bean Counter blog, says the problem in Mr. Steger's case was the Canada Revenue Agency's staggered deadlines for tax slips. While T4 and T5 tax slips must be mailed out by Feb. 28, tax slips for mutual funds, flow-through shares, limited partnerships and income trusts are not due until March 31.
It creates a heavy backlog in April, when accountants must rush through claims without giving them the attention they deserve.
"It drives the clients nuts," Mr. Goodfield says. "I just don't understand why Revenue Canada doesn't just make all the forms due [on the same date]"
Mr. Goodfield recommends active investors prepare their tax returns early but wait until mid-April to file. He also suggests they familiarize themselves with some of the more problematic tax slips:
Year-end trading summaries
Banks and brokerages use year-end trade summaries to report proceeds and commissions on each sale. However, the proceeds reported are sometimes net of commissions, which can lead investors to erroneously deduct the reported commission number a second time. Also, many banks issue multiple slips for each investment account, but send a consolidated summary of the slips to the CRA, which causes havoc when there is a missing slip or a question regarding one of them, Mr. Goodfield says.
Gain and loss reports
Many privately managed bank funds prepare gain and loss reports for clients. However, where there are U.S. stock sales, often the cost reflects the U.S. dollar purchase amount at the current year's exchange rate, rather than at the time of purchase. The onus is on the tax payer to figure out the historic exchange rate, Mr. Goodfield says.
T3 and T5013 tax slips
These two slips are not mailed out until March 31. T5013s are often issued late and then amended, causing confusion as to which is the correct slip, Mr. Goodfield says. Also, box 42 on the T3 slip - return of capital - reduces the adjusted cost base of the security, and is often overlooked.
T4 salary slips
Some people who started working with their employer before 1996 may have a tax-free transfer to their Registered Retirement Savings Plan on termination payments. The eligible retiring allowance portion, reported on the T4a, is often missed, Mr. Goodfield says. Other often overlooked deductions on the T4 are the stock option deduction benefit at the bottom of the form and the T4 OAS, Statement of Old Age Security, which includes income tax deductions and net supplements - any allowance, allowance for the survivor or Guaranteed Income Supplement you received during the year.
T5 investment income slips
If you earn U.S. interest on your investments, it will show up on your T5, with a note at the bottom saying that the interest is in U.S. dollars. It's not always clear to the taxpayer that this figure needs to be converted at the average exchange rate for the year, as set out by the CRA. Also, T5 slips have both eligible and ineligible dividend boxes, which taxpayers often accidentally reverse on their returns, Mr. Goodfield says.
Investment loan interest
Most banks do not issue receipts for interest on investment loans unless specifically requested, resulting in a missed deduction for the client. Borrowers should request receipts well in advance of the tax-filing deadline to ensure they arrive in time.
T2202a forms for students
Nowadays, tuition forms are not mailed and must be found on students' school websites. Most students pay no attention to these deductions and miss them at tax time.
Editor's note: An earlier online version of this story and the original newspaper version of this story incorrectly stated that RRSP tax slips must be mailed out by Feb. 28. This online version has been corrected.Report Typo/Error