Busted! Don’t Believe These Tax Myths!
Admit it. Tax time can be hard and tough to grasp for most of us. With numerous tax responsibilities and laws to obey, filing taxes as a layperson can be daunting. Moreover, you have the Canada Revenue Agency (CRA) scrutinizing records every year! Enlisting the services of a tax accountant is a beneficial choice to minimize tax liability. They will oversee your finances and make sure you comply with the tax laws and file your taxes on time.
However, like most taxpayers, when you end up pressed for time, you try to complete taxes yourself. This could leave you confused and neglect crucial tax law about the system and eventually fall prey to various tax-related myths floating simply because you’re unaware of tax-related information. To help you steer clear of these misconceptions, Can-Am CPA Professional Corporation has debunked three of the most widely believed myths about tax.
Myth 1: Once I receive my notice of assessment, everything is good!
This myth exists because clients believe that CRA’s notice of assessment (Canadian Revenue Agency) means that CRA agrees with all their claims and deductions. This is, in fact, not the case! A notice of assessment is merely a quick mathematical assessment that does not prove that CRA has carefully examined your tax return.
Myth 2: I should not accept a pay raise because it would put me in a higher tax bracket!
Most people believe that the increase in their taxes payable are as a result of their pay raise. While this is partially true, only the excess money earned outside of your former tax bracket is taxed at a higher rate. All the money earned below the new tax bracket is taxed at the lower tax rate, not the higher (new) tax rate. So, accept your pay raise with some peace of mind.
Myth 3: Employment insurance income is not taxable!
All income is taxable by the government, including the money they give you (Canada Emergency Response Benefit included). In some cases, taxes are withheld by Service Canada first, but they are not in other cases. Clients should be prepared to pay taxes on Employment Insurance (EI) and Canada Emergency Response Benefit (CERB) because they are taxable.
If you’re looking to steer clear of these tax myths, reach out to Can-Am CPA Professional Corporation. As a leading and full-service accounting firm in Toronto, since 1975, we have been diligently helping small businesses and individuals improve their financial management and understanding by offering efficient solutions. We provide our accounting and taxation services to clients across Toronto, Pickering, Ajax, Mississauga, Brampton, Vaughan, Woodridge, and the surrounding areas.