This year was the first time I ever did my own taxes (it was my fiances actually). She only had a few slips which made it simple enough to enter it into Quick Tax. I still went to an accountant to have mine done because of all the investments. I was also hoping to enter all of my figures into Quick Tax online and compare the results with what the accountant got. If the final numbers matched then next year I would do it all myself. However a recent article over at Canadian Capitalist has got me wondering if the average person (aka Me) can do their own taxes.
Whats the problem?
What Canadian Capitalist points out is the perceived definition of foreign property. Myself, Canadian Capitalist and I’m sure many others have taken that to mean real estate property. Well it turns out that it’s a lot broader than that and includes things like stock in a foreign company . Well without doing the additional search you could be setting yourself for some significant fines from the CRA. This is just one example and I’m sure there plenty more points of confusion within the tax law wording. So even with all the fancy software out there is the average person still able to do their own taxes?
What does the fancy software say?
Since I filed my fiance’s taxes using Quick Tax Online I decided I’d go over there and take a look what how it describes foreign property:
Foreign Property is property you owned outside of Canada, and your share of foreign property in which you had an interest. It does not include:
- property in your registered retirement savings plan (RRSP), registered retirement income fund (RRIF), or registered pension plan (RPP);
- mutual funds registered in Canada that contain foreign investments;
- property you used or held exclusively in the course of carrying on your active business; or
- your personal use property.
It looks like it doesn’t really clear things up. If Quick Tax isn’t clear on this particular issue then is stands to reason that they lack clarity on other definitions on their site. If you aren’t careful you could be filing an incorrect tax return.
As a concerned tax paying citizen should I be afraid to do my own taxes?
Tax software definitely helps alleviate the strain of doing your own taxes. However it should not be a substitute for due diligence on your part. Not only has tax software made the process simpler but the internet has made understanding the process simpler. If you don’t understand the information that you are entering then head over to the internet because there is probably someone out there who has clarified it already. You should also frequent the CRA website to get the final word from the horses mouth. Taxes is definitely something average person can do and with a bit of work you can develop a better understanding of the tax system and your personal finances. That being said, a little bit of fear never hurt anyone and keeps you from getting complacent.
Even with the tax software do you find the process confusing?
-mfd-
Related posts:
{ 1 trackback }
{ 2 comments… read them below or add one }
Thanks for the mention. I’ve done my taxes for over 10 years now and it was easy enough in the early years. A T4, some RRSP contributions, some charity donations and voila! I was done. Now, it is becoming a pain in the butt figuring out all the nuances. No wonder there are full time professionals who do nothing but taxes for clients. It is a full time job keeping up with all that CRA throws at us.
@Canadian Capitalist - It seems more trouble then its worth. I would thin that the software makers would do a better job explaining some of those nuances in the tax law. I’m sure plenty of people are filing incorrectly because of the information (or a lack thereof) provided on the various tax software sites.