Expert Tips.
“Our pledge is to provide you with the best service possible. Our chartered accountants are highly experienced and ready to prepare your return quickly and professionally.”
Vic Arora, CPA
Managing Director, Client Services
Is there a higher chance I’ll get audited by the CRA if my return is EFILED?
Absolutely not. This may sound like a silly question in today’s age because most people have their return EFILED by their accountant or tax preparer.
The answer is a big NO and it’s a big tax myth. The CRA does not decide to audit individuals based on their filing method.
That being said, if you follow the rules, are honest when filing your taxes, you should have nothing to worry about, even if you are audited by the CRA.
What’s the difference between a tax refund and a tax return? Aren’t they the same thing?
Most people use these terms interchangeably, but they are not the same thing at all.
A tax refund is the money you receive after you file your taxes, and you have ‘overpaid’ on the taxes owing. This is a common scenario if you work a salaried job in which income tax is automatically taken off your pay cheque by your employer. This is based on your ‘tax bracket’ and an estimation of the percentage of tax you’ll owe to the government.
What employers don’t take into account are other deductions you may have such as RRSP, tax credits for donations, or potential losses from your side hustle. Thus, if you have a number of dedications that lower your effective tax rate, you get a tax refund.
A tax return, on the other hand, is simply the term for you filing your taxes.
What’s the difference between tax deductions and tax credits?
These two terms also get used interchangeably, but they serve two very different purposes.
Tax deductions can be deducted from your taxable income. Examples include: union dues, RRSP contributions, and child care expenses. Once all of your deductions are accounted for, you end up with your net income, which is what you are taxed on. Deductions are important because they reduce the income you are taxed on.
Tax credits on the other hand are applied to reduce the amount of taxes you owe. Tax credits come in two flavours, refundable and non-refundable.
As you may guess, non-refundable tax credits can reduce your tax all the way to zero, but not beyond that.
Refundable tax credits, which are less common, can reduce your tax below zero - if so, you get a refund!