If you are filing your taxes in Canada for the very first time, it might be a good idea to talk with an accountant like Randall Dang who can provide you with tax advice. There are myths about taxes that some people do believe in, which is the easiest way to get an audit. Obviously, this isn’t something you’ll want so, below, Randall Dang, an accountant in Canada, discusses some of the most common myths you should avoid if at all possible:
Maternity Leave Income Is Not Taxable: If you receive Employment Insurance benefits during maternity leave, remember that you should report all income earned. In many cases, less money is withheld from Employment Insurance benefits so you may have to pay additional taxes at the end of the year.
You Can Claim 100% of Your Personal Expenses if You Work from Home: You can only reasonable expenses if you work from home. For example, you couldn’t claim 100% of your internet expenses because it’s assumed you would use it for personal use as well. Try to be as detailed as possible throughout the year so you know how much is a reasonable amount to claim.
You Can Claim a Pet as a Dependent: We treat our pets like our children, but they, unfortunately, can’t be claimed as dependents. Even if you have spent a large amount of money in the past year for treatments or other costs, you most likely will not be able to deduct any expenses or claim them as dependents.
You Don’t Have to Report Your Tips: Even if you’re a server who receives the majority of your tips in cash, you need to record and report your tips on your tax return.
You Have Received a Refund So Your Return Was Approved: Although the Canadian Revenue Agency will send you a refund, you may still eventually have to pay additional taxes if it reviews your return later on and determines that a claim wasn’t eligible.