Why it pays to file your taxes on time
It takes all types
Lest you think it's only creative types such as Brayton who get into trouble with the tax man, think again. Sixty-year-old Jane Gibson, who asked that her real name not be used, is a well-regarded Toronto medical professional and the owner of several high-priced rental properties. She left hospital practice some years ago in favour of incorporating her own private practice employing several staff. When government payment regulations changed, her business "went belly-up." And that was the start of her tax troubles.
Eight years later, Gibson has finally filed six years of corporate tax returns (excluding the last two years), but none of her personal income tax. She's been threatened with cancellation of her corporate status and has numerous unopened letters from CRA.
"There's not a day goes by when it's not on my mind," she says. "It's literally ruining my life." Having finally obtained an accountant, she's dragging her feet yet again and is afraid "my accountant is going to fire me."
Getting a referral to an accountant who understands the nature of your business and with whom you feel comfortable is a good place to start. Given the high stress experienced by delinquent tax filers, the latter is an important point.
Going through it all
Brayton has finally found such an accountant and is combing through
six years of income and expense receipts. "My living room floor
is covered in boxes."
The good thing, she says, is that she's "a pack
rat who's kept almost everything," so it's mostly a matter
of finding it. Where she hasn't got a paper trail, her accountant
"For example, I hadn't kept a record of all the
auditions I've been to, but I can claim travel and other expenses
for auditions. My accountant suggested I contact my agent and, lo
and behold, he had the record of everything. I've also discovered
that I can print copies of my promotional materials online."
She's learned that when a record is missing, you can often go back and get duplicate copies. This is something Gibson will have a harder time doing. She's made substantial charitable donations, travelled for business and paid innumerable other expenses that are deductible. The trouble is, she hasn't kept many of the records.
Even with a good accountant, it's still a pretty daunting
task gathering, organizing and sorting through years of your life.
To make it all more enjoyable, Brayton went out and bought lots
of "pretty coloured boxes, file folders and labels."
Initially it was another way to avoid the tedious
work ahead, but now that she's on her way, she is enjoying all those
bright colours spread about her living room floor.
Diana McLaren is a writer in Toronto.