The personal income tax deadline is looming, but a new survey shows many Canadians have gaps in their basic tax knowledge and could be leaving money on the table come tax time.
CIBC tested Canadians ahead of the May 2 deadline to gauge their understanding of a range of tax scenarios, with only 19 per cent of respondents getting eight or more answers correct in the 10-question quiz.
“Having a good understanding of personal income tax is critical not only for filing your return accurately, but the more tax knowledge people have, the better they can take advantage of applicable tax deductions and credits which can, in some cases, lead to savings,” said Jamie Golombek, CIBC’s managing director of tax and estate planning.
“There are many Canadians who could do with a tax refresher … There is still some confusion around subjects such as inheritances, gifting and spousal responsibility.”
Respondents were equally divided on whether someone could or couldn’t give their child a tax-free gift of any amount (they can) and 49 per cent of respondents were incorrect in believing they could be held accountable for their partner not filing taxes.
The survey was conducted on behalf of CIBC by Maru Public Opinion, which randomly selected 1,515 adults between March 31 and April 1.
Some of the most common misconceptions included: Canadians believing lottery winnings are taxable income, that an inheritance received by a Canadian resident is not tax-free, selling a personal item online valued at less than $1,000 is a taxable transaction, and more than a third believing laser eye surgery is not an eligible medical expense.
Another little known tidbit is that moving expenses may be a valid tax deduction if the move was for work or school.
One question most respondents did get right is whether receipts and records need to be kept for tax purposes – they do, for six years. You can also adjust your return after filing.
To learn more about filing, go to canada.ca/en/services/taxes/income-tax.
Do you have a story tip? Email: firstname.lastname@example.org.