A little help at tax time
Doug Ashbury
Northern News Services
Yellowknife (Mar 14/01) - Tax time is a good time for Yellowknifers as most get money back.
The refunds are a result of the Northern residents deduction and higher incomes -- which often mean extra money for registered retirement savings plans.
| Tax file:
-In 1997, the most recent year for which income tax details have been released, 11,290 Yellowknifers filed income tax returns. -Total income reported on all 1997 income tax returns was $471.6 million. -In 1997, Yellowknifeers paid 93.7 million in income tax. The average Yellowknifeer who made enough to pay income tax, 2,110 did not, paid $10,203 in income tax. |
At H&R Block, manager Lisa Williams estimates the Yellowknife office will file about 6,000 tax returns a year. About three-quarters will be for Yellowknife residents.
At this time of year, "for every three (tax returns) we file, two are for cash back," she said.
Companies offering cash back -- people can opt to wait for a cheque from the government -- are legislated as to how much of the return they can take (15 per cent of the first $100 and five per cent of every $100 after that).
Williams said some people get as much as $10,000 back but the average is around $2,000.
The quickest turnaround Williams has seen so far this year is five working days from electronic filing to direct deposit.
"It's quite gratifying. People are very excited that they are getting a refund," Williams adds.
About 11,500 Yellowknifeers file a tax return each year with the Canada Customs and Revenue Agency. The average income on a taxable return filed by a Yellowknifer is about $51,000 with total income tax paid of about $11,000. Average income for all returns filed by Yellowknifers is about $42,000.
"We see mistakes that can cost you. If you don't take advantage of every tax write-off and know the tax act, you may lose out," Don Portz, co-owner of 5D Tax Services said.
Portz said many times he has heard a client say: "I didn't know I could claim this."
Portz, an ex-banker who was faced with a transfer down south 20 years ago, decided he wanted to stay in Yellowknife so he quit the bank and, with his wife Donna, started a bookkeeping business.
5D has been preparing tax returns for eight years. This year, Portz said he anticipates assisting in the preparation of about 600 tax returns.
When it comes to what most people get wrong or find confusing, Williams and Portz both said it's the northern residents deduction. The deduction has two parts, one for residency and one for travel.
Yellowknifeers get a $7.50 a day deduction, just for living here. There's an additional $7.50 per day available as well.
When claiming the residency deduction, the household total cannot add to more than $15 a day. That means people with roommates need to be careful about incorrectly overlapping.
Williams suggests peoples sort it out when they move in and put it in writing with your roommates.
The deduction is good for spouses because it can lower their combined tax liability.
The second part is a paid travel benefit. Not all Northern companies give this benefit, despite the fact that it does not mean they are paying their employees more. Unions have negotiated this amount through collective bargaining. The travel benefit is displayed in box 32 of your T4 from your employer.
Portz said if companies can't be bothered to made the bookkeeping change, workers should try to negotiate for it.
The worker is not negotiating for an increase in salary, but asking the employer to consider part of salary as a travel benefit and record as such.
"This gives the (employee) the opportunity to limit their tax liability," Portz said.
The travel benefit often equates to about $2,000, or about how much it costs for two airfares to Edmonton.
And for every $1,000 worth of deduction, your wallet gains between $250 and $420.
