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Drywallers have a reputation in the tax industry as being chronically late filers, and taxes have a reputation in the drywall industry as being a royal pain in the neck. The good news is that the resulting perpetual avoidance doesn’t have to be a financial nightmare when the time comes to square the books away ... but professional services may be in order.

Are your taxes really, really behind?

There are generally two types of reactions to a question like this. The majority of tax filers think, “That’s hilarious. I wonder who this could be happening to!” The second and most significant response is one of knowing familiarity. Well over 1,000,000 Canadians and many contractors say, “My goodness, where have you been all my life?” when they see a question like this. When contractors approach a tax specialist for the first time – whether they are 20 years or one month behind – they generally have no idea how to get started.

You’re not on your own

A recent case in point is a couple who was eight years behind on taxes. He was a siding subcontractor and she stayed at home raising the family. CRA had arbitrarily assessed the couple, meaning it estimated how much they made because they didn’t file. The assessment was for tens of thousands of dollars plus late penalties and interest, so needless to say they were panicking and even considered bankruptcy. Upon initial consultation it became clear that they didn’t realize the full extent to which the husband was entitled to deduct business and other expenses, and at the end of the day, the couple received a refund plus child tax benefit and GST credits for several years, resulting in a total return of over $7,000.

How can I get started?

For those late filers out there, the question of how to get started can only be answered once you’ve determined exactly where you are. Step one: Deciding to get a professional or do it yourself. If your returns are simple and you’re only a year or two behind, you should consider tackling the job yourself to save the professional fees. If there are several complicated years to file involving payroll, self-employment, and special expenses, or the government has its hands in quite deep, get a professional.

Putting your information together

Whether you go it alone or with a pro, there is a certain amount of information you need to gather, beginning with an accurate determination about how many years need to be filed. If you’re not sure, contact CRA at 800.959.8281. Corporate contractors or anyone with a GST/HST number should call 800.959.5525. Be sure records and documentation are complete. CRA will mail out missing information slips like T4s, as well as a copy of the last return filed, which will contain information necessary for filing the most current return, such as RRSP limits and pension information.

The next step is gathering all information outside the T-slips. A professional will generally provide a check list of necessary documentation, but if you’re on your own, refer to our checklist* and the CRA guides and tax packages for each year. If you have more complicated returns involving investment, small business, employment expenses, or rental income, this requires more detail and online resources are available on our website at <www. ptccanada.com>. Also, check our CRA’s guides on Investment, Capital Gains, Small Business, Corporations, Employment Expenses, and Rental Income available through <www.cra-arc. gc.ca/menu-e.html>.

Check out old tax returns

Once the information is gathered, it is valuable to check and see if previous years filed were done correctly. PTC Canada has assisted builders in finding thousands of dollars through missed deductions or discovery of entitlement to certain claims they didn’t even know existed. A recent case was of a drywall contractor who was a few years behind and while getting caught up, we discovered he had a disability for over 20 years that was never spoken for. He received a $20,000 premium outside his regular returns, which, compared to the $11,000 he owed, gave him reason to celebrate.

Time to get going

Once you’re all caught up, make a plan to be “tax efficient”. Check out PTC’s online resources including “10 Ways to Cut Your Tax Bill” and “Tax Secrets Guide” for advice around tax planning. It’s time to finally put away the nightmare and stop losing sleep over late taxes. With the right help, it will be easy to jump in with confidence.

Visit <www.ptccanada.com> and click Resources for a documentation check list. CWCJ

Since 1998 PTC Canada has been helping late filers get caught up and on track. Neel Roberts took his first income tax course in 1980 at the age of 15. Since then he has done over 5,000 tax returns specializing in small businesses, sub-contractors, and corporations and has lots of trade folks as clients. Be sure to get some free tax help at <www.ptccanada.com> where you’ ll find important resources like 10 Ways to Get Free Help at Tax Time, 10 Reasons Taxpayers Hire a Professional, and 10 Ways to Find a Tax Windfall.