REPEAT-BMO Nesbitt Burns Tax Study: Ninety-Four Per Cent of Canadians Say They File Each and Every Year

REPEAT-BMO Nesbitt Burns Tax Study: Ninety-Four Per Cent of Canadians Say They 
File Each and Every Year 
- Canadians paid more than $119 billion in federal income taxes in
2012  
- Do-It-Yourself approach gaining in popularity: almost half prepare
their own income tax returns 
- Knowledge Gap: many Canadians lack insight on tax implications of
RRSPs, charitable donations, capital gains and dividend income 
TORONTO, ONTARIO -- (Marketwired) -- 04/03/13 -- According to a BMO
Nesbitt Burns study released today, Canadians are conscientious and
responsible with their taxes, with 94 per cent reporting they file a
personal income tax return each and every year.  
According to the Federal Department of Finance, Canadians paid more
than $119 billion in federal income tax in 2012.  
The BMO Nesbit Burns study also revealed that almost half of
Canadians are "Do-It-Yourselfers", preferring to prepare their own
tax returns rather than relying on someone else - such as a tax
professional or family/friends - to do it for them. Interestingly,
more than a third of Canadians (35 per cent) will be using tax
software to file their returns this year - an indication of the
country's growing adoption of and comfort with technology. 
"It's commendable that the overwhelming majority of Canadians are
doing the responsible thing and filing annually," said John Waters,
Vice President, Head of Tax & Estate Planning, BMO Nesbitt Burns.
"It's not only the responsible thing to do, but also the smart option
given the penalties that you can incur should you owe money and don't
file." 
Knowledge Gap? 
Mr. Waters also noted that, while it is encouraging that so many are
choosing to prepare their income tax returns themselves, some might
still be missing out on valuable tax savings.  
When Canadians were asked about their level of knowledge about how
various investments are treated from a tax perspective, the study
found the following: 


 
--  More than half of Canadians (58 per cent) are not sure about how capital
    gains are taxed, while almost two-thirds (62 per cent) are not
    knowledgeable about how dividend income is taxed.  
--  One-third (33 per cent) lack knowledge on how charitable donations are
    taxed. 
--  One-quarter (25 per cent) have trouble understanding the tax
    implications of a Registered Retirement Savings Plan (RRSP) and 36 per
    cent lack knowledge on the tax implications of a Tax Free Savings
    Account (TFSA). 

 
"While many Canadians are familiar with the basics of tax
preparation, there appears to be a knowledge gap - particularly on
investment income," said Mr. Waters. "If you prepare your own return,
ensure you become as familiar as possible with the tax system so you
can spot opportunities to reduce the amount of tax you pay and
determine strategies for next year and beyond. For those who want to
be sure they're taking advantage of all applicable tax credits and
deductions and don't have time to study the tax system, consider
hiring a tax professional or speak with your financial advisor who
can help determine the best strategy for you."  
BMO Nesbitt Burns offers the following tips to help Canadians reduce
the amount of tax paid on capital gains and dividend income: 
Offset capital gains with capital losses: If an investor realizes
capital losses in the same taxation year that a significant capital
gain is triggered, the tax liability on the capital gain can be
reduced. Consider selling certain investments with accrued losses to
offset capital gains realized earlier in the year - provided that the
sale makes sense from an investment perspective. 
Spot tax deductions: The extra cash flow from the sale of an
investment could be directed towards a larger RRSP contribution,
especially if you have significant unused contribution room carried
over from prior years. 
Defer a portion of gains: If proceeds of disposition from a sale
triggering a capital gain are not all receivable in the year of the
sale, it may be possible to defer a reasonable portion of the gain
from taxation until the year when the proceeds become receivable. 
Consider income splitting: Income splitting allows you to spread
income amongst family members who are taxed at a lower rate (subject
to possible attribution rules). Some valid income-splitting
strategies include: pension splitting between spouses or common law
partners; an interest-bearing loan to family members in a lower tax
bracket; and gifts to adult family members (such as a parent or adult
child).  
For more information on BMO Nesbitt Burns, visit
www.bmo.com/nesbittburns. 
Get the latest BMO press releases via Twitter by following @BMOmedia. 
The online survey was conducted with a sample of 1,002 Canadians
between March 15th and March 19th. The margin of error for a
probability sample of this size is +/- 3.1%, 19 times out of 20.
Contacts:
Media contacts:
Rachael McKay, Toronto
416-867-3996
rachael.mckay@bmo.com 
Valerie Doucet, Montreal
514-877-8224
valerie.doucet@bmo.com 
Laurie Grant, Vancouver
604-665-7596
laurie.grant@bmo.com