If it were any other year, the taxes would have been behind Canadians. But it’s not any other year. The tax season was delayed to help people file and pay their financial obligations towards the Canadian government and CRA. And though most of the Canadians have already filed their taxes, the final date to pay them off has been delayed again.
Many people are still struggling to keep their finances in order, especially those whose livelihoods have been affected by the pandemic. Millions had to resort to CERB and CESB to keep afloat because they lost their livelihood, either entirely or partially.
But even those who might have taxes that they need to pay off, no matter their financial situation, they can’t put off paying their taxes any longer.
New tax deadline
The new tax submission deadline is September 30 and has been delayed again. At first, it was September 1, and according to CRA, it still stands, and encourages Canadians to pay their taxes as soon as possible. However, there are no late-filing penalties until after September 30. You now have 30 more days to pay your taxes.
The new deadline applies to individuals, corporations, and trusts. One of the reasons for this extension was to keep the tax payer’s debt at a minimum and keep them from fattening their tax bill by accumulating interest on their outstanding tax obligation.
But the CRA is also encouraging people to be prompt with their returns because the later they submit, the more they will delay the accurate calculation of their benefits.
Tax-free emergency reserves
For people who needed to draw from the emergency funds to get through the COVID-19 crisis, TFSAs likely proved very helpful. If you keep part of your emergency funds in your TFSA, you can access it in tough times, without driving your tax bill up.
If you don’t, putting aside a fraction of your monthly income and investing in a dependable stock like Royal Bank of Canada (TSX:RY)(NYSE:RY), can help you build an emergency reserve that you can rely upon whenever you suffer a loss of income.
The Royal Bank of Canada is the largest security on TSX and one of the most powerful banks in North America. While the bank has over 17 million clients in 36 countries and may not be as U.S.-leaning as others in the Big Five, it does a substantial amount of business in the U.S. and generated 23% of its revenue across the border.
RBC is also one of the fastest recovering equities since the crash in March. Currently, it’s trading at $92.4 per share at writing, just 15% down from its pre-pandemic high. Though dividend yield is still a juicy number of 4.6%, and the payout ratio is stable. Its 10-year CAGR is 9.83%. At this growth rate, you can convert $200 a month into about a quarter of a million in 25 years.
CRA has been generous with its tax deadlines this year, but that doesn’t mean you have to put it off until the eleventh hour. If the pandemic hasn’t brutalized your finances, you should’ve (ideally) stuck with the typical schedule.
Being prompt with your tax filing and submissions means that your yearly financial calendar won’t be disturbed, no matter the deadlines.
Speaking of CRA tax delay...
Motley Fool Canada's market-beating team has just released a new FREE report that gives our three recommendations for the Next Gen Revolution.
Click on the link below for our stock recommendations that we believe could battle Netflix for entertainment dominance.
Fool contributor Adam Othman has no position in any of the stocks mentioned.