DON’T FORGET! 1 More CRA Deadline Is Coming

There is still one more deadline for this year, so don’t miss it and find out exactly how much you can invest into a great stock like Suncor Energy Inc. (TSX:SU)(NYSE:SU).

| More on:
Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline

Image source: Getty Images

It’s been a heck of a year, with money troubles front and centre for most Canadians. The COVID-19 pandemic swooped in, and there are two worries for everyone: staying healthy and financially afloat. Almost all Canadians have reported that the pandemic continues to affect them financially. Luckily, the Canada Revenue Agency (CRA) came out with a few new deadlines to ease the burden.

These new CRA deadlines came in every shape and size. The main one that most people focused in on was the filing deadline of June 1. It meant that you no longer had to figure out both how to stay safe and healthy and still file taxes back in April. So, great, that deadline is gone.

But there is another CRA deadline many people also may have forgotten about, and it’s the payment deadline. This is arguably more important; if you don’t pay your taxes, you can be penalized — even during a pandemic. This new deadline is slated for Sept. 30, 2020. As of now, that’s about a week or so away.

Pay it NOW

The last thing anyone needs right now is to owe the government more money. The best thing you can do for your own finances is pay your taxes immediately. The CRA will not be cancelling penalties on taxes owed, and interest will also be included if you owe those taxes. However, given the pandemic, the CRA has stated existing tax debt will not grow during this time.

The main reason the CRA needs these taxes, besides the obvious, is to calculate your own credits and benefits. If you have Old Age Security payments, Canada Child Benefit payments, or any type of benefit, these could stop by October 2020. You could even be asked to pay back what you were given in July through to September of this year.

It can be hard to pay all this cash during a trying time, so help yourself out in the future. If you don’t already, start putting your cash aside in a Tax-Free Savings Account (TFSA).

Earn returns tax free

The TFSA has $69,500 in contribution room as of this year. The last increase in contribution room was $6,000 in January. So, there is plenty of room for you to put cash aside, watch it grow, and use it to pay down your taxes when the time comes.

If you’re looking to make the most of that cash, invest in dividends stocks that have a solid future. Right now, the energy sector is struggling. But it will rebound eventually. What you want to find is a diversified stock that is likely to rebound ahead of the rest of the sector. In this case, Suncor Energy (TSX:SU)(NYSE:SU) is the perfect option.

Suncor stock is trading well below fair value at the moment at about $18 as of writing. That’s an almost 70% potential upside according to the average economist estimates. It gets this major estimate as the company is Canada’s largest fully integrated energy company. It focuses mainly on petroleum resources in the Athabasca oil sands, but it also markets that crude oil through its Petro-Canada brand. It’s even started investing in clean energy products, making this a stock you could have even if oil and gas go to the wayside.

Meanwhile, the company’s compound annual growth rate (CAGR) for its dividend is a whopping 14.2% over the last decade. That’s even after coming down during the current economic crisis. Right now, you’ll receive a dividend yield of 4.77%. However, back in March, that hit a whopping 11%. This could be the case again should the company return to normal dividend payments after the crisis ends, leaving you with a strong stock and sky-high dividends.

Bottom line

Pay your tax return now, and see exactly how much money you have to invest for the next year. As the markets continue to drop during the fall, buy a stock like Suncor and hold it long term. You can then use the dividends to pay off your tax return next year. Investing $30,000 in Suncor today would bring in $1,400 in dividends this year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned.

More on Coronavirus

Dad and son having fun outdoor. Healthy living concept
Dividend Stocks

1 Growth Stock Down 15.8% to Buy Right Now

A growth stock is well-positioned to resume its upward momentum in 2024 following its strong financial results and business momentum.

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Stocks for Beginners

3 Things About Couche-Tard Stock Every Smart Investor Knows

Couche-tard stock (TSX:ATD) may be up 30% this year, but look at the leadership and history of the stock to…

Read more »

Plane on runway, aircraft
Coronavirus

Can Air Canada Double in 5 Years? Here’s What it Would Take

Air Canada (TSX:AC) stock has gone nowhere since 2020. Can this change?

Read more »

Senior housing
Stocks for Beginners

Home Improvement Stocks Are Set to Fall (When They Do, Buy These Like Crazy!)

Home improvement stocks are due to drop further in the coming months. But with solid underpinnings for the sector, it…

Read more »

An airplane on a runway
Coronavirus

Forget Boeing: Buy This Magnificent Airline Stock Instead

Boeing (NYSE:BA) stock is looking risky right now, but Air Canada (TSX:AC) stock? Much less so.

Read more »

Man considering whether to sell or buy
Stocks for Beginners

Goeasy Stock: Buy, Sell, or Hold?

When it comes to smart buys, goeasy stock (TSX:GSY) is up there as one of the smartest money can buy.…

Read more »

Woman has an idea
Stocks for Beginners

Here’s Why Magna International Is a No-Brainer Value Stock

Magna stock (TSX:MG) has been climbing back once more, but still offers huge value for long-term minded investors.

Read more »

Aircraft wing plane
Coronavirus

1 TSX Stock Down 60% That Could Bounce Back Stronger

Air Canada (TSX:AC) stock got severely beaten down in the March 2020 COVID crash. Here's why it's probably not going…

Read more »